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

To: goldsnow who wrote (43040)	10/15/1999 9:57:00 AM
From: C Hudson	Read Replies (2) \| Respond to of 116762

Rumour mill, but WHAT a rumour! There will be an announcement today of a gold cartel that will limit gold production.

To: goldsnow who wrote (43040)	10/16/1999 9:12:00 AM
From: Rarebird	Read Replies (1) \| Respond to of 116762

CROSSCURRENTS: Financial assets held by individuals, private pension funds and state and local government retirement funds have clearly exceeded the threshold of a mania. Equities for this group as a percentage of financial assets are now 60%, the highest in history, exceeding the prior high of 55% at the secular peak in 1968. At the same time, cash as a percentage of financial assets has fallen to a record low of just under 20%, well below prior lows recorded in the entire decade of the '60s at more than 30%. The excessions of past records offer compelling evidence of a secular, rather than cyclical peak. Even the theory of a new paradigm cannot explain why exposures have changed to such a radical degree. Although the notion that stocks should receive a lower risk premium would on the surface, account for a larger exposure to stocks, it is clear that this is not the explanation we seek. Risk is now sought on all levels as shown by the enormous increases in credit card debt, home equity lines of credit, corporate borrowings and the trade deficit. We can only surmise that the long lived secular bull market created a sense of confidence and invulnerability via the largest issues and the indexes. As in Japan during the late 1980's, there is the sense that the market is larger than any guess or attempt we might make at fair valuations, thus Microsoft at one point was enabled to trade at 5.8% of our entire gross domestic product. The entire process of valuation seems to have been replaced with fanciful notions having no basis in stock market history. Household equity holdings have now reached nearly 170% as a percentage of disposable income, compared to less than 60% in 1990. Even in Japan in 1990, household equity holdings were only 60% of disposable income. We have more than pushed the envelope. The rationale for valuations at this stage can be summed up in three words; acceptance of risk. It is exceedingly difficult for us to imagine how the acceptance of risk might expand from current levels. Unfortunately, as history has shown on numerous occasions, the acceptance of risk on equivalent or even lesser scales has always led to a secular downturn and huge price losses. Although the process may take a long time as it did in the U.S. from 1968-1982 and in Japan over the last decade, in our view, the process is ensured by the massive increase in exposure to risk. Simply put, cycles rule the economy and human psychology. At this juncture, we can expect an eventual huge change in psychology from exposure to risk to an avoidance of risk. Logic dictates that such a move can only be accompanied by much lower stock prices than now. decisionpoint.com