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

To: Ken Benes who wrote (42902)	10/13/1999 5:58:00 PM
From: Tunica Albuginea	Read Replies (1) \| Respond to of 116762

Ken Benes, " The dollar, commodities, and bond markets are stretched to the breaking point" , IMHO. And, We are certainly looking at a muddled picture However I have a more secure view of the big mining stocks like NEM or AU for example. I an encouraged by AU buying Acacia. I saw a write up recently that Australia mining stocks may be overhedged. That however does not seem to have stopped AU from buying it. I am sure they scrutinized their books extensively before buying it. I also liked the run up of price today of ASL a theoretically bankrupt co: people can't seem to be able to buy enough of it: up 23.08% today ! Again, if gold does become a bigger back up for world currencies taking over the role of the US Dollar then banks will be buying gold for reserves. If there is a run on the dollar you would want, I think, to make sure that in the future the same does happen with gold. So you go back 50 years and relearn history: you stock the Bank vaults with gold. As world population and bank deposits soar in the next 20 years, that will be a lot of gold bullion to get into the vaults. TA @sittightongoldstocksfornow.com Message #42902 from Ken Benes at Oct 13 1999 5:15PM Jim: We are certainly looking at a muddled picture. Gold up about 70.00, the bond rising almost 50 basis points during the period gold ran up, and the dollar loosing strength. With the interrelated markets we currently have, each of these markets are acting both independently and as a group. It is difficult to invest in gold without having off setting positions in bonds. The dollar has an intricate roll in the equity, bond, and commodities markets. What is worrisome, the trade gaps, and the resurgence of the Asian markets. This is going to have a negative impact on the dollar and the bond. The gold market is holding its strength in a market where it is difficult to understand the short position and its relationship to producer forward sales. What is more worrisome is how the proceeds of forward sales, hedging, and other derivatives have been invested. What is known, the bond is a large component in these hedging strategies. Unfortunately, investments in bonds are highly leveraged. A rise in the gold market and a fall in bonds can produce exponential loses for the bullion banks and hedge funds that specialized in this trade. The additional pressures of a falling dollar can only exasperate this scenario. It would appear to me that this confluence of events may be stressing the resilency of a lot of markets. To further cloud the picture, it is reasonable to assume, that a portion of the dollars invested in the bond market may be used to collateralize investments in equities. The dollar is key, it is difficult to comprehend the consequences of a meaningful move out of the dollar. The dollar, commodities, and bond markets may be stretched to the breaking point. Ken /I>