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Gold/Mining/Energy : Gold Price Monitor

GDXJ 97.99

+0.3%

4:00 PM EST

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To: Bobby Yellin who wrote (4220)	12/14/1997 1:49:00 AM
From: PaulM	Read Replies (2) of 116753

Hi Bobby Yellin. I heard an analysis on CNBC re: deflation v. inflation. The analyst suggested that Asia will cause global deflation with respect to many goods (computer chips, cars) but that inlfation is likley with respect to many services (70% of the U.S. ecomony), such as health care. The analyst admitted this wasn't an "ideal" scenario. Let me add that we should see deflation with respect to financial assets, especially the stock market. A lot of people who expect to retire on their 401(k) are in for a rude awakening. Bobby, I believe that corporate earnings are a tiny sliver of the iceberg. What we will see now is a global credit contraction. I was somewhat amused at the South Koreans asking for early disbursement of the U.S.'s and Japan's portion of the IMF aid. Japan has its own banking industry to worry about. And the U.S. is still the world's largest debtor nation. So their response was unsurprising. Just imagine how much money the U.S. will have to make (is making) now. It's not just that the Japanese are no longer lending (buying U.S. treasuries). Rather, they are now active sellers (repatriatign caitol). The FED has to eat both sides of this coin. I don't think the market has even begun to realize the implications of this. All of this is coming at the worst possible time for EMU. I guarantee Clinton will go to Bonn asking for favors that just won't fly in Europe, it being as strained as it is already. Things will fall apart. Gold may explode the day EMU falls apart.....Soon I also expect: (1) massive liquidation of debt; (2) massive inflation; or (3) both. No other alternatives that I can see.

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