Greenspan has two problems. He has to inject liquidity into the market so that the system is not at risk. Then he has to deal with the fact that, increasing credit can no longer be the sustenance for all those overvalued financial assets, out there. The %$#@ has to hit the fan. What this will do for gold, in the near or longer term, is unclear to me. However, any reduction in production, will only help in the long run.
The Asian crisis, instant as it was, is a realization, that the foundation for all the investment in those economies was to provide the US market, with cheaper product, and that a lot of the $US received for those products went into self-aggrandizement, and not real investment.
Gold has clearly been a psychological target, amongst the policymakers, but ultimately it will find its own level. It is no longer as important as it was last week, from a policymakers standpoint.
Last of all, and I'll keep saying this till I'm blue in the face, the amount of the gold available out ther just isn't that much.
Sincerely,
Al Cern |
