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

To: ahhaha who wrote (40348)	9/21/1999 3:58:00 PM
From: Ron Struthers	Read Replies (1) \| Respond to of 116786

<<I said financing is far more equity oriented than debt oriented in comparison to the past..........I don't agree that corporate debt levels are at extreme highs,>> I agree that financing is more equity than debt related, but debt financing has also been growing strong. I was not able to find the record amount (number in trillions) of corporate debt, but according to the Federal Reserves flow of funds data, in 1994 corporate borrowings showed a net increase of $51.3 billion. In 1998, borrowings increased by $342.9 billion. The 1998 level has already been surpassed in 1999 and we have seen several single corporate debt issues in a row that each beat the previous record. With the FED raising rates there has been and still is a rush to the debt market to try and lock in rates. For the Net companies, I think we are along the same lines basically, agree it is the inability to make a profit, they have been living off of issuing paper. It won't last forever. Agree about the FED containing crashes, but there is no guarantee their methods will always succeed, as we learned in Japan, that easy monetary policy did not work. It is also quite possible that any FED action may take a long time to work or not enough stimulus will be provided. History and very recent history, I might add is riddled with central bank bumblings of adding too much or not enough stimulus, raising or dropping rates too far. It is very difficult to control or manage any market, let alone the complicated monetary/economic one. I agree about the market being tough, I have pointed out a number of times about the narrow breadth of the rise. A handful of stocks are accounting for 90% of the S&P 500 increase. I believe when this bull market ends, which is likely very soon, history will write that the real peak was last July. The correlation with gold and stocks. I am mostly talking about the long term and extremes, when the correlation moves too far in one direction, a change is near. Many track the gold to DOW ratio, franco-nevada.com The ratio is at a record, so most likely a change will soon occur and we will see the DOW fall and gold rise. Today appears to be an example I supposse this could just be a function of economics. At times we have seen inflation rise, gold rises, interest rates rise to combat inflation which hurts the equity market. I do agree about gold and inflation, one of my takes on the market is that the low gold price is actually screaming deflation. I believe we are in for more deflation. The Asia Crisis over a year ago is just the first wave or beginning of it. Right now we are in a rally with inflationary forces on the rise, but I expect they will soon retreat and give way to more deflation. Ron