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

To: Zardoz who wrote (1763)	10/3/1998 6:08:00 PM
From: ahhaha	Respond to of 1911

On Wednesday I thought we had reached a short term top. That isn't likely now since the mark has formed a breakaway gap. Watch the mark for clues to gold. Germany is holding the line on interest rates while FED creates piles of money. This will have a monetary inflationary effect. The immediate response is that the nations practicing monetary discipline will see their currencies advance against the dollar. When the dollar which is the reserve currency is falling, the final arbiter, gold, must rise, because the dollar has a reserve value priority only up to gold. On 8/28 the mark made a convincing breakout. On 9/1 gold followed suit . In the third week of September the mark was consolidating with rising bottoms, similar to the big picture it had been portraying all year. The mark strength is being caused by a perception that inflationary forces are being put in place. Relatively, Germany is tightening, so their currency will rise. Gold is rising partially from the psychological effects of the rising mark, but mostly from the same perception that inflation is returning. The era of intrinsic deflation ended 9/1/98. When the Japanese start pumping which won't be long, the yen will rise against the dollar. This seems contradictory, but it isn't. Pumping will cause short rates in Japan to rise and you have the same relative tightening seen in the German case. It has been a major error for the FED to balloon the money supply in order to protect someone. This business of domino debt is the perfect red herring to fool the children at the FED to make the same error so many previous FEDs have: supply money when they should have been doing the opposite. In April Japan needed to pump and the FED needed to lean against the wind. If FED and BOJ had done this there wouldn't have been the T-Bond upside persistence that precipitated the LTCM mess and other fear and panic kneejerking which has caused the FED to paint themselves further into a corner. Instead they have made unrelenting outright injections for many months. It wasn't until August that the SOMC, that august body of money discipline, said anything. Now the FED must create ever more money because the market will be reluctant to provide funds. FED is already having trouble getting fed funds down. They are giving a new posting but nobody wants to attend unless they're paid.