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

To: Jim McMannis who wrote (20716)	10/5/1998 4:28:00 PM
From: Ken Benes	Read Replies (3) \| Respond to of 116825

Jim: I have two observations about the bond market and the gold market. Relative to the bond market, current commentary states that the drop in yields is due primarily to the long bonds safe haven status. While this may be true, I am hearing that a big part of the increase in the price of bonds is due to the hedge funds unwinding their short positions. This may be drawing in additional monies, however, those not covering a short position may be setting themselves up for some disappointment if the yield backs up. I find it hard to understand, why anyone would invest in a 30 year instrument yielding under 5%. For safety cash may be king and safer, in that many banks offer money instruments yielding 50 basis points less than the long bond and in denominations of under 100 thousand insured by the FDIC. As to gold, the central bankers still have many tools at their disposal to cap any gold rally that may precipatate a flight to quality in the metals market, which could undercut currencies and bond markets. It appears that the metals have been so totally denigrated that nothing short of a panic situation may instigate a move over the 320 price level. For the moment a trade in the XAU range of 50 to 80 may be the best that can be expected. Ken