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

To: ild who wrote (22393)	11/24/2004 11:43:59 AM
From: ild	Read Replies (2) \| Respond to of 110194

Date: Wed Nov 24 2004 10:48 trotsky (pm stocks) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved with gold shares not rising much in spite of 16 year highs in the PoG in the course of a big rally, the old question insinuates itself: when WILL they? if not now, when? i'm increasingly alarmed as it were, since this isn't the first time this has happened. i don't have to tell you the outcome of the other times - the often repeated assertion that they will 'follow eventually' has been proven wrong in every single instance. to the extent that this post receives 'this time it's different' replies we'll know that it won't be. from the look of the charts we're having a 1974 deja vu here. if so, the coming two years could be quite a sobering experience. Date: Wed Nov 24 2004 10:36 trotsky (@van Eeden) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved "The U.S. trade deficit is a virtual guarantee that the dollar will fall and the budget deficit is a guarantee that interest rates will rise." neither is entirely true. one only needs to look at the period 1990 - 2000: the trade deficit rose in every single year througout the period, and the dollar rose right along with it. it is however true that historically, once the dollar DOES begin to decline, it doesn't find a bottom UNTIL the current account is back in balance, so this is the stronger of the two points. the assertion that interest rates are guaranteed to rise on account of the exploding budget deficit must be rejected out of hand however. for instance, Japan's cumulative budget deficit as a percentage of GDP is 2 1/2 times LARGER than the US budget deficit. and yet, interest rates at one point fell to just 45 basis points for 10-year maturities, and BELOW zero for short term money. this illustrates the difference between an inflationary and a deflationary era: in the 1970's K-summer, rates did indeed rise along with exploding budget deficits. but in the K-winter, money tends to flee toward the debt instruments of the most trusted debtors - i.e. the ones deemed least likely to default. and obviously, not even a very sizeable rise in industrialized nation budget deficits on account of their misguided Keynesian interventionism can persuade bond traders that there's a likelihood of default. it's a different matter with emerging market economies, but with the issuer of the world's 'reserve currency'? i'm almost tempted to say that hell will freeze over first. Date: Wed Nov 24 2004 10:13 trotsky (P.Yorkie) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved "Amazingly the authorities appear to be no nearer understanding the underlying cause of 9/11 ( i.e. cultural isolation of Saudi and the religion as practiced there ) than they were the day it happened." neither are you, apparently. the 'cultural isolation' bit sounds like quite stretch considering millions of people visit Mecca every year. and if the 'religion as practiced there' ( certainly repressive and all that ) were the 'cause', then why did 9/11 happen in 2001? why not in 1980 or 1970 or 1960? modern day radical Islamic organizations have been around since the 1920's after all. so i guess we'll have to look for different causes. i'll give you a hint - the CIA has a word for it: blowback.