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Gold/Mining/Energy : Gold Price Monitor
GDXJ 96.06-1.4%Nov 17 4:00 PM EST
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To: Gabriela Neri who wrote (8612)3/20/1998 11:10:00 PM
From: Terry Rose  Read Replies (1) of 116762
 
Gabriela, I think 6000 on the Dow is a good target for downside risk this year, with the major downturn occurring in October. There are some interesting parallels to 1987 which are starting to occur ie. the huge and increasing trade deficit numbers is one. Now if the price of gold starts to climb and the Federal Reserve raises interest rates that will be two more parallels and things will get very interesting.

I also think the Fed is currently signally a raise in rates, and the
last hourly wage increase reported on March 6th has brought them to an impasse. Either they raise rates and cool the economy down, or they remain neutral and inflation becomes harder to hide and the rise in the price of gold signals it's rebirth.

This simplification of where things are going is the essence of my trading plan. I am long gold in stocks that are heavily leveraged to the price of gold. They should go up in value with inflation. I am also short U.S. banking giant stocks in the form of leap puts. They should get trashed if the Fed is serious about controlling inflation by finally raising interest rates.

This plan gives me one year for this to play out. If by some miracle the U.S. stock market goes up or breaks even, I will reload my leap puts next year. I will then let the year 2000 fiasco finish off the stock market.

Terry,
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