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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 665.67

-0.9%

Nov 17 4:00 PM EST

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To: Zeev Hed who wrote (63219)	11/28/2000 11:04:12 AM
From: yard_man	Read Replies (1) of 99985

CBs do have a rather large supply to continue to sell from whenever needed -- no doubt about that. And initially, in a financial crisis one would expect money to flow to bonds from stocks while the dollar remains strong -- but could a real selloff in US stocks (from these levels) happen concurrently with continued dollar strength? Also: >>I have argued that the monetary role of gold has long been abandoned by the CB's (for obvious an reason, tying the world economy to gold will doom the world to perpetual inflation)<< Your parenthetical statement is interesting. Why would using gold as a medium of exchange be inflationary? I would some to think the reverse, on the face of things -- especially given current conditions. After all, the US money supply alone (the large growth in credit and leverage notwithstanding) has been growing much faster than the US economy for several years now. Given the large "overhang" in gold supply and the current rate at which it is mined -- if notes were printed that were backed by gold -- wouldn't this tend to reign in the growth of the money supply and bring on a more rapid slow down -- Also re:CBs -- no argument that the CBs in the western nations have abandoned gold as "money," yet they have a need for it nonetheless -- if for no other reason to do just what you said -- sell every time the price edges up above $300 -- if it is no longer "money" to anyone else -- why would they need to sell to arrest a climb above $300/oz? Of course folks in SEA who held gold through the last crisis there did well -- not same situation as holding US dollars right now -- I know. Said all that to say this: CBs have declared "gold" no longer money -- fine -- but does that make it so? If it no longer a hedge against a full-blown crisis -- what hard asset takes it place? Oil?

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