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Strategies & Market Trends : Classic TA Workplace

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To: skinowski who wrote (63472)	1/11/2003 11:08:49 PM
From: yard_man	Read Replies (1) of 209892

A deflationary collapse does not mean everything goes down in price (in USD terms), but rather those items that have been inflated in price because of the ease of acquiring them on debt -- see housing, durable goods. A fall in the USD vs other countries means that foreign goods cost more in USD terms. But narrowly with respect to gold -- if gold increases in price in USD terms -- it increases the price that producers get in USDs whether they sell forward or not. I suspect you are right, that while everyone of the producers (right now its fashionable) wants to be seen jumping on the "unhedged" bandwagon -- a great many of them who have survived this terrible bear market in gold -- they like these prices and would like to lock here or better in the near term, but this is not a reason to think that gold will not rise further, IMO. What about central banks -- the impression was that they controlled the price (they really don't over the long term, but that's the impression many have) because they have a large supply that can either be sold or leased and then sold. But now, the Fed is very serious about avoiding a deflationary spiral like has happened in Japan -- they know the danger is very real that this could spread worldwide -- should the US get mired down. So what do they desire? They believe they can influence things by "perceptions" -- thus they now must favor a modest or slow rise in the price of gold. In total collapse of the fiat system -- who the heck knows what would happen. I think such s complete collapse is very unlikely so as to be ignored -- you cannot prepare for it. But between an extended recession and a very bad downturn there are many possibilities. I like the idea discussed here before about gold gaining favor as the real returns on assets approach zero ... it is not that gold has intrinsic value -- rather that paper claims are subject to rather rapid re-evaluation on the whole at certain points when "everything goes wrong." I own gold and goldshares largely as a put on confidence in policymakers ... confidence is far from having burst, but when it does folks will vote with what little excess cash they have -- it may not be gold, but it might be, too. Good luck.

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