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

To: Cynic 2005 who wrote (40567)	9/21/1999 4:12:00 PM
From: ahhaha	Respond to of 116779

It's not my theory. It's the way the world works. Gold is cheap. What BOE would do was known in advance. Big quantities available at low price is an attractive opportunity. Price is not determined by total supply and total demand and so gold's action had little to do with s-d. It's elementary economics that price is determined at the margin when marginal supply equals marginal demand. This is a transient state significantly effected by random noise. The gold price fell $30 on the same news some months ago. You will never know what is the marginal supply/demand state and so it useless to look at warehouse inventories which measure total s-d, and then extrapolate price. It's all at the margin and therefore it's all in the emotion. The bias happened to be up today because it now can be admitted that a rising yen enables American labor to push through inflationary wage demands. Japan intends to manufacture more money to cool the yen. Unfortunately, it doesn't work like that. More stimulus causes the yen to rise even more with the attendant upward pressure in the US on the will to inflate. Inflation is the cause celebre for gold. Time to get out of the way of that cause, so the mining companies have to undo some of their protection. The mining company economists don't believe there is any inflation and that is why the mining companies will cover at much higher prices. No one believes there is any inflation because the official mindthink has trained people to adapt to ever higher levels of inflation. The wealth effect reduces the fear of rising prices. The FED has fixed the cost of money to be cheap so why shouldn't money be undermined? When that happens gold starts rising. In contrast, the DOW is dropping like a rock, but not because there are more and more booked orders entered below. Total supply is greater than total demand now, but marginal demand is higher than marginal supply. Orders were pulled to buy below so the book became thin. A little selling pulls the specialist in at a premium, so sellers stop selling because they don't want to get a bad price. At the same time the public is saying "I think we have a problem here and I'd better start getting out". So they book orders above to sell. The market reverses and briefly rallies which can cause panic short covering where market orders to buy find booked orders to sell above. When the short covering ends the market proceeds down towards its value target way below. The DOW is demonstrating the mechanism to which you refer.