SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Gold/Mining/Energy : Corner Bay Silver (BAY.T)
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Claude Cormier who wrote (1408)10/4/2000 9:15:12 PM
From: ahhaha  Read Replies (2) of 4409
 
You have the cart before the horse. The currencies move and the stock market responds.

It is traditional to marry gold and the dollar inversely, but over the last two years the dollar has soared, but gold has remained steady. The configuration that engages the inverse connection without slack is when the US has a high propensity to inflate. Currently it doesn't have such a propensity.

Recently the FED and the other central banks engaged in a concerted effort to slow the dollar's rise. The mechanism is simple. When the price of oil rises it has a levered effect on European economies both because of the large refined products tax margin and because of socialistic economic inefficiency. The effect is recessionary for Europe.

The FED can't lower rates because it will stimulate US consumption of oil and prop its price. According to the above mechanism the pressure would remain on the Euro under this circumstance. The effect of the FED resisting the market's tendency to lower rates is slowing of the US economy and therefore deflationary. Whereas slowing means less purchases abroad and hence less demand for foreign exports it does have a calming effect from the demand side for oil in the US. With oil supply building oil price should drop fairly significantly in coming months. The result of this inadvertent discipline will be that the stock markets somewhat world wide will go to all time highs.

If that's right intersecting with your implication that stock markets and gold move inversely. then gold has a tough row to hoe. I'm not a believer in this linkage and so I expect gold would do as it has done and move sideways in its base.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News