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Gold/Mining/Energy : Gold Price Monitor

GDXJ 97.81

+0.9%

Nov 19 4:00 PM EST

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To: The Vet who wrote (57688)	8/29/2000 10:39:10 PM
From: Hawkmoon	Read Replies (3) of 116762

The US lives well on the worlds credit. What will happen on the day that those debts come due. Wait a minute here... Which nation on this planet is currently running a governmental budget surplus as a result of the favorable economic conditions? Conditions that create more value for each investor dollar than do other economies? We know it isn't Japan, where interest rates are at .25% and their national debt is approaching 130% of their GDP (with an increasingly aged population who will be stuck paying the tab down the road). And it isn't Europe where governmental regulations, subsidies, and the extremely high taxes needed to fund their generous entitlement programs are causing capital to flee and putting them in quandary comparable to that which Japan faces. The ECB is set to raise rates this Thursday and the question will be whether they raise them high enough to support their currency (equivalent to an intervention), or let the Euro float lower to new lows in order to prevent an interest rate induced recession. Like many folks, I'm closing watching what occurs this week with the dollar and the US markets. We are currently setting up for a big move and I suspect that it will be ignited by a currency related event. Either the Dollar makes a new high and continues an uptrend (ensuring the Euro is shorted in a "carry trade"), or it fails and we have another correction in the markets that won't get resolved until tax loss season is over this November-December. Now the ECB could raise rates excessively high in order to support their currency, but as a result they will be creating the conditions where EEC nations may become so divided that it may tear itself asunder and destroy the concept of a unified currency. Remember that the Euro is the currency of the European Confederation, not the currecy of a unified Federation. Confederations exist only as a result of mutual consent and the EEC is too new for them to be taking such risky actions. Just my opinion. But do I think that the Dollar will reign forever?? Not particularly.. But right now the last thing Japan and Europe want is for the Dollar to decline and limit the favorable export conditions they currently enjoy. Conditions that are crucial to sustaining economic growth. Very complex situation they are facing and there are a whole lot of variables that must be factored in for analysts to truely assess what they will do. And in the end it will all come down to the decisions of a few powerful central bankers who are guiding monetary and economic policy. Also, note that only NOW is Europe undertaking the necessary reduction in tax rates that the US implemented back under Reagan. It will require many years until the effect of those tax cuts will be felt on their economic growth. Regards, Ron

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