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

To: Bobby Yellin who wrote (15345)	8/5/1998 2:42:00 PM
From: Daytek77	Read Replies (1) \| Respond to of 116763

Bobby I hope you don't mind me responding to the article you posted from PEI. I found this report interesting but incredibly inaccurate. It serves only his interests in justifying Gold @ $192 silver @ $3.00 and bonds @ 156!! The fact that he is short silver and (perhaps) gold and probably long bonds doesn't make his myopic conclusions correct. For example he states that..." weakness in the dollar during post '85 G5 era has caused the majority of damage in commodity prices" He claims that Japan's importation of large quantities of commodities has contributed to the bubble economy. I feel that rampant speculation in everything from paying $18,000 per square foot of real estate in the Ginza district to paying 300-400 times earnings for stocks had more than to do with it. This should ring alarm bells because that is precisely the type of environment you have in some U.S. stocks and real-estate today. Let's explore this weak dollar has caused commodity deflation not strong dollar point. I checked the U.S. dollar index and Mr. Armstrong would be surprised to know it has moved from the 80 level in mid-95 to 100-102 level recently about a 25% move. Meanwhile virtually every commodity is in a downturn especially economically sensitive ones like copper and oil. Both of these commodities are down about 50% in the last 3 years. This does not jive with his conclusion that a strong dollar makes commodities rise not fall. What would happen if the U.S dollar index went to 125? Would commodities rise dramatically or fall even further? PEI concludes with this incredible statement. "We may need to see $192 gold, $3 silver and bonds at 156 in the US with a 23% correction in stocks (50% in high tech), 40% in Europe and a China and Russia devaluation before the trend in commodities will be reversed." Most people believe that a devaluation in China will create exactly the opposite of this conclusion, in fact it will probably cause a global depression and that isn't going to make commodities rise. Tony P.S. here is a monthly chart of the U.S dollar index. You can use it to compare with any other commodity in this time-frame. It will prove this PEI report has no merit IMHO. tfc-charts.w2d.com