Corner Bay Silver (BAY.T) Message Board

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Gold/Mining/Energy : Corner Bay Silver (BAY.T)

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To: ahhaha who wrote (1413)	10/5/2000 2:33:06 PM
From: Claude Cormier	Read Replies (1) of 4409

My statement: It is not as much the US markets as the effect of this drop on the US dollar. The later is the greter influence on the price of gold. <<You say above that the stock market falling would have a negative effect on the dollar. >> Yes. That is what I think. But again I don't think that the recent bull market in stocks was a consequence of a higher US dollar as you implied (The currencies move and the stock market responds..) That I don't believe is true. The recent bubble was not cause by the US dollar gaining ground. Sure it was a factor, but a small one compared to the two other I mentioned: the Internet frenzy and the unprecedented credit expansion. <<I can't get: I said that the US dollar is a greater influence on the price of gold than the US stock markets. out of the above quote>> How about: The later (the US dollar) is the greater influence on the price of gold. <<I didn't say: Stock markets are not going up because the currency goes up.>> I didn't say you said that. This was my answer to your affirmation: The currencies move and the stock market responds. <<... flow of funds, international hot money, will move into dollar denominated securities mostly debt instruments, but more and more into our stock market because of its liquidity. >> True... but foreign money in US stocks is still only 8% of total US markets. Where Foreigners have 44% of US debts. Granted, the total market cap of US stock markets is almost 3X the size of the US national debt. Still, there is twice as much foreign money in debt instruments than there are in stocks. This really means the bubble in the US stock markets has little to do with a rising dollar or foreign money pouring in. I think we have to look elsewhere: M3 Money Stock NSA; Billions of Dollars safehaven.com Consumer credit safehaven.com S&P safehaven.com What happened since January 1st 1995? << If one looks at the financial data available at the St Louis Fed there is little evidence of this explosive expansion of credit. >> I see such evidence in the charts above. <<You don't get precarious credit without rampant inflation.>> And inflation is rampant. Stocks prices are inflated. P/E ratios are inflated: cepr.net <<Gold can go lower. There is nothing but CBs supporting its price now.>> Well sure... gold can have more speculative moves to the downside. But its average price (I mean over a prolonged period of a few years) is as low as it will gets for two reasons: 1) The price of gold as a commodity is near its average total production costs 2) CB's are already too much levereged in the gold market. They have leased between 20% and 45% of their gold depending on whose numbers you believe. This gold has been sold and absorbed by the market. They cannot get it back rapidly. The more they lease the more they become vulnerable and they (the CB's) know it. That was the reason for the Washington accord. In other word, although some sell program are continuing, the bulk of the dumping (via leasing) is done. A few good read on the US dollar, Inflation and gold: The US Dollar: Over Owned and Over Valued safehaven.com Inflation versus Deflation safehaven.com Back tomorrow! Claude.

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