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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 (62562)	6/2/2006 4:49:35 PM
From: sciAticA errAticA	Read Replies (2) \| Respond to of 110194

re: why didn't the Japanese hoard gold ---------- ... because of Rubin's successful strong dollar policy. ... when Japan was fighting the worst of its deflation, the global re$erve currency was king. ... another striking difference, though perhaps not directly related, was that Japan was sitting atop massive wealth in personal savings. ... the US is not so fortunate. ... in my view, attempts to draw inferences from a Japan - US parallel is deeply flawed...

To: UncleBigs who wrote (62562)	6/2/2006 5:00:42 PM
From: mishedlo	Respond to of 110194

Perhaps they did hold gold, I do not know one way or another. But Japan was one country out of sync with the world. We are in a situation now where the US, UK, and EU are close to K-Winter. That is a huge chunk of the world's wealth. At one time, most all of it. Now we have to figure out the effect of China and India. I have no idea where China is in the cycle. Technically nowhere as the k-Cycle is a free market not a command market phenomenon. However GST will correctly point out that outside of some command central silliness, China is far more capitalistic than the US (at least I think he would say that) and no doubt he will correct me if I am wrong. At any rate, this cycle will probably not play out exactly like Japan or exactly like the 1930's either. I doubt gold gets confiscated. But they could put a 100% tax on profits or something. Who knows? I am open to the possibility that gold does not soar during deflation, I just think it is likely. If for some reason I am wrong and gold declines, miners will be crucified IMO. The risk on gold is that people holding it as an inflation hedge, toss in the towel when it is aparent that something else is happening. Once can not underestimate the effects of unwinding various carry trades either(again look for my piece about carry trades on Monday or Tuesday). Once the panic out of gold (because of deflation not inflation occurs), I believe we have one last chance to catch the train up. That is sort of how I see this all playing out. It is a fairly complex situation that will rhyme as oppose to match other past deflationary periods. Mish