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

To: Zeev Hed who wrote (63960)	2/18/2001 3:11:36 PM
From: Crimson Ghost	Read Replies (1) \| Respond to of 116788

Zeev: I think you are right that a rapid surge in POG would signal to many people either much higher inflation down the road or (more likely in my view) a loss of confidence in the US dollar and the US economy generally. But here is the rub. By helping to drive POG into the dirt via cheap leases to encourage a huge short position, the CBs have made a sudden gold price explosion more likely. The quick $80 move we saw after the Washington Agreement may be a harbinger of things to come. For years the ongoing assumption in the gold market was that the CBS had a line in the sand at $400 and would do all they could to prevent POG from exceeding that level. But someone obviously decided to go from merely capping POG at $400 to driving it into the dirt. If the CBs (well at least some CBs) had not made the decision to destroy the gold price for the benefit of a few politically connected bullion banks, the POG probably would be in the low 300s now. More important the odds of a sudden panic would be much less as would the short position. I have no problem with CBs capping POG at a reasonable level to keep inflation expectations in check. But driving it into the dirt so a few wealthy bullion banks can reap enormous profits at the expense of gold mine workers and investors around the world is something else entirely. There is a school of supply side economist headed by Jude Wanniski who agree with you that the gold price has a big impact on inflation expectations, but also think the Fed and its allies have way overdone it. They continue to push for the Fed to stabilize POG around $325 to head off what they see as incipient deflation and rising deflationary expectations.