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Gold/Mining/Energy : Gold Price Monitor
GDXJ 97.80+0.9%Nov 19 4:00 PM EST
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To: pater tenebrarum who wrote (53948)6/8/2000 3:03:00 PM
From: Crimson Ghost  Read Replies (2) of 116763
 
Heinz:

THE BANK CREDIT ANALYST has many good insights (they remain bearish on global stocks markets for instance). But they seem to have an almost irrational bias against gold. Their basic idea is that a real gold bull is impossible nowadays. Why? Because most central banks are and will forever remain vigilant inflation fighters. They assume this as an article of faith. Just as many of us here argue the opposite based on empirical evidence.

Here is their latest gold commentary. They recognize that gold has rallied because the dollar has weakened. But they expect the dollar to rally soon as the Fed resumes tightening. And when a slower US economy finally induces a big dollar drop gold will not respond because inflation will then be weakening.

Changes in expectations for U.S.
short-term rates have played a large role
in driving the dollar and gold prices in
recent years. Falling rate expectations
have triggered a weaker exchange rate
and higher gold prices, and vice versa.
The recent drop in rate expectations
should be brief: inflation pressures are
still building in the U.S. and the equity
market?s resilience will support
consumer confidence. The dollar
should bounce, and gold sink, when
further confirming evidence of rising
core consumer price inflation occurs, as
investors upgrade their interest rate
outlook. However, longer term, we
expect an economic slowdown, which
should break this link with gold: weaker
growth will end the cyclical inflation
threat and undermine, not boost, gold
prices even as the dollar softens and
rate worries fade.
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