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Gold/Mining/Energy : At a bottom now for gold? -- Ignore unavailable to you. Want to Upgrade?

To: Bobby Yellin who wrote (1507)	8/6/1998 12:17:00 PM
From: ahhaha	Read Replies (2) \| Respond to of 1911

I agree with many things he has said. He is reaching a bit because he has forgotten the dollar's world reserve currency status and the fact that oil is universally priced in dollars. That status may be declining, but oil status and world trust still reside in the dollar. Much of what he says depends on this truth. He says, "In reality, a commodity rally can ONLY materialize if we see a dollar rally - not a decline. A dollar decline will only perpetuate global deflation within the commodity sector." Then later, "While we may face a 1 year deflationary mode that causes the dollar to surge, bonds to rally and commodities to fall sharply." Though the latter is not a sentence, it explicitly contradicts the former. I agree with the latter, but not the former, unless understood in proper context. Elsewhere he says, "Bull markets do NOT exist if they are taking place in only one currency. A TRUE bull market is distinctive insofar as that it must take place in terms of all currencies. When commodities, stocks, bonds or real estate rise in terms of ALL currencies, you find the greatest bull markets in history." You can see where the explicit contradiction arises. If commodities fall because fear of deflationary slowdown drives capital movement into trusted currencies, specifically the dollar, the dollar rises ceteris paribus. If Japan inflates and the US deflates, no change in commodities. If Japan inflates, US inflates, no change in dollar yen, but commodities rise. Same with Euro. The FED believes they are pursuing the right policy by supporting our will to inflate through rising wage demands. They should already have begun changing this attitude because the need to reflate the Japanese economy is now a growing perception in Japan and will inevitably if not immediately be enacted. At that time the FED must change policy, else we get inflation. The FED would then tighten, but due to the delay they are putting in place, the economy slows though wage demands don't commensurately. This starts the stagflation. The Euros are neutral in any circumstance. They'll inflate or deflate depending upon what the US and Japan do. If we and Japan are inflating, just like Armstrong says, the world could experience a commodity "greatest bull markets in history". However, it wouldn't last long and it would just run things up to the intrinsic major deflationary down trend that he expounds throughout the article.