John Pitera's Market Laboratory Message Board

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Strategies & Market Trends : John Pitera's Market Laboratory

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To: macavity who wrote (5542)	2/10/2002 7:50:47 AM
From: Henry Volquardsen	Read Replies (2) of 33421

there is a difference between gold and the gold mining industry. The gold mining industry may be a good buy at the moment, I don't know since I no longer follow the mining industry. But I know there are some very well managed firms that focus on extracting metal, the same as oil companies focus on extracting oil. I have little doubt that these firms may be in a position to be attractive investments. I would be less sanguine about mining companies that are mere speculation on the price of metal. Gold itself is a different story. It is a zero interest bearing commodity, for all but professionals who have access to the lease market. I have long felt the key factor for gold has been the liberalization of the international capital markets. This has allowed the infamous bond vigilantes and hot money flows to punish any currency that pursues debasement and/or negative real interest rates. It is no coincidence, imo, that the last real strength in gold was in the 70s when there were still significant global capital flow restrictions and the US was pursuing negative real interest rates. Can those conditions return? Sure. But they don't exist now.

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