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To: Bobby Yellin who wrote (4588)	12/21/1997 6:34:00 PM
From: Gabriela Neri	Read Replies (1) \| Respond to of 116814

The long bond will go lower. Lets take this phrase and think about the logic. Right now, 2 years yield about 5.65%. Thirty years yield 5.90% - a difference of .25%. HMMMM!! Why bother going into a 30 year treasury at this point in time when the pickup in yield is but a scant .25% versus the safety and security of a 2 year note, with little if any capital risk. For the long bond bond to go much lower, if at all lower, then one has to be thinking of a fed rate cut, its as simple as that, because long bond yields aint going to go through 2 year yields unless we have a recession, and I dont think that is in the cards quite so fast. (I am talking in the next six months) I find it hard to believe that our economy can go from a 4.5% rate of growth to recession quite so fast. Therefore, the long bond will go lower really says the fed will cut rates at this moment. I dont buy it.

To: Bobby Yellin who wrote (4588)	12/21/1997 6:45:00 PM
From: PaulM	Read Replies (3) \| Respond to of 116814

Bob Y, thanks for the kind words. I enjoy your posts as well. As you know, deflation can lead to inflation or even hyper inflation as govts try in vain to create the illusion of wealth during a depression. So my post doesn't set out a definite view on which will prevail in the coming years. To me, it really doesn't matter. Either way this is accumulation time for gold, which does well in any "flation" (i.e. any time people lose confidence in govts and corporations, which are the only things backing stocks, bonds and cash). Right now, the world has confidence in the U.S. backed paper assets. The reason is that: (1) the U.S. ran the lowest deficit of the major industrialized countries in recent years; (2) has had the lowest inflation; and (3) has grown faster than most of the other industrial countries. But the U.S. success is only relative. The rest of the world is already in deep trouble. When the U.S.'s credit worthyness is viewed with suspicion--and it soon will be--there will be no more safe havens Or no paper ones anyway. I don't think the Russians alone could affect the commodities market in the way you suggest. Also, I have no reason to beleive the Russians aren't acting like any other rational market player in current market circumstances. Do you think their sales were politically motivated? As for "world wide rebuilidng," I don't think that squares with the facts. World-wide, growth has been weak consistantly throughout the 1990's. Only financial assets have appreciated quickly (as a result of easy money, which is a response to the slow growth). Good Investing