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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: marcos who wrote (10364)	4/22/1998 1:57:00 AM
From: Alex	Read Replies (1) \| Respond to of 116815

ROFLMAO. Good one marcos. A cut from Kaplans' site.................... QUOTE OF THE YEAR-How soon we forget the basics of investing in this euphoric era, as aptly pointed out in the Sunday New York Times Business section of April 19, page 4, as part of a full-page article on gold mining. Said Christopher Holton, Vice President of Marketing for Blanchard and Company in New Orleans, arguing in favor of buying gold: "IF YOU WANT TO BUY LOW AND SELL HIGH, THE FIRST THING YOU HAVE TO DO IS BUY LOW." CONTRARIANS USUALLY WIN EVENTUALLY-According to a new study by Morningstar Inc. of Chicago that was published in Morningstar Investor, edited by Susan Dziubinski, the three equity fund categories that proved the most unpopular with investors in a given year went on to beat the average equity fund over the subsequent three-year period 78 percent of the time. The three most unpopular equity fund categories outperformed the three most popular equity fund categories over the subsequent three-year period 89 percent of the time. [In case you were on an extended vacation, by the way, gold mining was by far the most unpopular equity fund category with investors in 1997, with the average gold fund losing slightly more than one half of its value, indicating that it is likely to outperform in the years 1998-2000.] THE DOLLAR AND GOLD-There is an important historical relationship between the value of the dollar and the price of gold, since gold is essentially a proxy for a worldwide basket of commodities and the dollar is a proxy for a finite purchasing power which can be employed to obtain the same basket of commodities. Therefore, as the dollar drops, gold usually rises, though not always in synchronous motion nor in a predictable way. The recent decline in many of the currencies in East Asia makes it increasingly likely that exports from those regions to the U.S. will increase, while imports to those regions from the U.S. will decrease. Eventually this will cause a downward realignment of the dollar (which hasn't happened yet) in tandem with record trade deficits (which have already occurred), which will push the dollar down yet further. One important factor that has kept the dollar strong in spite of the fundamentals of the balance of trade are the strong U.S. stock and bond markets, particularly the equities market, which has drawn capital from abroad back into the U.S. Interestingly, as P/E ratios in East Asia collapsed, instead of these lower valuations spilling over into the U.S., capital fled from those countries into the U.S., further inflating prices. However, this will eventually have the same effect as changing deck chairs on the Titanic, as equities pricing--like all financial behavior must over the long run--inevitably trends toward the mean. Historically, as stock prices fall, the dollar usually follows, which will then cause an increase in the price of gold. A frequent early warning sign of a drop in the U.S. dollar is a drop in the shares of U.S. utility companies, followed or accompanied by a drop in long-term U.S. bond prices. Monday's sharp, across-the-board drop in utilities shares and the recent inching up in the 30-year U.S. Treasury yield to almost 6 percent could be pointing the way toward a weaker dollar. Moreover, as money exits the huge bond market, a small percentage of it finds its way into precious metals partly as a hedge against inflation.