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

To: chic_hearne who wrote (57138)	8/9/2000 6:59:41 AM
From: Eric K.	Read Replies (1) \| Respond to of 116972

<font color=gold>Hi chic-- Re: Here's a question that may have been answered before. I have trouble figuring out what's the biggest bubble; the US stock market, the US real estate prices, or the US currency? If one of these bubbles bursts, won't gold rise in any case? Specifically, if the Dollar crashes? To the naive self, it seems gold is low in US dollars because the US dollar has been inflating so much compared to the rest of the world currencies. The bubble question is easy: US stock market >> US Real Estate >= US currency. The real estate is basically an issue in a few metropolitan areas. If you were to calculate an average price/(square foot of average quality housing) for home values across the entire country, you would get a value that would be several orders of magnitude below the mother of all real estate bubbles-- Japan in the late 80s. The US currency situation is arguably a bubble, but, is certainly largely due to the recent crappiness of other countries (ie: they have a lot of "potential," but based on recent economic performance, our currency strength isn't all that arbitrary or nonsensical). The stock market, on the other hand, is unquestionably grossly overvalued, at almost all levels and by any historical measure. You can look at home depot at 10 times book and 54 times earnings and realize the entire stock market is overvalued (not just Mr. DAQ), whereas real estate is only bubble-esque in pockets of the country, and currency is overvalued but not necessarily at bubble proportions either. Not to 'dis gold, as I had a friendly encounter with XAU calls I was holding during that little central bank event in October, but, given that gold was maintained at $35 an ounce for quite a spell, I don't think anyone can say with particular confidence that gold is now undervalued. Given that there have been 5,000 years of production of it and that gold is not a consumable commodity, the arguments about supply/demand imbalances based on annual production or current production costs are kind of weak. Moreover, the fact that there is a large short interest reaks of the same type of whining that longs of high-tech companies go into when their stocks get slaughtered. I hope the thread regulars will not feel the need to excoriate me for this post. -Eric

To: chic_hearne who wrote (57138)	8/9/2000 9:32:36 AM
From: lorne	Respond to of 116972

Hi Chick. Your question >>>" Here's a question that may have been answered before. I have trouble figuring out what's the biggest bubble; the US stock market, the US real estate prices, or the US currency? "<<< IMHO I think because everything like housing, stock markets, commodities etc are priced or valued in terms of US$ that the greater bubble is the US$. But then I think that if every country or central bank in the world holds as their main asset the US$ and there is a constant demand for the US$ the value must rise. A question in my mind is which country friend or enemy would be stupid enough to do anything to cause the US$ to fail as they would be cutting their own throat. So another question comes to mind what would replace the perceived value ( I think this is a term that Ron R.uses) of the US$ the Yen, Euro, gold etc. if the US$ should ever fail what paper money would ever again be accepted by the world as a store of value. So IMHO the US$ may well be a bubble but who would dare let it fail?? I just think that every country of the world will do whatever they can to keep the US$ afloat including selling gold if it should become a threat. But still the US$ may fail :-) Lorne

To: chic_hearne who wrote (57138)	8/9/2000 12:33:34 PM
From: LLCF	Respond to of 116972

<Here's a question that may have been answered before. I have trouble figuring out what's the biggest bubble; the US stock market, the US real estate prices, or the US currency? > IMO you can take real estate off the list... other than upscale homes, as a class real estate hasn't seen anthing like the bubble we had in the 80's which was augmented by tax schemes. Banks have been very careful lending to commerial real estate ventures... maybe recently they've gotten a bit crazy I don't know, but nothing like the 80's. Look at the yields in REITS... priced pretty conservatively. Some home prices are probably a different story, certainly there is bubbling going on in wealthy areas. I think the race is between the dollar and stocks. DAK

To: chic_hearne who wrote (57138)	8/16/2000 12:34:29 AM
From: PaulM	Respond to of 116972

No, I don't think you're naive, but I do think everyone else, from the Fed to the Treasury on down to Joe six-pack is. I think gold will rise when the dollar falls, but not for real, and not enough to help the gold producers, not right away at least. Everything possible will be done to save the "too big to fail" institutions when their positions are threatened as the dollar falls. Sooner or later, gold will rise to levels few could contemplate today, but plenty of scary stuff will happen in the interim and I don't know how many producers will be around at the end of the tunnel. JMO.