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Gold/Mining/Energy : Newmont Mining(NEM) & Newmont Gold(NGC)

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To: ahhaha who wrote (183)	5/21/1999 4:56:00 AM
From: Roebear	Read Replies (1) of 587

ahhaha, I pilfered this from the Kitco forum and would like to have your take on it. D.A. is a good egg. D.A. (money supply) ID#7579: Copyright © 1999 D.A./Kitco Inc. All rights reserved All: Over the past 13 weeks the rate of growth of M3 has slowed dramatically. Only a mere 50 odd billion dollars of new bank credit plus Fed currency printing has occured in this time period. The growth rate is down in the 3-4 percent range, under nominal GDP. The slowdown in credit growth is probably attributable to two sources. First off, the rise in long rates of better than 100 basis points off the spike bottom, has dried up mortgage refinancing. When rates are dropping, people often pull equity out of their homes by getting a bigger mortgage with a lower rate and keeping the monthly payments static. This increase in mortgage size causes bank credit and hence money supply to expand. The second reason is a bit more subtle but probably a contributory factor as well. Back in the fall when LTCM met its demise, credit spreads widened dramatically. This shut out many corporate borrowers from the bond market and instead caused them to draw upon lines of credit at the bank. This also expands the bank balance sheet and causes growth in money supply. Now that spreads have come in greatly, these corporations are once again able to issue paper in the bond market and paydown the bank loans which they had been forced to take. This paydown causes a contraction in money supply. The net effect of a slowdown in the growth of money means that there is less free cash running around bidding up financial assets. This is a bad thing for the equity market. Short stocks -- buy silver.

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