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

To: Rocket Red who wrote (69649)	5/20/2001 7:00:13 PM
From: Gary H	Read Replies (1) \| Respond to of 116790

In a post by Paul Ross(69522) which quoted John Hathaway, the one thing that caught my eye was the following statement; With Treasury bills now yielding about 3.6% and the consumer price index rising 3.3% year over year, the so-called real interest rate is below 1%, perhaps explaining why those who still think the Fed isn't easing aggressively enough haven't been mentioning "real" rates recently. Since the 1950s, gold stocks have generally outperformed when the real interest rate is below 2%, Hathaway said. When real rates were above 2%, it "paid to be short" because investors could sell short gold, then invest in one-year Treasury bills and "be ahead of the game as long as gold remained in a downtrend," he explained. With the current state of real interest rates, that incentive to short gold has been removed and "there's no longer much of a penalty for being long."