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

To: LLCF who wrote (29200)	2/25/2003 8:43:47 PM
From: LLCF	Respond to of 74559

This also has interesting tidbits relating to the belief that gold shares only did well in the last depression because FDR raised the price of gold among other things: <<Recent expressions of intent by the Federal Reserve pay only lip service to the notion of currency stability. The new focus is reassurance that any action will be taken to avoid deflation. In the 1930?s, markets anticipated a sharp fall in the intrinsic value of the dollar three to four years in advance of the actual hike in the official price of gold. For example, the black market price of a $20 gold eagle in 1930 was $30. In the late 1960?s, investors anticipated the breakdown of an official dollar link to the gold price. Market pressure forced the London Gold pool to disband in 1968, forcing an increase in the official gold price from $35 to $41. In 1971, the same pressures forced the US to close the gold window. >> Message 18627080 This part is also especially juicy: <<What about the dollar? It is being issued at an accelerating pace by a sovereign government managed by former investment bankers, lawyers and corporate executives. Its intrinsic value is subject to their collective interpretation of the mandates of sovereign interests. Its market price, in terms of gold and other currencies, is determined by the collective assessment of those who hold it, especially for investment purposes. The fact that the marginal investment holders of dollar instruments are foreign has been true for decades. New is the fact that the worldview of foreign dollar investors may no longer coincide with the actions or perceived intentions of those who are in a position to maintain or undermine the dollar?s intrinsic value. What is also new is that non-US holdings of dollar investments have reached a magnitude where an opinion downgrade would overpower domestic policy considerations, objectives, and initiatives. At 40% of the treasury market float, a foreign exodus would result in higher US inflation and interest rates, irrespective of Federal Reserve or Treasury actions.>> DAK