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Gold/Mining/Energy : Gold Price Monitor
GDXJ 98.59-2.8%Nov 13 4:00 PM EST
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To: d:oug who wrote (66120)3/19/2001 9:12:40 AM
From: russwinter  Read Replies (1) of 116759
 
Yes, that's the index I referenced. The key variable everyone is focused on are capital requirements as established by the Bank of International Settlements. This was an attempt by the global banking industry to require minimum standards (Good Housekeeping Seal of Approval) of solvency for banks so that one country or another couldn't be lax.

The Japanese have been struggling with this standard from day 1, and certain institutions have already fallen by the wayside, but there is much more to go. The reason the Nikkei has relevance is that these banks and insurers have large cross holdings of securities in other institutions (*). Also keep in mind that the mark to market happens at the end of first quarter. Now look at the index and you will see that 12,000 is substantially below prior mark events.

(*) A word on the Japanese share ownership structure. Mutual funds own only 3% as a % of GDP (US is 40%), and pensions own 23% (US is 69%). Japanese are so risk adverse (partly because of the feudal nature of their investment market) that they have a trillion dollars in no return postal savings. The potential of this market is enormous and I liken it to US 1974. IMO the whole ability of the world economy to get squared away depends on Japan. I am basically a bear, but my small bull hedge is Japan. The historical evidence is that when blood runs in the street, the Japanese are eventually able to adapt and do it quite well.
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