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Strategies & Market Trends : Canadian Market Direction

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To: Jan Johnstone who wrote (32)	7/13/1997 1:54:00 AM
From: andy	of 35

I happened by a chat line on CANOE where someone posed an interesting idea : is the central bank sell-off an attempt to reposition gold into economies and governments which do not have adequate reserves or backing for the currency? Sadly we can't really find out the investment performance of the people who bought all of that gold against the people who sold it. Global stability is so transient ... I hope you are implying 'Western' or 'G-7' economic stability. It appears to me that this has been an extended period of non-consumption growth : you build bombs to blow things up ... you build large bureaucracy to make yourself more remote from the people footing the bill. I tend to believe that it's the media to blame and to thank for the current transparency of the economies. In Bismarck's day I imagine you could count the people who controlled the world on your hands ... now everyone, including us chit-chatting away here, can extract different interpretations of events based on regional access and importance. Heck, we even have the covted leisure time to sit around and postulate whatever fancies us. My only hope is that when the media flips its opinion that things aren't always perfect and rosy ... people use some sound judgement before bailing out. I keep playing back in my mind the Bre-X trigger point for gold ... every shuffle in the market needs its catalyst. Things looked quite ordinary during the first month or two after the announcement. The fact that 80 million ounces (or whatever) could disappear and not effect pricing or stability must have influenced the view that gold didn't carry it's own weight in the market. Now look at oil ... a couple of strong juniors are coming out with Ooopsies! and the market is staying stable. There is so much oil 'in the pipeline' all over the world and yet the price per barrel so far is resisting collapse. I am still overweight in the gold sector and I have been for over two years. Even in this environment, however, the overall market returns are there and these are huge returns by any measure of the last two decades. This investing environment is proof that indices are the playthings of ignorance. Yes they are benchmarks but I am fearful that they will lead the collapse due to hysteria. One number which doesn't really mean much on its own. Wow. I am finding it more difficult to forecast growth ... I'm glad to see the unemployment numbers falling. Good current account. Godd money supply growth. Why the dollar resists a rise I can't fathom. Perhaps with gold and oil hitting lows is the best time for a strengthening of the dollar by government policy...that way the dollar could be weakened as commodity prices rise in the future cycles and domestically there could be some reasonable control of the extremes of pricing. Let's take a lesson from Japan. As an aside ... do you think NAFTA should be looking to Eastern Europe? Why is it that we want a military link-up but no economic partnering when we look to Europe (except perhaps old dominion task master England) but when we look to NAFTA expansion in South America its economic grounds and no real military link-up. Funny, huh? If the EU has a problem expanding right now ... isn't it to our advantage to block it's growth into Russia by brokering an economic link on the EC Eastern Front. Where will our future growth (power) come from ... or is everyone prepared to forsake that thing called nationalism. You see cunning world politics aren't really dead. And the shock waves to come will probably be rather larger in that they originate from a period of relative calm.

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