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Strategies & Market Trends : Commodities - The Coming Bull Market -- Ignore unavailable to you. Want to Upgrade?

To: craig crawford who wrote (945)	11/25/2001 8:08:03 PM
From: craig crawford	Read Replies (1) \| Respond to of 1643

About as Low as They'll Go For interest rates, an historic turning point has arrived interactive.wsj.com After 20 years of declining interest rates dating back to the 15¾% paper issued by the Treasury in 1981, we have reached the point where we can't reasonably expect rates to fall lower. It's true that the U.S. is in a recession, a juncture that normally puts downward pressure on rates. But for rates to fall from their current level would suggest that no recovery is coming. Don't bet on that outcome. The fact is that the government is getting ready to spend money like mad, and the Fed is doing all it can to stimulate the economy. This combination has never failed to propel a rebound. And the market appears to agree that interest rates went too low in early November. In one of the most vicious market routs ever seen, bond yields have soared more than a half-point since the beginning of the month. Right now, they stand above the their levels when the Treasury pulled its Halloween trick by doing away with the 30-year bond. By last week, the benchmark 10-year note's yield was back over 5%, and the long bond had risen to 5.39%. That meant that, in just a matter of weeks, investors had lost much more on the decline in bond prices than they can earn in interest in a year. ................................................................................................................................ But most of that dizzying rise in yields took place in the 'Seventies. The rise in yields from the end of World War II to the Nixon Administration took them from the low end of the nation's experience to the high, but not into uncharted territory. To get past 8% took a string of doleful events: the devaluation of the dollar with the severing of its last link to gold; the ensuing jump in commodity prices, with the Organization of Petroleum Exporting Countries creating gasoline lines; simultaneously the worst recession and highest inflation in history; defeat in Vietnam and the resignation of the President. Brian Wesbury, chief economist of Griffin Kubik Stephens & Thompson, contends that the concerted rise in yields started in 1965, when taxes, government spending and regulation all increased as Lyndon Johnson simultaneously carried on the Vietnam War and the Great Society programs. At the same time, the Fed held rates low to boost growth to counter the invisible foot of government. The combination of easy money and big government created a secular increase in inflation that boosted bond yields for 16 years. ................................................................................................................................. As for inflation, Kasriel continues, "Two important central banks, the Fed and the [European Central Bank], are printing lots of money and don't seem to be concerned." Rapid expansion of the money supply invariably spurs the economy and, with a lag, sends inflation higher -- both of which point to higher, not lower rates. The U.S. central bank is under intense pressure to boost employment, he notes. Inflation, meanwhile, seems to have been kept in check by slack energy prices. But the overall price level depends not on a single commodity but, over time, money. As even the most casual observer knows, the central bank has slashed its target rate 10 times this year for a total of 4½ percentage points. The Fed also radically cut rates in the early 'Nineties to a low of 3%, but generated little growth. The difference now is that the money supply is growing rapidly while back then the money stock was stagnant. Notes Merrill Lynch's chief U.S. investment strategist, Christine Callies, expansion of the broad money supply, M3, after adjustment for inflation, is 10.5%, the highest year-on-year rate in almost 28 years.

To: craig crawford who wrote (945)	11/25/2001 10:02:35 PM
From: Box-By-The-Riviera™	Read Replies (1) \| Respond to of 1643

thanks. side note on silver as a by process to zinc... i.e. production. secondly, u.s. silver stocks are nearly non existent, and of late even the inventory number is now hard to find... it's something i'm watching for better or worse. i gotta think about this lead story... ultimately the move will be out of lead in batteries....more near term than long term dream I think... interesting even in that forward story, what you have seen. there's a reasonable answer somewhere no doubt.