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To: orkrious who wrote (69984)	9/21/2006 12:53:27 PM
From: ild	Read Replies (2) \| Respond to of 110194

@sentiment in pm land -- trotsky, 10:41:56 09/21/06 Thu yesterday's developments have been noteworthy. i previously reported that inflows into the Rydex pm fund indicated a bit of an unwinding of the bearish sentiment that had been in evidence previously was underway. well, you can scratch that. it's back to 'everything's bleak' with yesterday's large outflow of $12m. at the same time, the premium of CEF to its NAV has now shrunk to its lowest level in about 5 months (it's now slightly over 4%). the relatively large premium in CEF in recent months has always been a bit of a fly in the ointment, so to speak. most remarkable is however the jump in put buying and the speed at which new put open interest is created in the XAU options. for instance, yesterday's volume p/c ratio came in at 1.77, with over 14,600 puts traded vs. about 8,200 calls. in the broader market you rarely see such options volume ratio spikes. what's really interesting is that quite a bit of the put buying apparently translated into new OI, as the XAU's p/c OI ratio now clocks in at 1.40. this is VERY high - definitely the highest reading of all of 2006, and higher than 87% of all readings over the past 52 weeks (whereby one must consider that the handful of readings higher than 1.40 were only marginally higher). such deep pessimism makes it increasingly unlikely that any additional substantial downside will actually materialize. when everybody is already leaning toward even more bearish action AFTER a big price decline has already occurred, it is time to look for a durable low imo. @China's economy -- trotsky, 10:25:36 09/21/06 Thu yesterday an interesting link to a recent presentation by Marc Faber was posted, in which he stated something i have long argued to be the case - namely that China's economy is in fact already far larger than anyone 'officially' believes. this can be easily deduced by looking at details of China's economic statistics, such as electricity generation or the value of imports and exports (as well as the percentage of global supply its commodities imports for instance comprise). the reason why China is officially classified as far smaller than it really is, is that a simple calculation of Yuan based economic data using present exchange rates without regard to purchasing power parity paints a very distorted picture. also, while it is comparatively easy for China to measure what's coming and going through its ports, it is far more difficult to present a comprehensive overview of the economy in its totality (this is not only a problem in China of course - the mathematical and formulaic side of economics is a bit of a pretend science everywhere, but China's bureaucracy obviously is well behind the leapfrog-like developments of its still quite new market economy). for instance, China's State statistics minions recently (a few months ago) revised the national output total upward by some 15% in one go - they had noticed that in previous beancounting exercises they had overlooked the development of entire new industries in the country. they simply had not been aware they existed, or mistakenly not deemed them big enough to be worth counting. an interesting implication of the above observations is that the baton of economic supremacy on the globe may be passed on much faster than was previously believed. this is of course not a problem at all (who can object to 100ds of millions being lifted out of poverty after all), but there are political forces in the West that DO see it as a problem. in a twist of irony, those people are the very same ones who do everything they can to hasten our relative demise - by waging costly, unnecessary wars and attacking our liberal (in the classical sense) traditions. China sits on the fence and watches bemusedly as we slowly bleed ourselves to death financially in some god-forsaken desert, and while liberty is rolled back bit by crucial bit in the 'land of the free' and its allies, it slowly but perceptibly increases in China (of course China is still under a dictatorship, but in e.g. terms of economic liberty is has already left us in the dust). anyway, all those predictions we have long heard regarding 'China overtaking us' are coming true - it's only happening much earlier than anyone thought.