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Strategies & Market Trends : Classic TA Workplace -- Ignore unavailable to you. Want to Upgrade?

To: skinowski who wrote (63472)	1/11/2003 9:30:39 AM
From: Moominoid	Read Replies (1) \| Respond to of 209892

Gold is a good play if the Dollar is falling relative to foreign currencies. But you could buy Aussie Dollars or Canadian Dollars instead.... gold shares are leveraged to the gold price due to fixed costs/depreciation etc. which mean the profits of gold miners rise rapidly as the gold price increases. If there is general global inflation then I'm not sure that gold is a better bet than land/property and even stocks in the long-run.

To: skinowski who wrote (63472)	1/11/2003 9:51:44 AM
From: big guy	Read Replies (1) \| Respond to of 209892

"To me this is far from clear: The situation when the dollar collapses and, simultaneously, the gold goes up IMO presupposes some sort of a major collapse of the socio-financial system, which is very unlikely." financialsense.com <Another way to look at this, especially the issue of financial collapse, is to consider some of the things that don’t make it into the press. For example, the Bank for International Settlements (the “BIS”), which is the central bank for all central banks, recently formed something called the Financial Stability Institute. They didn’t form that Financial Stability Institute because everything is okay. They have a problem. The Council on Foreign Relations here in New York is running simulation games on financial collapse. What is really interesting about these games is not the games themselves, but the participants. I have passed many of these people and it’s like Who’s Who in the financial world. I can promise you, these people have better things to do with themselves on a Saturday afternoon than to hang out on East 68th Street playing games. They have a problem. The Kansas City Fed recently had a whole conference on financial collapse. These things don’t make the press. The day after I interviewed Paul Volcker, on July 11, Mr. Kohler, the head of the IMF, said the probability of a complete worldwide financial meltdown was one in five. One in five! This did not make The Wall Street Journal. This did not make The New York Times. This did not make any television show. The BBC picked it up and I clipped it off the BBC, the British Broadcasting Corporation.>

To: skinowski who wrote (63472)	1/11/2003 10:49:02 AM
From: At_The_Ask	Respond to of 209892

I've been trying to figure out what will happen to gold given deflation too. Going up doesn't seem me to make much sense to me either. Deflation by definiton is a sustained increase in the value of money relative to the price of goods and services. We've had deflation, so to speak, for the last 30 years as can be seen on a dxy chart and during that period gold has gone down. at_the_ask.tripod.com Being that you have to pay for storage and things for physical, owning gold would actually cause a drain on your increasingly valuable cash. Tbonds on the other hand would actually pay you a percentage or two for the priveledge of using your money and when you get it back it would be theoretically worth more. The philosophy behind this is the whole reason the gold carry trade worked for so long.

To: skinowski who wrote (63472)	1/11/2003 11:08:49 PM
From: yard_man	Read Replies (1) \| Respond to of 209892

A deflationary collapse does not mean everything goes down in price (in USD terms), but rather those items that have been inflated in price because of the ease of acquiring them on debt -- see housing, durable goods. A fall in the USD vs other countries means that foreign goods cost more in USD terms. But narrowly with respect to gold -- if gold increases in price in USD terms -- it increases the price that producers get in USDs whether they sell forward or not. I suspect you are right, that while everyone of the producers (right now its fashionable) wants to be seen jumping on the "unhedged" bandwagon -- a great many of them who have survived this terrible bear market in gold -- they like these prices and would like to lock here or better in the near term, but this is not a reason to think that gold will not rise further, IMO. What about central banks -- the impression was that they controlled the price (they really don't over the long term, but that's the impression many have) because they have a large supply that can either be sold or leased and then sold. But now, the Fed is very serious about avoiding a deflationary spiral like has happened in Japan -- they know the danger is very real that this could spread worldwide -- should the US get mired down. So what do they desire? They believe they can influence things by "perceptions" -- thus they now must favor a modest or slow rise in the price of gold. In total collapse of the fiat system -- who the heck knows what would happen. I think such s complete collapse is very unlikely so as to be ignored -- you cannot prepare for it. But between an extended recession and a very bad downturn there are many possibilities. I like the idea discussed here before about gold gaining favor as the real returns on assets approach zero ... it is not that gold has intrinsic value -- rather that paper claims are subject to rather rapid re-evaluation on the whole at certain points when "everything goes wrong." I own gold and goldshares largely as a put on confidence in policymakers ... confidence is far from having burst, but when it does folks will vote with what little excess cash they have -- it may not be gold, but it might be, too. Good luck.

To: skinowski who wrote (63472)	1/12/2003 12:28:34 AM
From: nspolar	Read Replies (1) \| Respond to of 209892

I agree with Russell, and am not in the camp with those who think a deflationary and/or debt collapse is unlikely. I think it is very likely. There are several reasons. Play a little mind game with the market. Assume the TA'ers, chartists, EW'ers are correct and that the DOW will bottom below 3000 and maybe even a good deal lower. The chartists do this by pure chart work, without concern about the fundamentals. Their chart work is valid enough that it can not be tossed out the window, and I assume most of us are in agreement on that. Thus the probability is pretty high that a huge market dump, over the next year or two, will occur. Assume it does. Now ask yourself why would this occur? I feel one can only conclude it would be because of something much more severe than stagflation, i.e. severe and continued deflation, or a debt collapse. Any other scenario makes no sense, as in these other scenarios (stagflation then inflation for example) the market would probably continue down but not to the depths it would during a deflationary one. Shift courses here now and ask yourself why Greenspan and cohorts have suddenly been going around giving a lot of speeches, saying they have the tools to fight deflation and will not let it happen? Why a few months ago did Greenspan warn the congress about continuing with outlandish deficits? Why did GW come out with a stimulus plan whose primary purpose is to pump up the market? Because: a) the fed is extremely worried, and they do not know exactly what they are doing. They are in uncharted territory, and they know it. To assume they can pull the right levers to solve the present problems is almost a dream. It was they who created this problem. Why should one suddenly assume they are smart enough, and have the power, to reverse course to the extent that the problem will slowly melt away. b) the fed and the Bushers are worried about fear and what it can do. It is fear and human psychology that have very great impacts during a deflationary spiral. They are trying desperately to reverse a course already in motion. They will need more than luck imho. McCulley of Pimco has written several good articles about all of this, over the last year or so.