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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Crimson Ghost who wrote (13296)	5/6/2004 12:43:21 PM
From: russwinter	Read Replies (2) \| Respond to of 110194

Bingo, another John Hathaway masterpiece!!

To: Crimson Ghost who wrote (13296)	5/6/2004 6:24:36 PM
From: NOW	Read Replies (1) \| Respond to of 110194

hathaway along with Faber is one of the best their is

To: Crimson Ghost who wrote (13296)	5/6/2004 9:49:23 PM
From: gregor_us	Read Replies (2) \| Respond to of 110194

Does Hathaway partake in the No Matter What it's Good for Gold Perspective here? Or am I putting words in his mouth? I liked his essay. I also have felt all along, as he does, that the all bouts of Deflation will be met with inflationary policies--as they already are being met--by Washington. But what I see in Hathaway is a vein that has long run through the gold commmunity--that gold is a reliable insurance policy. That you can count on Gold to be there. To time the tipping point between inflation and deflation, as with calling the top for the dot com mania, seems futile. What is clear, however, is that the fear of deflationary outcomes begets inflationary policy responses, as Fed Governor Bernanke has so forcefully stated over the last few years. While there can be no doubt that the end game is deflationary, an inflationary episode or two may occur along the way. For gold, it makes little difference because either prospect erodes confidence in financial assets. Why doesn't Hathaway devote at least one paragraph to a financial chaos/destablization scenario in which he surmises that Gold alone would not, in fact, work? Others, at least, at this very juncture are suggesting a basket of commodities and a mix of currencies, as a hedge against the mess which is brewing. Frankly I think Gold should be alot higher right now, and I would see that as rational. I also think the Yen is nearly worthless, and it would be rational for the Japanese to be holding more gold. I also think that Gold will be a destination that people will run to in financial chaos--even as the waves of inflation pass into deflation, as Hathaway writes. My point is that Hathaway gives what has come to be an all too familar, open-ended kind of guarantee...about Gold's power to rescue. It strikes me as a Belief System. If we grant that financial chaos is indeed coming, I think a very good case could be made to hold some gold--not because people will rationally hide in gold during the Inflationary Phase--but, that people, will likely hold gold long, long after we have passed into deflation. Gold is often presented as holding for the rational investor. Maybe gold is better viewed as a key holding for irrational times. I think it's irrational that gold is not much, much higher right now. But, Hathaway advises me to be holding gold now primarily for later, when I think it would be rational for gold to be lower. He may have a point.

To: Crimson Ghost who wrote (13296)	5/7/2004 11:12:32 AM
From: russwinter	Respond to of 110194

My favorite Hathaway line, During extended credit contractions, when lenders and investors alike shy away from risk, credit spreads widen and safety becomes paramount. In the rainy seasons of the 1930's and the 1970's, gold rose against financial assets. It did so not because it was part of some "reflation cocktail" dreamed up and packaged by promotional investors. It did so because a general movement towards safety caused by adverse experience in financial assets investments bid up its price. Stock market looks narrower and narrower, looks like they try and scrap some nickels and leverage together and just jam some subgroup. Today it's the SOX, about everything else looks miserable, with financials being routed. It will be interesting to see if the mutual funds get redemptions today, causing the clerks there to have to remove some soup can labels from the foul stuff moving through the factory line.