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To: GST who wrote (143141)	6/18/2002 9:18:07 PM
From: Oeconomicus	Read Replies (2) \| Respond to of 164684

Supply and demand was the same argument bubblonians used for buying without regard to the "noise" of fundamentals, and even for dismissing the old fashioned concept of needing to earn a profit ("demand for stocks will continue to grow, so these companies can cover their losses by selling new stock and don't need to be profitable"). I submit that 1) any rise in the price of any commodity, or any asset for that matter, is a result of a supply demand imbalance; 2) any decline is likewise the result of an imbalance; 3) the supply and demand of any highly speculative asset (e.g. gold) at any given point in time is largely a function of the supply (net selling) from or demand (net buying) by speculators; and 4) whether speculators are net buyers or net sellers is based primarily on their guesses, however arrived at, about future supply and demand. Therefore, your proposition that gold will rise because of "supply and demand, nothing more and nothing less" must, absent any theory about non-speculative supply and demand (i.e. supply from mines or central banks and demand from the jewelry trade or other natural users of the metal) must be based on guesses about the future sentiments of other speculators. Your basis for being bullish on gold is no more sound than that of a bubblonian buying Cisco or Ciena at the top. Perhaps even less so - some of them actually considered fundamentals, but made bad assumptions about business conditions in the various sectors. Are you actually suggesting that fundamentals matter for real businesses and the US Dollar, but not for this one commodity?