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

To: UncleBigs who wrote (47003)	12/10/2005 6:43:08 PM
From: regli	Read Replies (2) \| Respond to of 110194

I think you limit your outlook on the financial markets and especially the gold market far too much to a domestic view. There is significant concern regarding the U.S. on the political as well as the financial front. The world is a very different place than in 2000 not just because of what happened during 9/11 but significantly more because of what happened in Iraq. Having the U.S. walk out of climate talks in Montreal as the ONLY country out of 150 simply reinforces an already bad perception. The alliance sands are shifting and this will results in significant shifts in the behavior of the financial markets. A lack of trust in U.S. policies brings with it an automatic lack of trust in U.S. financial markets and its currency. I have no doubt that the gold market is reflecting this uncertainty. What I do know is that Europeans are extremely uneasy about U.S. investments. Based on what I read, a similar sentiment can be found in Asia. This should come as no surprise when there is loud talk about protectionism and forced currency adjustments. None of this has much to do with Bernanke with the possible exception that nobody believes that he will be able to convince the administration and congress to reign in their excessive spending. The short term effects of rising interest rates are immaterial. Just as the group here on this board knows that eventually rising interest rates will kill the housing market and therefore a significant part of the U.S. economy, most every investor in the ROW is aware of this fact. There are reasons why the Euro performed so well over the past few years and it wasn’t because investors felt it would rise forever but simply because it was considered a safer alternative to a risky dollar. None of the fundamentals for this assessment have changed. In fact, the worries about imbalances have become more pronounced. Bernanke is just a side show in this who could exacerbate a bad outcome. The real concern is what happens when the big adjustments happen and where do you want to be positioned at that time. One thing is for sure, at this point, despite the short term risks, gold sounds like a tremendously attractive proposition to me.