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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (261)	6/8/2002 1:22:00 AM
From: Jim Willie CB	Respond to of 89467

all this talk of economic recovery can be reasoned through I believe we have a very weak recovery in progress but it is funded and inspired by low-rate credit ok, so inventory is low and will be replenished, fine and wage costs are dropping, which helps profit margins and business investment is getting off its back, fine but that does not mean earnings will amount to much every time a company beats the street, lowered EPS exceeded valuations are still very high unfortunately I see end of the road on high dollar valuation on high bond valuation (corresponding to low interest rates) on high stock valuation (relative to earnings) it is an worthwhile lesson to extract the earnings yield on stocks take expected this year earnings and divide by stock price it comes to under 2%, just like shorterm TBill yield so one can argue that both TBills and S&P earn under 2% take 1/PEratio in other words to get pct return end of the road is my conclusion we have near zero real rate of return from stock investment and the argument for continued migration into gold it dont cover inflation after taxes even though the economy may recover, stocks are priced in such a high manner that it still is NOT worth the price the issue is NOT whether the economy recovers the issue IS whether we wish to earn under 2% for stocks IT IS NOT WORTH IT, SINCE IT DOESNT COVER INFLATION AFTER TAXES we have the extreme having been reached in dollar, bond, stocks no way out for paper-based assets this is why GreenSnot is caught in a box, and it is sad thus gold is set to begin its long rise not just for a few months as the supposed "experts" claim their entire livelihoods depend on that NOT happening but we are in the same corner as Japan gold should be rising thru several critical stages first to #330, then #375, then #400, then maybe a rest then to equilibrium price to satisfy supply meeting demand that is believed by mining experts to be #600, give/take one of two outcomes must happen now: 1. we proceed to have TBonds head to zero interest rate 2. gold is set free to rise to a multiple of current price either we proceed down Japan's path or reverse the GOLD SUBSIDIES OF BONDS gold is now half its equilibrium price and 5x as many dollars exist since 1980 do the math to get a justified #3000 price that could be a real price target later this decade in 1994 who would have said that EMC or DELL would rise 150x ? Greenspanker has shown his tendency clearly he will REFLATE, and induce price inflation he has often decried the Japanese path taken he will soon tolerate inflation to rid deflation conditions but he will NOT be able to contain GOLD their only recourse is to open the Fed doors to more gold sales and with all the newly generated publicity of gold leasing and sales over the past decade, his hands will be tied I believe GreenGrinch will sell gold only to relieve upcoming DESTABILIZATION and DISORDER within the gold market it is coming as sure as night follows day some dislocations are coming soon some derivative meltdowns will create big big updays for GOLD Hathaway of Tocqueville says +25 updays but Central Banks will attempt to restore order they had their day and now it time for their night / jim (in Ohio visiting college buddy)