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

To: rails99 who wrote (88769)	3/18/2001 10:30:23 AM
From: Hawkmoon	Read Replies (1) \| Respond to of 95453

Well normally I would believe the oil sector would be a bad place to be, given the odds of recession this year (if not already). But I'm more afraid of energy induced stagflation, or a continuing profits recession, both of which appear possible as 10% of the US economy is forced to operation under power rationing. As for gold as a hedge, it's useful if it appears that the entire fiancial system is about to blow up causing us to regress from floating exchange rates to a gold standard. But I can almost guarantee that the bankers will expend every arrow in their financial quivers before they permit returning to the gold standard. And money supply (MZM) is expanding, not only because the Fed may be doing repos, but also because the demand for hard cash instruments like money market accounts is expanding. High money supply represents the fact that capital is willing to accept lower interest rates in exchange for safety in all this turmoil. Thus, the Feds job is to lower rates enough to where this capital flows back into equities and loans. This is a critical juncture for the Fed. They really need to be proactive in calming the markets and convincing us all to be willing to take on economic risk. This is where the BOJ screwed up when Japan's bubble burst. They kept money too tight and utterly destroyed consumer/worker confidence. The fact that the Fed had raised interest rates too high in the first place, given the over-reaction of our just in time economy, tells me they are now behind the curve when it comes to lowering and have considerable ammunition left. We may actually see a .75 basis point reduction given the fact that the futures are expecting it, and the outflows from equities into money market accounts. All the indicators seem to be telling us the Fed has some catching up to do with the private markets. Regards, Ron