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

To: Bill Murphy who wrote (29218)	3/1/1999 9:28:00 AM
From: Zardoz	Read Replies (1) \| Respond to of 116758

" It is very good." And very wrong. Warning this is a Hutch posting. Some people should've already hit NEXT. "For several months, AGORA has been very concerned with the possibility of deflation entering the North American economies and causing great damage to the stock markets, as well as, the wealth of the ordinary individual. In support of this contention, we have supplied endless amounts of data that pointed stronger and stronger towards this possibility. In fact, we discussed the real possibility of deflation before Alan Greenspan and The Federal Reserve Board finally mentioned it in September of 1998. Alas, we were vindicated and investors could now take our warnings ever more seriously." Deflation has never been the problem with the USA economy. Deflations was Europe's, Britain's and Asia's problems, but not the USA. USA problems have always been a over stimulated monetary policy that the markets use to create growth and earning, by creating a lower coporate bonds rate enviroment. This allows for higher earnings on those companies that carry large bond structures. And is the prime reason that the DOW companies can increase growth at faster rates then those of the Russell indexs. Growth is what was driving the US stock markets, and this is where the weakness exists. Agora is wrong to assume that deflation was EVER in USA, since they have ignored monetary inflation. mypage.direct.ca 1980-1999 This is a chart of M2 MACD versus DOW MACD, and in the last 1/2 inch on the right of the screen, you'll see a RED line where the slope becomes HORIZONTAL. That is where the DOW made the break to the downside. That is where the mention areas of the world felt deflation, and that is the point where M2 lack of liquidity caused a correction. As can be witnessed Greenspan increased M2 rate again {see rise of M2 rate from 100 to 130B, left hand side data} this is where the problem has now reached. Excess M2 inflation is showing it's signs in the form of higher yields {or real inflation}, as the M2 rate becomes horizontal. The REAL returns on bonds is always refelcted in the 30 yrs, and this is why the bonds have been having a rising yields. "Monetarism: The money supply is critical indicator of inflation, but it's role is fiercely debated. The school of monetarism believes inflation is purely the consequence of excess growth in money supply. For example: if the amount of money in circulation rises 10%, the rate at which it circulates through the economy, called velocity, is constant. If the supply of goods and services only rise 5%, then prices must rise 5% (more or less) to balance the supply of products with the money chasing it. Monetarists also believe the rate of growth of the money supply is entirely in the control of the central bank, through it's ability to print and destroy money." Canadian Security Course 1998 Alan Greenspan is the quintessential monetarist, and as such he adheres to the monetarist mandate which suggests that we are in a climate where M2 rate will decrease or at best level. And that will bring in inflationary trends which will take approx 3 months to develope. Since the market is forward looking, you can expect a market decrease: {No if ands or buts about it} The trend of M2 rate has not been fully normalized yet, and as such the DOW can rise, while the bonds correct back into lower yields. BUT this market corrections are systemic, and correlated to Europe and their deflationary recession. This has shown itself in the recent back tracking of the Euro into normal bounds. This does not bode well for GOLD as the foriegn investors will realize that the USA systemic correction is minor to capital loss of Europe. So they will take, as they have already, the oppertunity to invest into USA. Would you want negative real returns in Europe or Asia? This will lower the price of gold, as well as the production costs. As most gold is mined outside USA, but based in US Dollars for production costs. The XAU and TSE gold index's are already reflecting this. So the commodities prices will start a downturn if not this week, SOON. Bill, you said a while back: "I have better things to do than to respond to a negative human being like you. Do not bother to post to me again. Life is too short. You are just too puny minded and have no soul." When it comes to investments, their is no such thing as being a negative human being, puny minded, or souless. I don't become attached to an equity that is only a vehicle to make money. And that my epistle friend is what these stock and commidity are. Gold has no warmth, you can't eat it, and when shit hits the fan you still pay a premium to buy the goods you really need with it. To quote in the Shaka Zulu theme, I will beat my drums into a war against the believe that we should all get on the bandwagon, "because it's time". {this is the last failing war cry of a gold bull}. Truth be, gold has fallen prey to better forms of risk arbitrage, and a sign of this is the lease rates. Careful anaysis of currencies over time has shown a demonetariztion of gold. But the XAU offers a dividend proxy for the actual gold. Gold does have a saving grace... but not if you live in USA. Only a total melt down of currencies would cause a rapid rise in gold. Silver is still in a Buffet affect from last year.