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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: pogohere who wrote (79672)3/4/2007 9:52:48 AM
From: orkrious  Read Replies (3) of 110194
 
It ain't what you know that gets you, it's what you know that ain't so.

that's a good saying

hoye talks about gold's real price (money) losing purchasing power during asset inflations which exhausts itself and then gains purchasing power during periods which last roughly 20 years. he says:

In all such examples, gold's real price declined to a significant low as speculators scorned cash and leveraged up on the hot stories about stocks, bonds, commodities, and real estate.
Once the era of asset inflation exhausted itself, typically gold's real price increased for some twenty years.

He explains:

In all cases, once the speculative boom breaks it has been followed by a sudden and pervasive loss of liquidity...as early as the 1622 example severe liquidity vacuums...Mother Nature finds it more practical to replenish global banking liquidity by increasing the supply of gold...This is prompted by increasing investment demand, which in all cases has been anticipated by changes in the credit markets. Other than the exhaustion of speculative momentum, key determinants have been a turn to widening of credit spreads as market forces begin to ration the availability of credit for speculation...Typically, the height of a mania is accompanied by speculative demand for credit driving short-dated rates up relative to long-dated bonds. Just as typically, the end of speculation is marked by the reversal of the yield curve to steepening.

Heinz says the same thing here:

Message 22604687
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