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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: Crimson Ghost who wrote (75205)10/2/2000 12:49:21 PM
From: isopatch  Read Replies (1) of 95453
 
Couple of thoughts on that excellent article George:

"According to the Bank for International
Settlements, total derivatives on interest rates and
currencies measure in the hundreds of trillions."

The potential of extreme volatility due to the above factors which have undermined the stability in the huge international currency and debt markets is one of the best arguments for watching Dollar and US Treasury futures and cash markets whenever the Asian Markets roll over and start to tank. Once that tandem really gets rolling would expect the precious metals to begin their large impending move.

"The productivity myth rests on the dubious foundation of hedonic pricing methods, a methodology applied to the BLS price indices at the beginning of the Clinton administration."

Tried to bring up the issue of "hedonistic pricing" in a post some weeks ago, but very few picked up on the significance of this issue. It is VERY significant.

"Even the Deutsche Bundesbank and OECD have recently
challenged the validity of this centerpiece of
financial market lore. Using this methodology, the BLS
has inflated spending of $28 billion by business on
computer hardware, or 3 percent of nominal GDP growth,
to $127 billion or 20 percent (Richebacher Letter,
September 2000). The impact of these adjustments is a
substantial overstatement of productivity figures and
an understatement of consumer price inflation."

Overall, George, this gold fund manager makes an excellent case and pull together points some of us on the thread have voiced similar thoughts here OR on Yahoo boards since last April.

In addition to the enormous derivitives risk built into the currency & debt markets and the "Emperors New Clothing" image presented by hedonistic pricing. I especially liked these further points by the writer in accounting for the extreme overvaluation of US financial assets vs gold (and of course other commodities).

"* Removal of trade barriers.

* Curtailment of longer term treasury debt maturities.

* Endless spin on a strong dollar.

* Making sure gold did not establish an uptrend.

* The demise of the Soviet empire"

Thanks again for posting the entire piece George. Good to have you back as a regular contributor to the thread.

Best

Isopatch
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