Government printing money== higher POG : get it?
This is the number 1 lie of the mainstream gold bug mentality. Greenspan is a monetarist. Monetarists use money to control economics and thus inflation. If printing money was inflationary, then in Jan 11/99 when the rate of M2 was at it's peak you'd have seen the US FRB hike 1% or more, and CPI would've been ratcheting to all time highs. Why is this so hard to understand? for me it isn't, for this thread it is. Well the case is such that when growth out paces inflation your currency appreciates as more cash inflows into your country occurs. So the US Dollar Index shows this in the past, and the YEN is showing it now. What can be done is increase monetary supply {M2} and this will alleviate the rise of the currency. Japan has sterilized its monetary supply, and thus has allowed the YEN to over appreciate. This is why the FRB have been raising rates, to ease the pain of yet a further recession in Japan. Japan plans are to export their way out, but the way it's going, their currency will preclude that. A further implosion like Martin Armstrong suggests will cause a rapid demise in the YEN sooner then later. This capital outflow will wash around the world in a trillion dollar currency bath, and little is actually to land within the gold spectre. WHY? The ECB in it last dying grips of a debased monetary union will become a true Zollverein. And with that it is in the best interest to restructure the fledgling currency, by busting the balls of the gold markets. But rest assured that the FRB has also aided the recent rise of the POG by buying around 5.6 tonnes between Sept 25-Oct 7 99
bog.frb.fed.us
So M2 is used to OFFSET the rise {appreciation} of your currency.
members.home.net
The US Fed is behind the US Treasury yield curve. This suggests that inflation, which is really a misnomer, has never been important. In truth deflationary pressure cause a rise in the POG, and that hasn't occurred since 1970-80. In deed the realization that over 40 MToz of gold a year can be mined for under $200 should add to the shock that any rise in the POG up to $325 is nothing more then the Derivative markets in gold being pulled to their maximum. And the derivative markets have held. Now more selling is hitting the markets.
#reply-11498649
For those without a calculator, that's 1244 Tonnes per year.
For how many years???
Now if total demand is around 2600 tonnes {World Gold Council Data}
And if 1244 comes from less then $200 production, we need only account for 1355 tonnes. But thanks to Bob Johnson {he did my work for me} 1094mt of Asian scrap for 98. So that leaves a little over 260 tonnes. Is not the ECB suggesting 400 tonnes per year? Scary when you think of how much gold is floating around. Excess {which there are none} can easily be filled by those mines just over the $200 cost of production. Any additional mines coming on stream due to the rise to $320 will only add to the supply side of the equation. And thus we can expect a lower price of gold going forward. So those here that ridicule ABX for their hedging should realize that maximum gain from a forward hedging program is still the BEST WAY to maximize profits. Don't expect this futures driven rally to last. Supply is too large at greatly reduced costs. Now you understand when I said back 2 weeks ago, that this rally is playing into the hands of the shorter.
NOW you know why other has suggested a $200/Toz for gold, and why Martin Armstrong {who was correct} suggests the same. I held at a low for $240, only cause demand would increase fast once you get below $250. But supply is so huge, and this is just a blip on a longer lower trend. To place your money into a false rally cause of ECB comments is to show that this thread is nothing more then speculators. Many say here:" Why is this so hard to understand?" Well I understand quite well, do you? I think not.
Funny is those that question ABX hedge positions are those that truly don't understand what a hedge is. Cambior & Ashanti weren't hedging. Do you know if your gold company is hedging?
Hutch
PS: HMO's are a none starter here. People should have the right to sue them for proper care. Want to know where the markets will be in March 2000, look at DOW yield versus M3/M2, the trend is clear. |
