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Gold/Mining/Energy : Gold & Gold Stock Analysis -- Ignore unavailable to you. Want to Upgrade?

To: GST who wrote (23044)	12/7/2010 4:49:24 PM
From: Jim McMannis	1 Recommendation Respond to of 29622

Rising rates are a potential inflation fighter. Gold, as an inflation hedge is spooked by that. The key is the velocity and where the perception is for where Berspanky is on the curve. If inflation is perceived as run away and rates are lagging well behind then Gold can run some more. We've had the best fundamentals with falling rates and Berspanky putting the monetary pedal to the metal. All said and done this could be a little bump up in rates and gold pauses and continues up later.

To: GST who wrote (23044)	12/7/2010 5:03:42 PM
From: ecrire	Read Replies (3) \| Respond to of 29622

The initial stage of rising rates is not necessarily damaging to gold sentiment, but if a rising interest trend develops, it creates competition for investment funds at some point. Too early to call today's move anything other than a reaction to the tax deal(which is vehemently opposed by many Democrats) or whether a trend has begun. If Europe blows up and the Dollar rallies the whole thing is just a one day affair but certainly is a factor to consider as an influence on Gold and Silver.

To: GST who wrote (23044)	12/8/2010 8:09:17 AM
From: carranza2	Read Replies (2) \| Respond to of 29622

Higher interest rates channel money out of gold and bonds into the stock market. Larry Summers's explanation for Gibson's Paradox is pretty much bullet proof. Gold does well when inflation is high and rates are low. Its rise in price under those circumstances is the 'yield' many think gold does not have. It is the antidote to negative real rates. In my estimation, higher rates will indeed tank gold but do so only temporarily as they are indeed indicative of macro difficulties. What needs to be thought about - and hard - is the fact that interest rates have been abnormally low for a very, very long time. They may simply be reverting to a more realistic level. If inflation, which is terribly mis-measured, stays at present levels as measured by the fraudulent CPI, and interest rates continue to go higher, gold will absolutely, positively go down. The present pressure on gold is IMO a reflection of this possibility. Having said that, the USD is indeed in very big trouble. Its difficulties are masked by the Euro's troubles and its status as a reserve currency, not to mention the fact that China, Japan and others hold huge amounts of it and are likely to support it as a matter of simple self-interest. In the short term, however, it is quite possible that gold's run has come up against a brick wall of rising interest rates. It will undoubtedly resume its march forward but when it will do so is unknowable. One would think that sooner rather than later, given the fiscal and monetary follies we are witnessing, but who knows. Am I selling? A bit. I'd be foolish not to take some profits and use them to buy later at lower prices. My PF is very highly concentrated in gold and miners, so some selling under the circumstances I see is a rational thing to do.