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

To: gmccon who wrote (21914)	10/18/1998 4:04:00 PM
From: Giraffe	Read Replies (1) \| Respond to of 116767

October 16 The price of gold has fallen 40% (gold stocks 50%) since 1994 to the $300 range as investors have chased a speculative bubble in paper assets. Buy Signals are not partial to gold, but to markets which have been marked down in price. Metals may be as over-sold as financial assets are over-bought. The longer-term outlook for gold is good, however, gold stocks are paper first and reflections of gold price second. In 1987's crash, gold went up but gold stocks collapsed with common stock prices. Wall Street may be heartened by the Fed's move but the average investor has been looking at losses this week on their quarterly mutual funds reports - and more volatility. Also, a potential 'head and shoulders top' and unimpressive late-day action in the XAU index (despite dollar weakness, stable gold prices and a supportive overall stock market) warrants caution in the very short term. Dr. Alan Meltzer, Chairman of the Shadow Open Market Comittee, and Jerry Jordon of the Cleveland Fed believe that the Fed's rate cut was a mistake. Dr. Meltzer cites high money growth and a strong interest-senstive sector as economic strength and argues that present low inflation is an anamoly of low oil prices (and other temporary factors) which, when relieved, will add to the core rate of inflation of 2-2.5% in an environment of high unemployment. That would also underscore the expectation of higher metals prices. It is not the role of senior citizens and others dependent upon fixed interest earnings to subsidize hedge fund gambling. That is the effect when interest rates are lowered to bail out speculators. Those willing to take the risk should suffer the loss and there is no value to the economy or market, as Dr. Meltzer cites, in reviving a speculative bubble. buysignals.com