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Gold/Mining/Energy : Gold Price Monitor
GDXJ 98.59-2.8%Nov 13 4:00 PM EST
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To: Abner Hosmer who wrote (9949)4/14/1998 3:21:00 PM
From: PaulM  Read Replies (2) of 116762
 
hello enigma....

I'm fairly certain we see a significant correction this year. The key probably lies in Gabriela's earlier post.

Re: the economy, it is better than at any time since 60's. But the stock market is better than EVER. You must also be old enough to remeber that this had country has had equally LOW inflation, HIGHER growth, GREATER productivity, LOWER interest rates all with stock market PE's of 15-20.

Although I do believe the CPI understates inflation, it is admittedly low. It's low because of demand for dollar denominated investments (like stocks) and therefore dollars. And that, in turn, is true because Europe has been in a downturn and Japan on the verge of a depression for years now. A significant devaluation of the dollar is all it would take for almost instant inflation.

the problem with having lots of your stuff (like stocks and bonds) in the hands of foreigners is that they dump it when something better comes along or when they have to. For example, Japan now has to. It is resisting doing so only because of agreements with other industrialized countries--mainly the U.S.--but there has to be tit for tat.

The U.S. will have to give in more as the situation in Japan worsens.

So look to the upcoming G-7 and possible dollar devaluation as the trigger for the coming correction. And if the dollar isn't suffciently devalued, look to Japan for the trigger.

Regards

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