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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Crimson Ghost who wrote (2970)	3/26/2004 8:21:42 PM
From: mishedlo	Respond to of 116555

Thanks, How's Junk? M

To: Crimson Ghost who wrote (2970)	3/26/2004 8:26:48 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Is Canada running out of natural gas? thestar.com

To: Crimson Ghost who wrote (2970)	3/26/2004 8:33:49 PM
From: mishedlo	Respond to of 116555

Saudi Arabia Criticizes U.S. Reform Plans Sun Mar 21,10:10 AM ET story.news.yahoo.com ========================================================= I am convinced they do not want Bush re-elected Look for a spike in oil prices this summer. This cancellation of an Opec cut, just smacks of a more damaging cut right at the peak of US driving season. Mish

To: Crimson Ghost who wrote (2970)	3/26/2004 8:44:42 PM
From: mishedlo	Respond to of 116555

Safe Haven on Gold safehaven.com Many believe that if there is a market meltdown that the gold stocks could fall with them. While initially there might be some sell-off history suggests otherwise. In the 1930's the few gold companies around did fall with the market in the Crash of '29. By the time the bottom came around in 1932 and the Dow Jones Industrials fell 89% with the revaluation of gold upward from $20.67 to $35 companies such as Homestake Mining surged 10 fold. Dr. Richard Appel presented this argument in a recent article entitled "Will gold shares follow common stocks lower? An historical perspective". Historically the best argument against this happening is the bear market of 1973/1974 whose chart is presented below. While the Dow Jones Industrials was losing some 46% in 1973/1974, Gold soared from the $60 area to over $200. Homestake Mining rose from about $2 to almost $10. The chart of the 1970's, a period of the last great gold boom, is quite interesting. With the markets down in 73/74 and gold and gold stocks up during the same period they switched places in 1975 when the DJI regained its two years of losses while both gold and the gold stocks fell. From 1977 to 1979, the period of the great bull market in gold, both the DJI and Homestake languished in a general downtrend/flat. Note then the unfolding huge divergence between gold and Homestake in 1980 when Gold collapsed then tried to rally back while Homestake and the gold stocks came to life and soared to new highs, a significant major negative divergence which presaged the 20 year bear market in gold and gold stocks.

To: Crimson Ghost who wrote (2970)	3/26/2004 8:46:00 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Safe Haven on Commodities safehaven.com Following a brutal two-decade bear market, today is once again a wonderful time to be a commodities investor or speculator. The venerable CRB Commodities Index is trading near 23-year highs and even CNBC manages to find a little time to discuss commodities these days. Will wonders never cease? Since it has been so long since the last major commodities bull, the full implications of this event for general equity and bond investors are not yet widely considered this time around. As history has shown however, a secular commodities bull often exerts great influence on the prices of both stocks and bonds. This influence is not direct, but indirect via the price of money. There is usually a very high correlation between the prevailing long-term trends in commodities prices and interest rates. As commodities power higher in a bull market, interest rates often march higher in lockstep. ... All conventional investors in stocks and bonds really need to carefully consider the dire implications for their portfolios of the high probability of rising long rates. Commodities are already galloping higher, and odds are that interest rates will soon follow. Today Wall Street continues to act like nearly half-century interest-rate lows will persist into the indefinite future, but as every contrarian instinctively knows betting on an extreme existing into perpetuity is the height of investing folly. Interest rates have been stretched to incredible lows, and rising commodities are already heralding their inevitable rebound much higher.

To: Crimson Ghost who wrote (2970)	3/26/2004 8:52:27 PM
From: mishedlo	Respond to of 116555

From SI to Me on various problems. Others might be affected as well. In the meantime, I might have to reply to someone else other than the poster. There are lots of posts that I can not even see. Mish ============================================================ You were just one of the unfortunate people who resided in the corrupted area of the folder_links table. It's being worked on as we speak, and throughout the weekend. Hopefully, you should be already seeing some improvement. Mish

To: Crimson Ghost who wrote (2970)	3/26/2004 8:55:28 PM
From: mishedlo	Read Replies (2) \| Respond to of 116555

Deflation vs hyperinflation safehaven.com This article examines the respective risks of deflation and hyperinflation. Although at first glance these two seem to be at completely opposite ends of the monetary spectrum the article explains how looming disaster brings them both within one false step of economic management, and further explains how central bankers are eventually forced into taking that step. ... Alan Greenspan is tasked with guiding a weak climber - the ever-expanding currency system - to the peak of Mt Economic Utopia. To the left is the chasm of hyperinflation and to the right the precipice of deflation, and the path narrows as it rises up to the distant summit. On the lower sections of the mountain path it is wide enough to let our guides turn us round. But the closer we get to the summit the more everyone believes it is achievable. Mountaineers suffer the same problem. They call it "Summit fever" and it claims far more lives than bad luck ever did, by corrupting the powers of good judgement. It takes a lot to turn one person away from a summit. Turning round a happy crowd is quite impossible. They would rather believe the optimism of the guides who talk of spectacular rates of 'sustainable growth'. They prefer government statisticians who add mandated public sector expenditure into economic growth figures, and they listen to commentators who refer to 'Goldilocks economies' and 'productivity miracles'. So they buy more sports utility vehicles on borrowed money and re-finance their houses. Yet domestic economic activity has no real growth, and high imports cause huge trade deficits. Savings rates diminish, financial instrument yields evaporate, governments borrow and spend and call it 'investment', corporations report profits which have nothing to do with earned cash, financial trickery permeates all levels of society and credit is offered to an ever increasing set of less well qualified borrowers, whether sovereign states, companies or individuals. The majority cannot see these signs for what they are. Only a few miserable realists look around and, seeing the dangers on both sides, turn back on their own and face the cheerful smiles of those who continue on up. It's a long lonely walk down and there'll be no-one waiting at the bottom to cheer your safe return. But there is a catch. The raising of rates can only be done when there is no risk of it causing debt servicing problems for large numbers of borrowers. Otherwise different risks arise. If, for example, after a long borrowing binge corporate debt is high, public debt is high, and consumer debt is high, the increase of rates (strengthening the monetary glue which keeps money in people's pockets) and the economic slowdown they should cause, now risks producing unserviceable debt and large scale default. These can destroy savings as dramatically as hyperinflation, only through its ugly sister deflation. So Mr Greenspan, who has safely fought inflation while debt was under control, now, with private, corporate and public debt all at record levels, has to fight both hyperinflation and deflation risks at the same time. Increasing interest rates will risk deflation. So to prevent a deflation he has to hold rates low for long enough to allow a demand led recovery and an increase in general financial strength. Only then can rates rise. The negative return on cash is now likely to get worse before it gets better, as real inflation (and taxes) outstrip any modest interest rate rises, so the time has come to switch into assets which will hold or accumulate purchasing power with greater reliability. Dollars have become repellent. They are no longer the natural way of storing value, and this has broken one of the key conditions which is required to keep a linear relationship between money supply and inflation.