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Gold/Mining/Energy : Precious and Base Metal Investing -- Ignore unavailable to you. Want to Upgrade?

To: Bearcatbob who wrote (29353)	5/2/2004 9:56:48 PM
From: Proud Deplorable	Read Replies (1) \| Respond to of 39344

Enjoy it while it lasts as it won't be much longer before the US dollar crashes. ---------------- Sunday, May 02, 2004, 2:58:00 PM EST Jim’s Mail Box Author: Jim Sinclair Hi Jim, Please feel free to post this to your site. I am going to see if I can get it over to Bill Murphy as well. This is to follow up on your interest rate comments. Along the line of your thinking in regards to the dollar, (which thinking I am perfectly in agreement with), the Reserve Bank of New Zealand announced a SURPRISE rate hike this very week of 25 basis points or .25% bringing the cash rate to 5.5%. Any guess what the reason they gave for the unexpected hike? They cited "inflationary pressures." They also went on to say that future rate hikes were now on the table. New Zealand now has the highest official cash rate in the developed world. This move out of New Zealand has fueled expectations that the Reserve Bank of Australia may follow suit sooner than later. The March housing credit numbers came in very strong, suggesting that the Central Bank may hike sometime after the government's May 11 budget. Australia has its own troubles Down Under with a red hot housing market and the financial authorities are growing concerned about a developing bubble. Unlike their counterparts here in the States, both the Kiwi's and the Aussie's are far more responsible guardians of their respective economic houses. If the Federal Reserve here kicks rates up a measly .5%, any interest rate differential benefit is going to be quickly lost as others follow suit and a round of hikes take place. The dollar is dead in the water and is going nowhere but down in the long term. I cannot personally think of any situation more conducive for gold. Kind regards, Dan Norcini Dear Dan, The Aussie and Kiwi Central Bankers like the Chinese recognize the following: Interest rates have a really bad record of stopping inflation caused by a huge injection over a very short period of time of international liquidity. Increased interest rates at their inception are in fact an ingredient of inflation. It took a move to 14 7/8 on 10 year money in the US to stop the 1970 to 1980 inflationary spiral. The use of the Japanese - Bernanke Electronic Money Printing Machine and its outrageous liquidity injection directly into the world bond markets represents a transaction that cannot be reversed and therefore remains uncontrollable in the world's economic system. This non-traditional method of liquidity injection will result in inflation at an unprecedented level. We have a price crisis in oil about to become a supply crisis. Did you read about the terrorist attack on the international oil companies in Saudi Arabia this weekend? Here comes the supply crisis. The Aussie, Kiwi and Chinese owe little politically to the US administration and have moved against the tidal wave of inflation that is crossing the world's oceans at 700 mph. Conclusion The Gold Community - unless it's become totally brain dead listening to the paid advisors who are now at their most bearish level since gold traded at $255 - would be wise to review history to confirm that a move from 1% to 1.5% this year on the discount rate is super bullish to gold! Regards, Jim