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Gold/Mining/Energy : A to Z Junior Mining Research Site

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To: 4figureau who wrote (5056)	7/5/2003 12:46:07 PM
From: Jim Willie CB	Read Replies (1) of 5423

Rodney Cook (Big Fisherman): PERVERSE OUTCOMES gold-eagle.com a clip: More recently the Fed has clearly telegraphed that reduced rates are policy for the foreseeable future. But to a much wider audience. And that they will work their way up the yield curve to provide liquidity as necessary to fight deflation. So well trained speculators have been taking profits from selling at the short end and are re-deploying at the long end. This should continue to create quite a bubble in bonds. And should help maintain the housing bubble, as long as unemployment does not surge. The insiders have profited nicely by positioning for this run. If you can count on our monetary magicians, the creation of liquidity shall continue. But at some point, when least expected, this trend will reverse. And higher interest rates will prevail. And someone will be left holding the bag as the hot money flows to the next bubble. So if you are sitting at this table, watch the insiders. If they get up and walk away from the table as the crowds are gathering, it may be prudent to take leave from this game. The big unanswered question is what will be the catalyst for this reversal and what will be the next bubble. Sales of US bonds from foreign central banking reserves are the standard answer. China is often mentioned. So what will be purchased with these monies? Debts will be paid. Speculators will seek commodities. And central banks will ultimately buy gold. But internationally the number of players is much larger and this makes the game much more complex than simply front running the Fed. At some point these front runners will be slaughtered. Unless the dollar conquers the world. / jim

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