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

To: Investor-ex! who wrote (17572)	9/5/1998 1:17:00 AM
From: Don Green	Read Replies (1) \| Respond to of 116764

You feel you understand Gold.. Well, I know the feel and know the same about Japan.. Spent 1/2 of my life there.. and have great respect for them.. Their problems are social/politcal.. The money is there it just isn't where the banks and govt can get at it.. Asians are Very thrifty..not like the west. Regards Don

To: Investor-ex! who wrote (17572)	9/5/1998 5:43:00 AM
From: Alex	Respond to of 116764

Is the Dollar's Rise at an End? The consequences of weakening U.S. asset prices When the US and Japan stepped into the foreign exchange markets to prop up a plunging yen earlier this summer, it was widely viewed as a measure that would work only if Japan took the necessary steps to break out of its economic malaise. Two months later, Japan is still beset by a policy vacuum and the economy remains in a slump. However, that has not stopped the yen from staging a remarkable recovery. A dollar would have bought less than 134 yen yesterday, compared with 146 just three weeks ago - the Japanese currency's strongest showing on the foreign exchanges since May, and the most pronounced bounce since the yen started its slide more than three years ago. The sharpness of the reversal against the yen largely reflects short-term fallout from the shock that has reverberated around the world's financial system, according to currency analysts and traders. That would suggest that the dollar's decline may be short-lived, and that it could bounce again once calm returns. However, the greenback's slide against the yen has been accompanied over the past week by a marked softening against the D-Mark and other European currencies. Rather than just a technical setback, the currency market is now signalling its belief that the long-term appreciation of the dollar may be coming to an end. The short-term technical factors behind the currency gyrations stem largely from the large gap between US and Japanese interest rates. For three years, speculators have played that spread by borrowing cheaply in yen, then using the money to buy US stocks and bonds. The low Japanese borrowing costs, rising US financial asset prices and steadily weakening yen were a potent combination. The crisis in the international financial system has interrupted this lucrative game. Many of these risky bets have been reversed - either because cash-strapped speculators needed to raise money to cover losses suffered elsewhere, or because the fear that has returned to the markets has encouraged hedge funds and others to back away from their most risky positions. The slide in the US stock market has contributed to the reversal of these dollar-yen positions, accelerating the dollar's fall, says Kevin Flanagan, money market economist at Morgan Stanley Dean Witter. The decline may have been accentuated by its timing. Japanese institutions typically halt their buying of foreign bonds during March and September, when they draw up their half-year accounts, according to analysts at J.P. Morgan. On top of that, many may sell US Treasury bonds to help cover losses at home before the end of the month. While these factors are largely technical, however, the US financial markets have been signalling their belief that fundamental forces may also be at work in the dollar's decline. "There has been a growing conviction on the part of international investors that US economic growth is slowing substantially," says John Lipsky, chief economist at Chase Manhattan. Short-term US interest rates have fallen below the official interest rate set by the Federal Reserve - a clear sign that the markets expect the Fed to cut rates before the end of the year to reignite economic growth. Lower interest rates and a slowing economy would both stem the demand for the dollar. Even if the Fed eventually cuts interest rates, though, it does not necessarily follow that the dollar has to fall. With Japan still a long way from fixing its financial system, the yen is likely to stay under pressure. The Financial Times, September 5, 1998