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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: isopatch who wrote (87566)	2/19/2001 2:28:29 AM
From: energyplay	Read Replies (1) \| Respond to of 95453

My read on gold ... Is not as well informed as many others. However, a key point ... There are Large Interests with a strong desire to - 1) Keep the price of gold relatively low (by fair or foul means) 2) Keep any momentum from growing in the Gold sector, i.e. crush Gold Bulls Therefore I would be looking a sectors similar to gold (silver, and one could say oil) which fall into the 'hard assests" category BUT which don't have either the " psycological impact" of gold or the extensive hedging / gold carry trade factors. Platinum / Palladium would be an example (which I think many of the posters on this thread have done well with) of a similar hard asset. I expect the Gold battle may be the last battle (over hard asset pricing in the 'New Paradigm Economy') - and the Gold bears may win for a while, and prehaps win a the first battle over the price of gold. The gold price slide has been going on for several years, It could easily take year or more to wind up. My view the Standard 'Gold Bull' sceanario : 1) U.S. economy keeps dropping, Fed keeps cutting rates until below 4% (3.5%). Economy fails to pick up, deflation APPEARS to be starting (watch your measuring methods and the integrity of indexes here). Fed pours on the coal, rates to 3 %, big "Christmas tree" / pork barrel tax cut & fiscal stimulus package. Note that this says we are in an economically contracting enviroment, with the price of gold being stable or dropping slightly for a while. 2) Inflation starts up in some places, BUT price of gold drops as more shorts, and government led selling push price of gold down (Can be European gov't). Gold proxies and other hard assets show signs of life. 3) "Stealth" or hidden inflation continues for number of months as economy re-liquifies. Some hard assests soar. 4) As gold goes lower, someone tries to unwind their hedge position - maybe two or three someones. Maybe a few more smart people try to get long gold. Gold pops up, Gold bears dump to push price down, battle rages. Gold shorts get Fed to raise rates to "fight inflation" - even though economy may be flat and unemployment high. 5) Who wins, and when ? Don't know, but could be massive gold short squeeze. Price of gold could go to over $1000, possibly $5000 / oz. I don't have a good time frame. Note that some events, such as drop in price of gold last week, mean we could be at 4) now. I will be moving a little more into gold & silver (maybe as much a 5-10 % of portfolio) in the next few months but would like a diversity of hard assets... I don't expect a clean supply/demand overvalued dollar type situation to happen. Otherwise, gold would be around $350-$600 today. Best Regards, energyplay