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Gold/Mining/Energy : Gold Price Monitor

GDXJ 97.44

-1.2%

Nov 14 4:00 PM EST

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To: Abner Hosmer who wrote (9955)	4/14/1998 7:22:00 PM
From: Pete Schueler	Read Replies (1) of 116762

Thomas, Just to keep some perspective on the current market levels, consider the following scenario.... Dollar begins to weaken due to factors explained by Steve Roach. Domestic prices, unleashed from downward pressure from import prices, begin to firm. Trade deficit at all time high further weakens dollar at the same time that EURO currency begins to make impact on dollar. Now prices are rising and growth is stalled. Corporate profits are sliding. Voila! Stagflation (remember that marvelous combination of no-growth inflation?). Now say that Dow profits decline 20% from current levels to $320/share. Then people hear the music stop and try to find a seat. Dow P/E goes to 10. Dow goes to 3200. Is there a law against a P/E 10? In the best of times like now the P/E should be 10. In the worst of times the P/E should be 24 (like it is now in the best of times). But we know that the market isn't so rational. Maybe we get to 10000 Dow. I think its more likely to see a big hit. Remember the Nikkei at 39000 in 1989. Japan could do no wrong. USA will follow. Pete

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