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Gold/Mining/Energy : Blue Chip Gold Stocks HM, NEM, ASA, ABX, PDG

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To: Wade who wrote (1631)	6/21/2004 10:38:25 PM
From: Wade	Read Replies (2) of 48092

As we can see that USDX just hit the support of ~89 and bounced higher and POG hit ST resistance and bounced lower. It is clear that USDX is still in long term down trend if we look at its 200-dma. Thus, we should expect POG to continue its long term rally. Many experts have pointed out that the economy recovery is too heavily relied on injection of massive amount of liquidity, which is the primary source of inflation. Therefore, it doesn't make sense for Fed to tightening interest rate and inject liquidity at the same time in the ST. The most likely case is that Fed to maintain the low rate, or symbolically raise 0.25%. Therefore, we shouldn't expect major changes of Fed policy. We can see that Fed is hoping USDX to move lower to stimulate exporting goods and improve competitivness of US companies in the domestic market. This action is facing resistance from many countries wishing to keep higher USDX. The only way Fed can achieve its goal of lowering USDX is to create an environment that foreigners not willing to hold too much USD. The fine line of keeping the right amount of USD or giving it up is the most difficult jobs for the foreign central banks to manage. I think Fed is trying to find this balance as well. POG will move higher when Fed successfully lower USDX to a comfort zone. I think this has been Fed's policy. Most of the analysts just don't see it. Now, the question is that how much debt we need to accumulate before USDX can find the balanced point of import and export. Will we feel comfortable at that point? Can we adjust to that life style? Looks like we'll have to. I dont' see a second choice. Good luck to all. Wade

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