Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers -- Ignore unavailable to you. Want to Upgrade?

To: loantech who wrote (56277)	2/4/2008 2:03:57 AM
From: marcos	Read Replies (1) \| Respond to of 78417

Those two should do well relatively, the usa.v is bare inches from dead bottom as it is, knocked back when it tried to bounce a month ago ... wgw/wgi.to has been four months around this level, if they run true to form they'll have happy news soon, i hold both of these and don't worry about them ... and they've both got drillbit upside as well to an extent, but i think if we do get a dip in gold the more pure explorers could be the only movers for however long it takes ... just musing on this, haven't traded much on the idea, outside of buying cpq.v in the last few days, and adding cn.v and gqc.v It's not certain we'll get a PoG dip here, before i had 960ish pegged as the level to sell off from, maybe 980ish ... doesn't matter, could be 1150, the following dip will be a buy opp for the metal and double for the stocks Had two separate conversations with real estate types this weekend, on interest rates, it was interesting how differently they saw the near future prospects, at the same time a bit odd how similar all three of us have approached rates over the years - never went long on fixed mortgages, always kept it to two year max and usually one year ... i've almost always gone one year closed for about a quarter point less, except went for the open when expecting to sell within the year ... but the big thing is term - outside of two years in the last thirty-five, it was always considerably cheaper to take a short term than long [and one of those years it wasn't much higher, the other was 1981 with 8% or so higher, oops] ... saved a lot of money over the years, and had greater flexibility to deal as well, just don't believe in the conventional wisdom that it's wiser to lock in for thirty years So the following was interesting, this fellow says Bernanke wants to keep it that way, if he wants to save banks, who borrow short and lend long - '... First, the following is a look at the yield curve at the close on "rate cut Tuesday" (to co-opt a CNBC-ism characterization, it's the day of the "surprise" 75 basis point cut) as well as post the 50 basis point official FOMC meeting gift to the markets (or rather acquiescing to market demands). Wonderful, the Funds rate magically dropped 75 basis points overnight to 3.5% and then was followed up with an icing on the cake 50 basis point drop a week later. Yippee. But as is clear as day, the Treasury yield curve remains meaningfully inverted short term, flat out to five years, a modest 60 basis points of steepness out to ten, and less than 140 basis points of steepness all the way out to thirty years as a result of these actions. The last time I checked, it's yield curve steepness that the Fed would really like to see, especially in the current environment where a major end game goal of the Fed is to rebuild weakening banking system and broader financial sector balance sheets that are currently being torn apart by mortgage paper related write downs and write offs. What you see above is not going to do the trick. In fact, when it comes to the financial sector, and the banking crowd specifically, lowering nominal short term rates set against current yield curve dynamics does nothing but increase interest rate margin pressure in an already wildly competitive and overpopulated lending environment. You've already seen the cat calls by the Bill Gross' of the world and other similar prognosticators calling for a below 3% Funds rate. Let's face it, unless the Funds rate is dropped to 2% or lower, all else being equal at the moment, just how is the Fed to engineer anything even approaching meaningful curve steepness? I don't know. If the curve remains inverted to flat, or even mildly positive at best out a good ways in terms of maturities, Fed Funds rate cuts are largely symbolic as opposed to substantive from the perspective of financial sector P&L and balance sheet reality.' financialsense.com