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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: nihil who wrote (316)	10/28/2000 8:21:46 PM
From: TobagoJack	Read Replies (1) \| Respond to of 74559

I agree with your observations of facts and your analysis, and have some additional thoughts concerning what can go wrong with what we expect. Gold The central banks of Europe are selling gold to reduce its role as reserve and to fund current government spending, simultaneously putting their faith on the success of the Euro and putting off needed socio-econo-political reforms that gets people to work more and government to spend and tax less. An Excel spreadsheet analysis would indicate that the strategy is risky and failure penalty is high. Should the Euro fail, or is perceived broadly to be able to fail, a self-sustaining momentum may gather strength. At that moment, the interplay between the Euro, Yen, dollar and gold may result in some irrational moves making the sort we have seen in the equity market seem like a meandering gentle river, as the players in currency market includes all nations and all economic participants, enterprises and individuals. I note that America, Japan and China are not selling down their gold reserves, and the Euro states are. One of the camps has to be wrong. Some insurance for the downside seems to be called for. Precious metal as a store of value is an alternative to the currencies and real estate. The difference is that the metals can be hoarded. Whereas hoarding seems a quaint idea in the developed economies, it is a serious diversification move in the less developed economies, especially as the USD is not immune to crashes whether triggered by relative moves amongst the currencies or by absolute level of US economic policies. Participating first hand in the Asian Financial Crisis, I note that plenty of gold was released into the market in the crisis countries, and the money thus generated played a part in stabilizing the individual sellers immediate economic crunch. These individuals could of course have held the dollar, yen or euro, and they would have been able to achieve immediate stability as well, but only if they held bags of the paper at home, as their creditors seized their bank deposits. Bottom line, insurance is called for, but great if not called upon. The I Feel Defensive Disclosure: I am living in Hong Kong and have just chanced upon this thread, attracted by the eye-catching thread title. My own trading style seems to be in line with TraderMike’s, opportunistic, momentum based, going both long and, occasionally, short, peppered with plenty of option trades. I only open short Put, and covered call positions, never buy options except to close positions and I do jump in to the market with both feet during crisis periods, limiting myself to the US, Japan, HK, and China markets, and the same securities traded on the Euro exchanges. I am now at 9% equity and 8% bonds. I am not a raving gold bug, closet or otherwise. I have and do own some gold and a satchel of platinum coins. The platinum coins were purchased over a period of my investment life since 1986, at an average price below USD 350 per troy ounce. The gold coins are mostly of the commemorative variety bought at premium to market price for gold. These metals constitute less than 3% of investment assets. I do opportunistically sell puts on NEM and SWC as these two stocks have bounced around within a fairly manageable trading range. I keep the shares when occasionally putted to me and write covered calls against them when prices close in on the upper price ranges. My positions in NEM and SWC constitute less than 3% of investment assets.