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Gold/Mining/Energy : Gold Price Monitor
GDXJ 94.04+0.6%Nov 21 4:00 PM EST
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To: bobby beara who wrote (14082)7/3/1998 12:46:00 PM
From: PaulM  Read Replies (2) of 116764
 
Bobby, I predict that gold will diverge with the yen and Nikkei somewhere between here and 200 yen to the dollar.

I realize how hard working and effcient the Japanese are. Their market and their currency deserve to trade at a premium.

However, the question remains have their markets been trading at MUCH TOO HIGH a premium? We've all heard the stories about the peak in 1989 when certain Tokyo real estate was worth more than all of NA, and when NTT, a Japanese utility, traded for more than the entire German stock market.

Remember, in the 80's the yen traded for 250 (that's two hundred fifty) to the dollar!! It says something about their exporters that they were able to cope with an appreciation to 100 yen to the dollar (and maybe Japan was given special trade related favors in return).

In any event, it's interesting--is it not--how the rest of the world can't handle a yen depreciation of 100 to 145? Emerging markets begin falling apart. American and British manufacturing slump. U.S. multinational profit margins begin to get squeezed.

In a very real sense, the boom in Japan fueled the boom in the rest of the world. Few people know that in yen terms, the DOW has gone DOWN during the early 90's bull. This bull--"an earnings driven bull"-- has very much depended on a cheap dollar.

Anyhow, I don't expect capital flows to reverse until Japan is forced to liquidate capital on a grand scale and take the global ecoomy with it.
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