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Gold/Mining/Energy : Barrick Gold (ABX) -- Ignore unavailable to you. Want to Upgrade?

To: akidron who wrote (603)	4/23/1998 10:10:00 AM
From: IngotWeTrust	Read Replies (2) \| Respond to of 3558

Au stx ARE a hedge in falling mkts. HOWEVER, 1st wave o'selling normally decimates Au stx as well. Why? B/C most everyone in gold stocks also owns MSFT, CSCO, INTC a/w/a internet stocks, and when these are liquidated by money fund mgrs, the downdraft cause all highly leveraged (read 200% margined) investors/gamblers to liquidate whatever to meet margin calls. Said historical perspective gives the downdraft the money fund mgrs require to knock down the gold stocks' share prices and THEN they pile in as a hedge. As such, there are primarily 5 vehicles they use: ABX PDG NEM Agnico Eagle. & HM These 5 are the only ones basically liquid enough to handle massive inflows. And the #5 one isn't exactly at the top of ANYONE's buy list! Good Investing O/49r

To: akidron who wrote (603)	4/23/1998 1:12:00 PM
From: ahhaha	Read Replies (1) \| Respond to of 3558

Yes. The tail doesn't wag the dog. You have to be careful about interpreting short term actions in complex markets. When the BOJ sold dollars, the result was receipt of yen. In Japan short rates briefly rose which is contrary to the reality of a bigger supply of money ceteris paribus. So why did rates rise? They rose because of instantaneous uncertainty. When you don't know what's going on, you sell if something significant has occurred. In this case the Japanese withdrew money and created a short term illiquidity that wasn't anticipated by the BOJ. Within 24 hours the situation was corrected. Gold can rise with an increase in short rates because the market perceives the rise is insufficient to bust monopoly union inflationary wage demands. Gold can rise if repeated hikes are high enough but are too distributed over time enabling the trouble makers and economic society in general to adapt to the punishment. Central banks are the only force available to engage in union busting. Union busting has the most value to members of unions. When stock prices fall precipitously there is great uncertainty. Most don't know why things are happening as they are, so they automatically reach for the financial security blanket. Even the central banks tacitly admit that that blanket is gold. They may sell gold from time to time, but that is posturing and positioning at the margin to justifying the expense of econometric motivated tinkering. If the Swiss central bank can make $10 million playing Goldfinger's game, the bankers can esteem themselves clever capitalists who won't be outwitted by the Yankee imperialists. There are other circumstances where gold is both anti-correlated with rates and correlated. I'll mention just one of the many: high rate induced pure deflation. Gold can rise even faster there than in hyper -inflation because of uncertainty, the uncertainty of scarcity depression. Hyper-inflation ends in pure deflation, but the world has very little experience with pure deflation. Wheel barrels of fiat currency don't necessarily encourage people to produce. You can lead a horse to water, but you can't make it drink. The one constant in the wild swings between excess and paucity of currency is gold, so regardless of what part of the swinging cycle you're on, with big swings there is security only in gold.