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Strategies & Market Trends : HONG KONG -- Ignore unavailable to you. Want to Upgrade?

To: Tom who wrote (1111)	1/17/1998 2:00:00 AM
From: Tom	Respond to of 2951

Some pondering I posted elsewhere. Thought some here might be interested. MOBIUS ON EAST ASIA -- Is it merely conjecture? "A period of floating exchange rates in the region would prevent a similar asset price bubble occurring again but would also be an impediment to trade. Perhaps a system similar to the European Union's Exchange Rate Mechanism ( ERM ) could be developed in Asia. I believe that such a system founded on a gold standard could be implemented effectively in Asia. Of course, this would be fraught with difficulties." So sayeth Dr. Mobius. ---------------------------------------------------------------------- I say the following is worthy of consideration. As East Asian markets start to resurface, they begin accumulating the yellow metal. Only difficulty is that, at some point, the U.S. threatens to pull all support from their re-emergence for their favoring gold over greenbacks. But, the U.S. does so only after the greenback has fallen enough to provide some much welcomed relief to a few export sectors of the U.S. economy. Meanwhile, we are aware of how well gold reacts to a falling U.S. dollar. Gold's reaction, coupled with the threatening rhetoric is read, therefor, by many as merely a technical rally. The Asians disregard the chastisement for being just that, even as savy Western investment houses also begin to take shares in gold-based instruments. The pundits' prognosticating goes "poof," the metal dips once to tip it's hat to the pundits, then never looks back as the Asians from Tokyo to the Subcontinent renew gold's priority status. All the while potential Euro-members kick-up a fuss about consolidating sovereign monetary and fiscal policies. (Look for Spain to play an increasingly pivotal role as they share interests with North American policy-makers over their considerable S.A. holdings and indifference for Franco-Prussian strategies.) Should China crumble in the interim, none of the above will come about. Also, keep an eye on news from Germany as they have been cozying-up to Beijing for some time now.