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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: d:oug who wrote (37036)	7/12/1999 8:37:00 AM
From: Hawkmoon	Read Replies (2) \| Respond to of 116770

Doug, Thank you for that posting. Mr. Howe has some interesting thoughts that jibe with my perspective on why gold is being permitted to fall, if not "encouraged". But I don't think the logic of trying to convince the Japanese to hold yen instead of gold makes sense. For one, the Japanese are more interested in Platinum than Gold. Two, I think the issue is that a lower gold price supports a higher dollar value, since those who sell gold are likely converting that value into dollars, the next "safest" storehouse of value. By supporting the dollar, both the yen and Euro are able to more easily support their exchange rate target zones. Now let's look at this carry trade issue. We all know specs will take on short positions in a particular currency if they are convinced that the central banks are pushing that currency down to spur their export economy. And they'll push those trades until the CBs start intervening and forcing them to cover their positions. So if they push yen and euro carry trades until the point of intervention, it is assumable they'll do the same with gold. While I believe the CBs have an interest in lessening gold's competitive influence against the US dollar, I also think their will come a point where they will hike lease rates to points where the carry trades are no longer profitable or become too risky. Those who seek to prevent CBs from leasing or loaning gold are effectively undercutting their argument that gold is currency. Currency exists to be spent and received, or borrowed and loaned. That means gold as a reserve asset in a class with other currencies has be deployable by CBs. And if Reg ever reads my post, I don't see his logic that gold is being mobilized to support the yen. In fact, the last think the Japanese seem to need is more support for the yen. What they need is for some those deposited billions of Yen to be put to work or spent in the domestic economy. The low interest rates on Yen are due to poor stimulative monetary policy of the BOJ and Finance ministers. Instead of a major monetary intervention to spur economic growth after their bubble burst, they incrementalized their response lowering rates gradually to the point where they reached their current level. Again, Doug.. thanks for posting that comment by Mr. Howe. It shows that someone over in the "cafe" is thinking beyond GATA and trying to understand why gold is being made less "relevant" either intentionally or through basic market forces. It is less about manipulation by shorts, than it is about the CBs seeing no continuing rationale for supporting gold vis-a-vis their currencies. Everyone realizes that we are facing a major effort to re-inflate the global economy and boost demand side support. Gold gets in the way of this effort so they let it fall. They will print whatever money is necessary, through the extension of the necessary credit. Not doing so will result in massive economic shocks throughout the system and likely collapse into depression. So for you goldbugs out there who spend your time complaining about conspiracies against gold, just take heart. If this global re-inflation effort fails then gold may shine again. If it works, then we'll all be better off and economic progress can continue with plenty of opportunities to make money elsewhere, with people focusing on accumulating more, rather than just safeguarding what they have. Think of it this way. If gold represents the ultimate safe-haven of value, what the CBs are effectively doing is forcing its holders to convert that value to something more productive, in essence coercing that money to be put to work. Regards, Ron Regards, Ron