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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: At_The_Ask who wrote (4098)	11/16/2001 11:37:07 PM
From: isopatch	Read Replies (2) \| Respond to of 36161

Deflation is good for gold. During deflationary depressions the severe contraction of world trade puts huge political pressure on nations to compete for this shrinking pie of markets by protecting their domestic industries and employment. To keep employment from crashing completely the only way they can hold onto their market share is at the expense of the plants and work forces of other nations. Free trade gives way to "protectionism". But beyond tarriffs and other barriers, we also see what's known as "competitive devaluations" to gain a competitive advantage. With all currencies being debased in this process, gold gains in value even as the prices of most other goods and commodities are falling. Gold is the only commodity that seems to go up in value during both deflation and inflation. But our circumstances vis a vis the gold market are somewhat different vs the Great Depression. In recent decades we've had a functioning gold market. However In 1933, FDR simply increased the then fixed price of gold from $20 to a new fixed price $35/oz. But because this deflation is combined with a war as well as a public market for gold we've got different dynamics to deal with vs the 1930s gold and gold stock investors. My thinking has been that the price of gold will take off when the market manipulators run out of large amounts of gold to lease. Right now, they are into what many believe is the worlds last remaining large stash that's not been exploited. When this IMF gold hoard runs out the tic toc will end and the bell will ring<g> Without peeking into the IMF ledger books I can't tell you when that's going to happen. But I'd be surprised if took longer than somewhere in 1st qtr 02'. Just a guess. It's really spooky how the market can begin to react to big changes long before they arrive. So, I'd expect weeks or perhaps even months before the IMF lease well runs dry we'll see resumption of a strong uptrend in gold. We could be getting close. And if the nice slow build in both lease rates and positive COTs continues another week or two? The odds that is happening become stronger and stronger. Granted it's taken intestinal fortitude to maintain core positions recently. But there's one other possible ST fly in the ointment. Although I'd assign it only a 1 in 3 probability, it's enough to mention that we ought to be mentally and tactically prepared for a sharp engineered downward crank job in gold to run the sell stops just before the big bull move begins. That may be the only way to provide enough gold for both commercials and the W.S. PPT henchmen to cover their shorts and establish adequate long positions for a gold bull market. JMVVHO Isopatch