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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (67557)	11/24/2003 8:43:26 AM
From: Real Man	Read Replies (1) \| Respond to of 94695

The Physical Market seems to be comfortable with the current POG - in fact, the gold demand rose in 2003, after dipping in 2002. The sagging gold demand is related to Indian currency. If the dollar falls against it, support in the physical market will come at a higher dollar price. Also, the physical market showed that the selling from CB intensified starting 1997 or so, to almost 1000 Tonnes per year. Recently, I think, this number dropped a bit. There are 3 cornerstone assumptions in derivative markets 1) Treasuries have zero risk 2) Gold has negative yield, equal to the price you pay for storage, 0 convenience yield, and so does silver. 3) The market s efficient, so BS model works. I think, all assumptions are wrong, and the writing of derivatives will be tested at some point. I agree with you that the derivative collapse, if it happens, will be very deflationary. However, I fully expect USD to be destroyed shortly with it, or shortly after it, as the Fed banking insurance kicks in. It's hard to see now how it will all happen. A combination of deflation in some areas and hyperinflation in other areas is very likely.