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

To: gregor_us who wrote (13332)	5/6/2004 11:08:05 PM
From: NOW	Read Replies (1) \| Respond to of 110194

"It strikes me as a Belief System." Yes, and what else is there? Or to quote: Reality is merely an illusion, albeit a very persistent one." -- Albert Einstein Gold has the slight advantage of being part of a beleif system for thousands of years, unlike the clownbuck or anything else for that matter as a store of value. The powers that be would love for that to end no doubt.

To: gregor_us who wrote (13332)	5/7/2004 7:26:59 AM
From: russwinter	Read Replies (2) \| Respond to of 110194

The value of the John Hathaway essay lies more in the here and now. I've always felt he does the best seminal work on gold as an asset class. Here's the essay list: gold-eagle.com He lays out an excellent workable theory for relating gold's value to negative real rates. He states (sounds like my commentary) , "A core deception of the moment is the notion that a few up ticks of 25 to 50 basis points in short term rates will be sufficient to arrest the forces of inflation set in motion by the most aggressively accommodative Fed in history. He goes on, To preempt inflation fostered by four years of aggressive ease, the Fed must drive a sustained and politically untenable rise in real* interest rates. Increases cannot be tepid or token.* He finishes his point by saying in effect, that "I knew Paul Volcker (John Kennedy), Paul Volcker was a friend of mine, and Alan Greenspan, you ain't no Paul Volcker." Then he goes on, suggesting that gold will play well, as "credit spreads widen and safety becomes paramount." I think that this aspect explains why POG is still under $400. Credit quality spreads are still very narrow, but as they widen, then gold will reveal a different face.