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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Muthusamy SELVARAJU who wrote (20197)	6/24/2002 10:37:03 PM
From: EL KABONG!!!	Read Replies (1) \| Respond to of 74559

Selva, Some thoughts of my own on today's rise in prices, albeit it on relatively low volume and a very modest advance... Seems to me as though everybody and his brother is talking about hedge funds, buying metals as a hedge, currency trading (in currency funds I suppose), options, and other strategies typically used by the ultra-wealthy and highly successful hedge funds over the years. Look at the proliferating growth of hedge funds in the USA. They keep dropping the minimums for participation, and may get to a point so low that the kid on the street with a cardboard lemonade stand can buy in if s/he wants... So, it stands to reason (from my perspective) that a counter-rally is in the cards somewhere. Sort of a short squeeze, only the ones being squeezed won't be traditional shorts. It'll be the man on the street who just dumped $50K (US) into some hedge fund thinking he'll profit mightily from a falling market. So, I think we may actually see a small rally here. Not sustainable, but enough to squeeze Joe Sixpack out of his hedge funds. After the squeeze, more to the downside. Much more... KJC

To: Muthusamy SELVARAJU who wrote (20197)	6/24/2002 11:35:53 PM
From: Raymond Duray	Respond to of 74559

Selva, The G8 central banks have plenty of gold they'd like to sell. This puts a ceiling on possible appreciation. The gold market is highly contrived. I don't see what all the fuss is all about. Here's where smart gold bugs (oxymoron alert) gather: kitco.com

To: Muthusamy SELVARAJU who wrote (20197)	6/25/2002 12:20:40 AM
From: LLCF	Respond to of 74559

<a) Since loss in value of paper currencies could undermine the entire economic structure of substantially all of the world (since there is no longer an East Bloc), I wonder if the the powers of the G8 countries could get together to block any uncontrolled rise in the price of gold, say to usd 330 and beyond.> Why??? dAK

To: Muthusamy SELVARAJU who wrote (20197)	6/25/2002 6:59:54 AM
From: TobagoJack	Read Replies (2) \| Respond to of 74559

Hi Selva, <<mysterious stock market rise and gold's decline>> Do not go ‘black helicopter’ on me, my friend:0) Actually, to be Jay, I was surprised this morning when seeing the score of Nasdaq, DJIA and gold, since the last thing I remembered before sleeping was DJIA down 120 points, and gold up USD 1. But, then again, I was surprised at how Korea beat Spain in World Cup. Football is a complicated game that at times borders on dirty. <<I wonder if the powers of the G8 countries could get together to block any uncontrolled rise in the price of gold, say to usd 330>> … I believe THEY have been doing exactly that, and may yet succeed in ending 4,000 years of monetary history, purge all bank vaults of gold, take the precious out of precious metal, and printing the world to wealth, invalidate all economic texts, and make the Nobel Prize in the dismal science obsolete. I also believe THEY might fail, to the tune of 5-10% probability. <<Since gold is held by several G8 central banks, could they not get together with the US and do something together to get the price back down to usd 300 or below, esp since retail demand for gold is in fact decreasing>> … I believe retail demand for gold may completely disappear for all practical purpose if gold hits a price of USD 68. On the upside, demand may pick up should gold hit USD 6,800. Life is like that. <<I worry that the fundamentals in Europe right now can barely support the Euro at 0.97 and whether a sustained rise to say, parity and beyond is going to stick>> … Difficult to say about currencies, at the margin, but I know the wooden homes without view in the US are over-valued relative to stone houses with ocean view in Europe, and same for hamburgers. So, yes, we may pierce parity, and rise 40% beyond that, unless we do not. In the mean nasty time, parity seems fairly certain, unless above mentioned fight over gold price is won by G7 central banks, and US-centric economic development remains in place. The simultaneous equation of Abracadabra is hard to call correctly, because there are way too many independent and dependent variables and even more solutions to the equation. Chugs, Jay

To: Muthusamy SELVARAJU who wrote (20197)	6/25/2002 12:30:53 PM
From: Maurice Winn	Read Replies (2) \| Respond to of 74559

<Since loss in value of paper currencies could undermine the entire economic structure of substantially all of the world (since there is no longer an East Bloc), I wonder if the the powers of the G8 countries could get together to block any uncontrolled rise in the price of gold, say to usd 330 and beyond. > Selva, why bother controlling the gold price other than by selling stocks if the price seems to be into bubble territory due to speculative irrational exuberance? The fact that money supplies are increasing quickly means that the measuring stick used to measure things is shrinking [since economic output and demand for money isn't increasing at the same speed as the money supply is increasing]. A smaller measuring stick means things, such as gold, appear bigger than they were. So the price of things goes up. If there's a problem with the entire economic structure of most of the world, it won't be helped by selling gold at prices lower than the market will bear by dumping stocks on the market in large quantity. That would just mean that bank stocks would run out, then the price would go right back to where it was. Gold as an store of value just sits there in a block in a vault, whoever owns it, so nothing is economically gained overall by transferring it from one vault to another. But it would mean the sellers get a of money with which they can go shopping in a depressed sharemarket, or that they could lend. So they would economically do better than holding deadweight gold if they sell it at prices which are temporarily high. However, gold prices are not necessarily temporarily high, given the amount of money that's been printed over the past few years, which all has to find a profitable place to go. There is only so much stuff in the world to buy and more money chasing a fixed amount of stuff means prices will rise. Everyone is trying to guess what values are and guess whether there is going to be a big depression and monetary bust to match the Nasdaqian dive. I'm guessing values are about right and that there won't be a US$ monetary bust. But I haven't placed my bets on that yet, because I think there could be a few more bumps downwards as the huge market clearing of debt from the accounts of wishful thinkers and irrational exuberants is tidied up. There are still some very huge debts hanging over markets and the individuals and companies with those debts could be forced to sell assets at firesale prices for creditors to recover some cents in the dollar on those debts. Here's an example of a profitless company which seems likely to have its assets sold to the highest bidder siliconinvestor.com That graph is very typical of a huge number of companies. There isn't much [relatively] market capitalization still to lose, but the debts have still to be cleared and that means asset sales at low prices. Mqurice