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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: MulhollandDrive who wrote (8253)	9/13/2007 5:57:40 PM
From: Hawkmoon	Respond to of 33421

Excellent post and good food for thought... and i'm no 'gold bug'....in fact i despise the 'shiny relic' as an investment....but you have to go where the markets lead <ng> Yeah.. I certainly am not either. But there's only so much gold out there and when it gets to a point where its value forms a bubble in its own right, those producers are going to be selling forward like gangbusters to lock in profits. Heard an interesting comment from a CNBC guest about oil hitting $80/bbl this week. Apparently the 12 month price average for oil is still around $75/bbl so this is a short term crunch, one analyst opined. Of course, he hedged in saying that if demand increases above the expected norm, then all bets were off and the short-term price increase would turn into a longer term futures expectation. So I'd be curious as to what the projected 12 month average futures price is for Gold. Anyone have a link to that data? that said, east economies recognize that the western economies are their primary market....they don't want to kill the goose that lays that <cough> golden egg Definitely concur.. But what I'm curious about is whether China can spur its own internal consumption of goods beyond the level that it exports to the west. For a healthy economy to develop they can only rely upon export generated GDP growth for so long. It's all well and good to "commoditize" certain manufacturing parts to its lowest cost location, but final integration into systems/services (eg: basic computer hardware versus higher margin network software that goes on it) has to keep pace. And having China produce all of these components for various final products is not particularly wise. There are other countries, such as India, Malaysia, or even Russia, who have a highly educated populations that can manufacture these commoditized components. Its fine for them to build parts for aircraft, but where we have to worry is when they start building the aircraft for themselves. The same with high quality automobiles. And if we have to worry, the Europeans have to worry even more. As for diversifying manufacturing away from China, you make a very good point. One of the reasons we've done so is because Chinese people are particularly productive and very appreciative to have the work. We've tried to do the same thing in Latin American and it's not worked to the same extent, despite the very low wages there. But that might also be changing. Mexico is coming under extreme pressure as its oil revenues diminish, and fewer USDs are repatriated back home from the illegals working in the US. And I know from last year, the average wage of a hotel working in Cozumel is about $5/day. So there is potential there, if productivity can be achieved that compares to Chinese workers. But the primary problem is going to derive from China. But a US recession will be the trigger for that, IMO. It's all very interesting how we're seeing globalization redefine the financial markets. Hawk