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Politics : Dutch Central Bank Sale Announcement Imminent? -- Ignore unavailable to you. Want to Upgrade?

To: Bill Murphy who wrote (6065)	5/20/1999 6:29:00 AM
From: long-gone	Respond to of 80924

Good, All I want is a free market, not a "repaired" market.

To: Bill Murphy who wrote (6065)	5/20/1999 3:21:00 PM
From: Doug Green	Read Replies (1) \| Respond to of 80924

Bill, Getting back to your opening comments on this thread: Is anyone familiar with Leo Wanta & his ex-Soviet CB gold dealings as revealed by Orlin Grabbe, Skolnick, Claire Sterling etc.?

To: Bill Murphy who wrote (6065)	5/22/1999 10:35:00 AM
From: ForYourEyesOnly	Respond to of 80924

Recommended Reading: Date: Wed Jan 06 1999 21:49 D.A. (the.story.remains.the.same) ID#7568: Copyright c 1998 D.A./Kitco Inc. All rights reserved All: Happy New Year. The rally in the equities market is just more of the same. The valuations are of absolutely no consequence as absurd as they are, they will get more absurd until one and only one thing derails this market and that is the decline of the bond market. As long as the bond market does not force the Fed to raise rates to a level which curtails the current rampaging growth of money ( credit ) , the price of the favored assets in this inflation ( stocks ) will continue to rise. The idea that the financial markets would decline as a result of a nominal deflation has always had the achilles heel of the Fed money printing response. This has been amply demonstrated in the last quarter. As the market began to decline and gather steam on the downside amidst the so called deflationary contagion, the Fed merely stepped in, lowered already low interest rates and caused yet another cycle of surging money growth to ensue. Voila, the Dow is rescued. The only thing that will kill the market is the rise in asset prices of things which require real economic effort to duplicate them. If the price of Amazon.com goes to 100 billion dollars all that happens in the real economy is that 1000 other Internet IPO's are launched in an effort to cash in on the mania. Since there is very little economic effort ( labor, capital and materials ) required to create one of these things there is no ensuing strain on the economy in terms of resource allocation. Hence there is no effect on the bond market. However, let the price of real assets begin to rise and all of a sudden people are scrambling to build the assets because their price is well higher than the current production cost. In creating a building, a lumber mill, a copper mine or cargo ship there is real economic effort expended, and the economy has just so much of it to go around. Once it is spoken for then we get into that situation known as inflation and bond holders are unhappy. Bear markets are brought about by the absence of liquidity ( money/credit growth ) and not by anything so rational as the notion of overvaluation. Valuation is useful at the other end of the rainbow, but not here. To get a sense of the extraordinary happening over the last few years one need only look at the growth in money. From Jan 1989 to Jan 1995, a period of 72 months, about $400 billion of money was created through the combination of outright printing and expansion of bank credit. In the ensuing 48 months, or 2/3's of the time, an unbelievable $1.6 trillion dollars of new cash has been created. It is little wonder that some asset prices have gone ballistic. If you want to know when the stock market will end, simply watch the bond market. If you want to know when the bond market will end, simply watch the commodities markets. If you want to know when the commodities markets will rise, keep an eye on the economies which basically stopped consuming them a year and a half ago and see if things change. Korea for example, has now registered 4 consecutive months of gains in industrial production. Given the outsized speculative short positions which exist across the commodities sector, it would not be surprising, if the first move off the bottom was an explosive short covering rally. That inventory levels of many commodities are extraordinarily low relative to their price, allows for the possibility of instant short squeezes and severe backwardations. Gold will have its time, but it will not be because of spiraling deflation. Instead it will be the recognition that the Fed is unable to curtail inflation pressure because doing so would destroy the credit pyramid.