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

To: Jim Willie CB who wrote (38055)	9/10/2003 12:22:43 AM
From: energyplay	Read Replies (1) \| Respond to of 74559

One of the reasons bonds were down is Fannie and Fredie were SELLING bonds to adjust their maturities. This takes about 2-4 months, and will be ending soon - may be ending now- less selling, price rises. Also, I think we are seeing some deflation and reduction of money supply - many companies are paying off debt, which destroys money. Many of the US households that re-financed went to MUCH shorter payoff perionds for their new mortgage, and are paying more priciple each month. The gold price sat just under $400 for about 3-5 years - a support/resistance level ? If the gold price were to hang around the current level for about 6 months , many people would look elsewhere. The increased money supply to inflation chain can take a LONG time - one or two years (or more) to get started when the economy is slack. Once inflation takes hold, the transmission is much faster - maybe 6 months. I vaguely remember some charts showing the money supply zooming during the Korean War, but no inflation for almost 3 years. When Viet Nam built up, it still took about 2 years or more for inflation to REALLY show up ...then years for the damn thing to go away. Huge spike in gold in late 1970s was post Viet nam, and a few years after excessive money supply to cope with higher oil prices from 1973 embargo.