Precious Metals mutual funds (gold, silver, PGMs) Message Board

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Strategies & Market Trends : Precious Metals mutual funds (gold, silver, PGMs)

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To: Dan P who wrote (658)	5/20/2002 11:14:35 AM
From: Larry S.	Read Replies (1) of 972

Dan, et al, Thank you for the reference - a very interesting article. I listened to Rukeyser's Wall Street this past Friday and his special guest was the Bernstein, Merrill's head market strategist. In response to a question from Rukeyser, he acknowledged gold role as a safe haven but he said it was poor investment long term because (something to the effect of) everyone knows that long term its price will continue to fall. He also said to stay out of telecom because there is too much competition and margins are being squeezed. I'm sure he argued strongly for the deregulation but, in his mind, competition is really bad as it limits profits. I used to argue that the tax on corporate profits was bad because it makes us less competitive in the international market and is essentially a tax on goods and services, effectively a sales tax. I assumed that we had real competition. The CBO argues that it is borne by the owners of capital. I beginning to see their point of view, though I believe that at most 1/2 right. The Bernstein's of this world seem to have been effective in assuring that competition is limited. I'm really impressed that the action in the gold market and carry trade in particular. Gold is moving up again and the 1 yr. lease rate this morning is below 1% again. I think the same Wall Street herd effect that worked to help extend the bear market in gold is now working to assure that it will move up. The word is clearly spreading on Wall Street that the trends in the price of gold and the dollar have reversed and the carry trade no longer provides free money. (Note that Rukeyser didn't make derogatory remarks about gold this week.) As I said last week, for the bull to continue, I think lease rates must stay low indicating an adequate supply ready for leasing but limited demand, indicating an expectation that the price is moving higher. As time passes, the collusion that helped maintain the carry trade and the bear market in gold will fall apart and it will be every man for himself. I didn't find any mention of gold in Barron's this week except in market statistics. The GMI/POG ratio: On 05/16, the Barron's GMI was 470.64 down from the previous week's 479.10. With the POG down slightly at 310.60 (05/17), the ratio was down slightly at 1.52. The ratio a year previously was 1.30. Cheers, Larry

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