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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: patron_anejo_por_favor who wrote (182622)	7/23/2002 4:53:20 PM
From: SouthFloridaGuy	Read Replies (2) of 436258

Prechter on Gold revisted... JIM: I want to talk about the issue of gold because we’ve seen this recent rise in gold. You believe that it’s possible that gold will drop to 200. I want you to address those issues because we’ve gotten a lot of e-mails on that one particular point about gold’s going to 200. I would have to say in defense, I could think of two reasons, or two ways that could happen. Number one, there’s an outright war against gold fought by central banks dumping their reserves. Or number two, in this market crash that you address in your book, a liquidity issue comes up. I can remember buying shares from a hedge fund manager that got caught with a margin call. So, I wonder if you might address the issue of gold in the short-term and longer-term. BOB: Well, there are two things to consider. One is market opinion and the other is what you should do. They don’t necessarily always follow precisely 100% one for the other and I’ll tell you what I mean as we go along here. In the depression of the 30’s, silver prices were free to float. Gold was not. It was fixed by the government. Silver had a nice sharp rally in 1931 that lasted most of the year. But, by the time the economy bottomed in early 1933, silver had made a new low for the entire fifteen year period preceding and it bottomed, finally, in December 1932. A lot of people in 1931 thought that silver would be a hedge against the depression. That’s why they bought it and that’s why it had the rally but, eventually, it went down and finally bottomed with stocks. I think that’s likely to happen to all of the precious metals because today none of them are fixed by any government prices.

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