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Gold/Mining/Energy : Gold Price Monitor

GDXJ 106.90

+0.1%

4:00 PM EST

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To: Bobby Yellin who wrote (12824)	6/10/1998 11:02:00 PM
From: ahhaha	Read Replies (4) of 116795

Gold is looking for a bottom. Sentiment is driving it lower. The negative sentiment is based primarily on the deflationary effects of Asia's on-going economic problems. Actually Asia has no significant intrinsic problem because they have the best and largest pool of low cost labor. Asia's problems come from one source: Japan. Japan has failed to provide enough money to represent the amount of goods that they have produced relative to other country's prices to make the equivalent of those goods. The result is deflation. Eventually the BOJ will panic and open the money floodgates. They have already given some vague indication that they would be doing this. When it occurs the bottom in the NIKKEI will also occur with a reversal in gold. The yen will rise relative to the dollar and the FED will have to start tightening. But they won't. They'll delay. The Japanese money creation will be enough to get gold moving to the upside, but the failure of the FED to reciprocate will cause gold to explode. The FED won't be able to follow suit because they will be looking backward and they will be afraid to cause pain. Currently the yen is going into a waterfall decline. The world's richest nation is allowing their currency to be devalued. The Japanese think this is good as long as it doesn't happen too quickly because it means their goods are cheaper on world markets. Since they don't buy anything abroad, it is win-win. Except for crude oil. Crude oil is priced in dollars. A declining yen makes oil expensive and doubly so if OPEC removal of marginal supply kicks in. The double whammy forces the BOJ's hand. So the clue to the reversal in gold is the reversal in the price of crude oil. Watch for it.

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