MDA - Market Direction Analysis Message Board

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Strategies & Market Trends : MDA - Market Direction Analysis

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To: Fun-da-Mental#1 who wrote (25947)	9/15/1999 5:55:00 PM
From: pater tenebrarum	Read Replies (2) of 99985

Fun, i would agree with your idea that Yen based investments will be a good idea going forward. in fact i am planning to buy Japanese stocks heavily once the coming global correction has run it's course (note that i am not entirely certain if the BIG correction is already underway, but it does seem increasingly likely) - especially if Japan shows good relative strength. w/regards to gold, you have to consider that the gold market has some unique characteristics that virtually guarantee that an explosive rally will occur at some point in time. consider this: approximately four years worth of newly mined supply are sold short. some medium to large sized holders of gold have no physical gold left in their vaults - it's all lent out to hedge funds which have sold it (e.g. the gold reserves of the Reserve Bank of Australia consist of a piece of paper that represents a claim on their gold - not an ounce of bullion is in their hands). at the same time, demand for bullion world-wide has increased sharply. gold lease rates have shot up dramatically as a consequence, as bullion actually begins to become scarce. industrial metals and oil have in the meantime begun to appreciate sharply - only gold remains still in the doldrums price-wise. when it finally plays catch-up it will likely do so in a sudden sharp move. producers and hedge funds are all heavily short, but with the increase in the lease rate, shorting is not a viable proposition anymore. once the psychology in the gold market, which is currently one of excessive bearishness and fear turns, the mother of all short covering rallies will likely ensue. i can't put a date on it - nobody can - but i know it'll happen eventually. when it does, you will want to be there. regards, hb

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