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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: Hawkmoon who wrote (26332)	1/16/1999 6:49:00 PM
From: Rarebird	Read Replies (2) of 116764

< I think we have a different definition of what stagflation is. > Our difference doesn't lie there. Everyone knows that stagflation is a stagnating economy accompanied by rising inflation. By this time next year I expect to see the CPI overtake GDP. What I think you fail to understand is that gold mining shares are in very strong hands at this point. The handwriting is already on the wall in terms of a massive debt default by Latin America. The question is when not if. I give it 6 to 9 months at the very latest. < I think anyone producing a commodity will endeavor to sell it to raise cash to meet their commitments. > This sounds very abstract. Allow me to be more concrete. The forward sales by Barrick and Homestake, for example, have been used primarily to raise cash to buy some great junior mining companies. The Gold Mining Industry is in a period of great consolidation. Such periods of consolidation wind up in a great Bull Market. I would equate the state of the Gold Mining Industry today with the US Banking Industry in the early 90's. In a Great Bear Market, all news is interpreted negatively. Will these massive debt defaults force central banks to dump gold to raise cash? Or, will it force investors and central banks to buy gold as a safe haven? At the moment the POG is caught in a tug of war between these viewpoints. The tide is turning, however. You may get your final washout, but don't count on it. I can remember when CCI was at $12 and the Bears were predicting less than $5. The speculators will get burnt here big time, which is what usually happens to them as they establish their short positions at the peak of maximum pessimism.

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