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

To: mishedlo who wrote (23616)	12/20/2004 4:51:53 PM
From: Tommaso	Read Replies (2) \| Respond to of 110194

1) rate cut in UK Wouldn't that tend to weaken the pound a little and push up gold prices as measured in pounds? 2) intervention in the US$ by Europe and Japan Doesn't intervention often backfire and lead to speculative distrust of a currency? 3) Bush raises taxes (ups limit on SS taxes) Maybe if I think about it more I can see the connection between U. S. tax rates and the price of gold. 4) Consumer spending falls off the cliff Isn't it possible people might think about putting money in hard assets instead of more Chinese-made clothing and gadgets? 5) technical rally in the US$ when a breakout fails This assumes that the $USD is the exact inverse of gold. Isn't it possible that gold buying could take place independently of the value of the dollar as other currecnies weaken against the dollar? 6) just too damn many US$ bears Again, gold is not necessarily the inverse of the dollar. 7) SS reform just plain dies and along with it a $2 to $6 trillion price tage. The Social Security reform suggested by Bush involves the equities markets, which are enjoying a (temporary) reassurance in the idea that SS will go into equities. 8) actual spending cuts in congress Are these likely to occur and also have effects on the U. S. economy in the next few months? My own view is that the combinations of things that affect the price of gold are too complicated to make short term predictions very reliable. Longer term, gold seems almost the only internationally recognized store of value, with all fiat currencies serving as media of exchange, mainly, and will probably rise in value for that reason. But I also think that at some point ($500 an ounce? $750?) the price of gold will stimulate a huge increase in production that will eventually cap its price. I will be mildly surprised if gold drops back below $400, and not surprised if it rises above $500 in the next few months. I think more money is to be made, probably, by investing in energy.