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

To: t2 who wrote (82586)	2/26/2002 10:33:05 PM
From: Robin Plunder	Read Replies (1) \| Respond to of 116984

Hello, NV....it does seem like gold stocks are acting contrary to the market...down yesterday on market strength, and up today on market ambivalence. I am new to investing in gold (qcom refugee....). Over the weekend I was reading a lot of the articles at Zeal. It seems like the current appeal of gold is that 1)equities are overvalued 2)short term rates are low, providing little capital growth, if any, over inflation 3)long bonds are risky in that, if inflation rises, they will decline in value, also not providing appreciation of capital or protection of capital 4)gold is cheap on an historical basis, and can provide a means of capital protection that these other asset classes currently cannot provide. When this situation is combined with the large increase in money supply in the US and Japan, with this money looking for a safe haven, gold would seem to be a likely beneficiary. This safe haven aspect of gold is amplified in down market days, when the risk and high valuation of equities is more apparent. So on down days for stocks, gold shines. On up days for stocks, the level of investor anxiety may be down, causing them to place less emphasis on the safe haven aspect of gold. In 1999, the rapid growth in money supply went into tech stocks, as the asset of choice at that time. In 2002, the excess liquidity may flow to gold and other commodities, as the asset of choice at this time. The Zeal folks seem to emphasize the possibility of a weak dollar and high inflation as part of their gold thesis, but I am not convinced that these are essential. The dollar can be strong due to relatively weak economies in Japan and Europe, but this does not change the issues listed above...gold can still be a safe haven at this time. Similarly, we may not have rampant inflation (due to the deflationary effects of China, India and other Asian nations joining the developed world, with their cheap labor providing a deflationary effect on prices, plus higher productivity due to new technologies)...but still, the threat of moderate inflation due to the rapid growth of money supply may make bonds less attractive than gold at this time. Is NEM showing a cup and handle, with a break above 25.5 or so representing a new break out? Would it be a good strategy to 'load up' on NEM in the event of such a break out? Robin