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Gold/Mining/Energy : Gold Price Monitor

GDXJ 98.59

-2.8%

Nov 13 4:00 PM EST

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To: SwampDogg who wrote (43944)	10/26/1999 11:29:00 PM
From: ahhaha	Read Replies (2) of 116759

I don't agree that the price is ruled by derivatives. They're just another factor in the indeterminable pricing function and they have the least effect. This argument is similar to the claim that stocks are wagged by the options struck in them. They're separate markets and only have a connection on expiration and not much of one then either. Stocks are not priced by supply and demand. They are priced on rational expectations for future earnings. If you knew that so much gold is demanded at a certain price and so much would be supplied at another price, would you know the direction to equilibrium? Is gold declining because there is more selling than buying or because there is more intensity in the selling than in the buying when the buying is booked and selling is market? What good will an assessment of contracts, derivatives, and all the rest of the associated subordinate instruments, do for deciding whether to buy and sell? We used to think gold should be equal in price to the net liquid liabilities of the US government. That was one rationalization that got people to buy or sell. There have been many. All are transient except one: inflation. Inflation is the only force that has the ability to cause gold to trend. Depression, war, currency collapse, supply/demand, none of these have a lasting effect on the price. In the 19th century there was no FED to perpetuate inflation and so the inflation cycles were brief. Accordingly, the gold bulls were brief also. What is the basis upon which one can make a calculation based on inflation as to the appropriate future price for gold? The price at a bear market bottom? When is that? The average cost of recovery? That is harder to figure than is whether we have seen a bear market bottom because it is impossible to know how much would be supplied at various prices. There is no problem in my argument because market value = cosmic value = physical value. It's hard to believe but the gold market is the most free of all markets, so the equalities above are justified. What is the evidence of such freedom? Ole 49er can sell gold to the same questionable operator that the ECB does. Can and does.

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