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Strategies & Market Trends : The Options Box -- Ignore unavailable to you. Want to Upgrade?

To: Poet who wrote (7502)	11/19/2000 6:32:55 PM
From: dli	Read Replies (1) \| Respond to of 10876

Poet, I'm an absolute layman when it comes to gold, but I think that a heavy dose of inflation would probably help. I've also heard that many of the large investment banks have a vested interest in the price of gold staying low due to certain lending practices for gold reserves (can't remember details anymore). You may want to shoot Bill Fleckenstein an email about this. He follows the precious metals markets and refers to them every once in a while in his rap. Dave

To: Poet who wrote (7502)	11/20/2000 12:46:48 AM
From: chic_hearne	Respond to of 10876

Poet, In the case of gold, whose trend has been grinding downward for a relatively long period of time, what do you see (if anything) as being the necessary fundamental changes that may presage a trend change? The dollar crashing will do it. I don't think Gold can make much of a move until then. The dollar crashing will likely coincide with the US equities markets collapsing. When foriegn investors leave our market, the dollar will go along with it. I expect this to be a very fast move in Gold when it happens. Some have reserves valued under $10 per ounce (you want the unhedged ones IMO). It's almost like they are priced for Gold going to zero. The extreme short position in Gold could cause a massive short covering rally, especially if it's news based like the equity market crashing. The US dollar now holds Gold's traditional value as an international currency. In other currencies, Gold hasn't done too bad, but given that our currency has rallied so hard against other currencies it appears to us Gold is going down. Of course, when the buck goes Gold speculators in other currencies will unload to take advantage of the swing, but IMO the fear in the US will be far more than enough to cause a massive rally in Gold. In the new era bull market psychology Gold is worthless, but there's definitely enough smart money out there that will remember Gold is a save haven in bear markets when the time is right. Due to the leveraged short positions, the rally will be unpredictable IMO. It could happen after the equity market goes and the buck crashes. Gold equals fear IMO, and until that sets in Gold will trend down towards zero. chic