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

To: yard_man who wrote (11953)	5/26/1998 2:04:00 AM
From: Pete Young	Respond to of 116819

>>If one could be assured that the govt finances would hold together, obviously, the 30 year would be the cats meow.<< >Initially maybe. What if the dollar slides when the market weakens and the trade deficit balloons?< Well, it's probably true we are going to see Japan and SEA try to continue doing the same ole stuff. Inevitably, if Japan and SEA sell enough stuff to us, the Yen will appreciate with respect to the greenback. Will Japan start to sell Treasuries because of the weakening dollar? I don't think it's just a dollars and cents (or yen) kind of question. Japan has to keep loaning money to it's best customer (us)in order to keep things going---sell Treasuries, tank the market, end of orders, and probably trade sanctions from the US/Europe to boot. (Something we might of tried already but for the massive amounts of debt Japan holds.) This whole SEA problem was started when China devalued in 1994, making SEA uncompetitive, just as SEA made Japan uncompetitive earlier. China may devalue again, as SEA/Japan continues to export at lower prices. This will further lower prices. Won't this round of devaluation lead to lower interest rates, as prices drop? I'm not saying that this will continue forever...it might be good to jump out of bonds somewhere in this process and into something not tied to to the US dollar---but what? Gold doesn't do all that well in a deflationary environment--correct? (If you accept that deflation is what is going to happen in this beggar-thy-neihbor situation between China, SEA, and Japan.)