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

To: Ironyman who wrote (31185)	4/5/1999 3:15:00 AM
From: Alex	Read Replies (1) \| Respond to of 116764

Hi Eric. Agreed. It's part of the pattern. Rehash the same old gold slammin news every so often. I wonder if there was this much debt on the planet 5000 years ago? And hey, who needs to save for a rainy day - the magic beans I planted are going to return 30%+ a year FOREVER. It' an immutable law right? A good read from The N.Y. Post................. FED'S RATE POLICY IGNORES INFLATION WINDS By JOHN CRUDELE ------------------------------------------------------------------------ IS inflation back? If you look at the economic numbers coming out recently, you'd probably decide that the nation's economy is growing steadily without a whiff of inflation. And if you don't believe it, just ask President Clinton. But there's a problem with that theory. Why then did the price of oil and gasoline rise so much in March as this year - 37 percent and 38 percent respectively? And why are other indicators of inflation, especially ones not controlled by the Washington bureaucracy, showing signs of perking up? It is much too early to blame the kickoff of the summer driving season for the rising price of oil, a favorite excuse for those who like to wish away any unfavorable economic news like this. Indeed, March is usually kind to energy consumers and prices often move lower because there is less demand for heating oil. While investors and consumers seem to have barely noticed the rise in energy prices, the bond market appears fully aware of it. Interest rates soared early last week before dropping back down Friday when the stock market was closed and Washington reported a worse-than-expected picture of the employment market.The bond market, of course, likes gloomy economic news and the rate on 30-year government IOUs fell to a still surprising high 5.60 percent. The jump in the price of oil only reaffirmed what the credit markets have suspected for a number of months - inflation is back. Bonds haven't been buying the notion that U.S. business conditions have reached nirvana, with the lamb of low inflation able to live with the roaring lion of an economy. Indeed, borrowing costs are substantially higher today than when the Federal Reserve last attempted to cut interest rates back in the Fall in an effort to bail out stumbling hedge funds. In fact, the Fed's accomodative attitude on rates - in addition to rising inflation - may be precisely what's scaring the financial markets into taking actions on their own. The inflation traffic cop has fallen asleep on the job. So the bond markets were already in a foul mood well before the latest problem of rising energy prices. How high will interest rates go? As I said in a recent column, the top may not even be in sight, especially if additional reports of inflation start appearing. And that's precisely what is happening. Even if you believe the rising price of energy is a fluke, there have been other bothersome hints that prices are going up. When the Chicago Purchasing Managers put out their latest survey, prices paid by those surveyed were reported to be sharply higher. The same was true when the National Association of Purchasing Managers released its recent survey. Two more flukes? There is hope that prices won't continue to climb. Unfortunately, this hope is based on the kind of tonic that's worse than the disease - inflation could be tamed because the economy seems to be slowing rapidly. This past Friday the U.S. Labor Department reported that only 46,000 new jobs were created in March, compared with the 170,000 jobs that the experts had been expecting. That helped bonds rally for a day and sent interest rates back to slightly more reasonable levels. As readers of this column already know, I have absolutely no respect for the Labor Department numbers - whether they are showing a weakening economy or, more likely, a politically beneficial strengthening economy. So take Friday's number with a pinch of Diamond Crystal, especially since the folks at Labor managed to get the unemployment rate to drop, even though the number of new jobs was the weakest in months. So here's the bird's-eye view of what the financial markets might be seeing in the weeks ahead: higher inflation even as signs of an economic slowdown like weakening corporate profits start to pop up. All this will lead to a lot of confusion. nypostonline.com