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

To: Alan Whirlwind who wrote (67154)	4/5/2001 10:08:57 PM
From: Michael Collings	Respond to of 116976

OK now that the kid is gone. Let's discuss the economics that will affect gold. IMH but illiterate opinion (my econ degree is too old to be of much use anymore), there are two factors that work against us in the short term (besides the continued cb sales). As interest rates drop, consumer spending will remain strong. Re-fi activity will continue to fuel consumption. As long as the fed is expected to continue lowering rates, it will put off the credit bubble bust. Personally I don't see a significant dollar decline until the credit problems surface. We're seeing the beginnings of a credit bust but it's still the first inning. Interestingly bonds moved down today against the stock market and if that continues stocks won't have any momentum behind them. The credit spread between treasuries and corporate paper is rising, also signs of credit problems to come. But I do expect it to progress slowly for awhile. Everyone is still looking for a bottom in stocks so that they can pile in and get back what they've lost. When they say that a bear sucks in everyone and every dollar, I think that's right. Huge rallies that go nowhere but down, its for nimble traders only. I am inclined to think that the dollar/gold inverse movement may be rather shallow for awhile. Unless lease rates rise and force shorts to cover, we may be in these gold investments for quite awhile. I'm not adept enough to trade in and out of them like some of you are, so I've resigned myself that I'll just add a little more each time the opportunity presents itself. If we are in the midst of a bear market rally when the fed meets, we may not get the rate cuts (1/4 instead of 1/2)that could trigger the end of a credit boon. Imagine the fate of the credit markets at the last rate cut. Record high debt, low rates, and a declining dollar. Not a good scenario. The fed has its hands full on this one. If they then raise rates it will shut down the economy completely. We're back to huge Government deficit spending to sustain the economy with credit tapped out. Got Gold?