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To: Ilaine who wrote (53581)	7/28/1999 7:18:00 PM
From: pater tenebrarum	Read Replies (2) \| Respond to of 86076

my theory that betting on gold equals betting on a BK is based on the observation that no other type of crisis was able to move gold much in the recent past. the last time gold got a shot in the arm was at the height of the russia/LTCM crisis and the concurrent stock market meltdown. of course if a very serious major war were to break out funds may move into gold as well. however, in that case a BK would probably happen as well... whether gold is indeed a hedge against rising rates is debatable. if rates are rising because inflation is clearly heating up, yes. but the forward looking nature of the markets could lead to the opposite conclusion: since rising rates are bad for inflation, they should be bad for gold as well. i have no opinion on the stockpiling of survivalists...from what i hear, demand for gold coins has been excellent recently, but no effect on the POG can be discerned (except perhaps that it would have fallen more otherwise). a devaluation of asian currencies (say, the yuan) is just as likely to instigate a BK - witness last year's close shave. come to think of it, a further rise in rates could set off a sharp stock market decline also...remember '87? the market ignored rising rates for most of that year, focusing instead on what were then excellent earnings, until one day the whole herd woke up to the fact that rates and liquidity are more important to an overvalued stock market than earnings. when the market tanked in '87, gold initially rose sharply, but wilted again when things calmed down. the difference between then and now in terms of the gold market is that a record amount of gold has been sold short, so the mother of all short squeezes is waiting to happen.