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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (26704)	9/22/1999 5:26:00 PM
From: pater tenebrarum	Read Replies (2) \| Respond to of 99985

Haim, one could also argue that in case of the stock market cracking, the reaction of the central banks will be predictable: they will simply flood the system with money, the printing presses will run overtime. it is conceivable that this will lead to a sharp increase in the demand for gold, regardless of economic circumstances. remember that gold's heyday wasn't exactly a period of rampant economic growth either...but a period of vastly expanding monetary bases in the industrialized countries. in the 'stagflation' scenario which you have mentioned at times, gold would thrive. interestingly, gold even tends to do well during deflationary collapses. apparently the flight from paper assets automatically leads to strong gold demand. this was at least the case in the past, it may be different in the new era. gold's biggest problem is one of psychology, not necessarily fundamentals. should the psychology surrounding gold change for the better, even the central banks will get second thoughts about continuing sales, as they would become politically unfeasible. regards, hb