To: stockman_scott who wrote (8350 ) 10/24/2002 2:03:51 PM From: Jim Willie CB Read Replies (1) | Respond to Gold and the Impending Financial Storm, by Farfelgold-eagle.com It is patently impossible that we are headed for a pure deflationary spiral simply because there are too many infrastructural deficits (e.g., impending national medical care crisis, which will send medical costs soaring; impending insurance industry crisis, a consequence of September 11, plus the insurance industry's financial devastation as a consequence of failing equity investments; impending utilities crisis, a consequence of the Enron failure and the resultant negative multiplier effects, etc.), not to mention the obvious fast developing commodities deficits (e.g., platinum, palladium, silver, natural gas, etc.).The P/E's of precious metals stocks will simply explode, just as occurred with Internet stocks. The old timers will simply not believe their eyes, just as the old timers failed to comprehend the verticality of Internet stocks and the role that liquidity preference played in those astronomical valuations. The daily gap ups taking place in PM stocks will blow past the shorts' various stops and leave them exposed to tremendous losses. Again, by and large, the PM shorts today are disciples of fundamental valuation and simply have no concept of what a shift toward liquidity preference valuation will do to PM stocks. Although the government will be called upon to intervene to suppress soaring gold and silver prices, in the initial stages, the government will be powerless to do anything. That is because their main focus will be in trying to shore up the falling financial sectors -- and precious metals prices will be a secondary concern.
