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Gold/Mining/Energy : Gold Price Monitor
GDXJ 110.89+1.8%Dec 10 4:00 PM EST
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To: Eashoa' M'sheekha who wrote (5444)1/8/1998 9:18:00 PM
From: PaulM  Read Replies (2) of 116810
 
Hi Taurus......

I don't care much what the analysts say nowadays. I buy some of the physical stuff and the stocks with strong balance sheets (but no margin!) each paycheck and look at the low price as an opportunity to continue to do so.

How it will play out in the next six months I don't know, but reality has a way of asserting iteself.

Here's one possible way it will assert itself:

1. The tigers continue their meltdown, taking the Japanese with the them.

2. The Japanese again ask the U.S. to defend the yen, but America prefers to isolate itself from what's happening there and blames the Japanese. The strong dollar has been good to us.

3. A run on the yen begins. The Japanese now face political pressure at home as 1 % a day increases in money supply cause a rapid rise in consumer prices.

4. And that's still not enough to prevent a wave of bankruptcies (deflationary credit contraction) including in the banking industry.

5. Now desperate, and realizing there is only so much money printing and pension fund appropriateion the public will accept, a massive sell off of dollars and treasuries is resorted to (handing Americans some of the losses).

6. The Japanese realize the consequences include American tarriffs, which threaten to kill Japan's mercantile economy. But its mercantile economy is dying anyway.

7. Having experienced the negative side of depending on someone else to keep your ecomony afloat, and seeking to restore confidence in the banking system, Japan buys gold.

8. "Flight to safety" capital view both gold and treasuries in a very different light.
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