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Politics : WAR on Terror. Will it engulf the Entire Middle East? -- Ignore unavailable to you. Want to Upgrade?

To: John McCarthy who wrote (12866)	2/19/2006 11:43:15 AM
From: Rarebird	Read Replies (1) \| Respond to of 32591

The POG rose last year due to 4 factors: 1)new Dovish Fed Chairman 2)financial insurance 3)inflation hedge 4)capital gain OPPORTUNITY The inflation hedge is no longer a viable reason to own Gold since the yield curve has inverted. #1 is no longer a viable reason for owning Gold either as Bernanke made it quite clear that he will continue to raise Fed Funds. When the inflation rate is higher than the growth rate, Gold is basically a good trade. However, Gold does compete with bonds and short term monetary instruments. If I can get 5% come May 06 in a short term CD, why should I risk my capital in Gold or any other equity that is up over 5% in less than a few months? I am quite aware that the end of US reporting of their M-3 broad money numbers, and the planned start of the Iranian oil bourse (trading in Euros not $US) is a month away and that may be quite bullish for Gold, especially if the US is at war with Iran before then. But the Gold/Xau Ratio is under 4, which is basically bearish for Gold stocks, as it says that the gold stocks are expensive in relation to the POG: Message 22008592