Would be nice if we could get hime to post about this - are you lurking, Max?
My assessment is that deflationary trends are dominating inflationary trends in the US for the following reasons.
Deflationary:
1 ) WJC in trouble now even with his own party.
2 ) Recession looming in US -- markets picking this up.
3 ) World-wide deflation, commodity prices likely to drop more.
4 ) US up to its eyeballs in debt
5 ) Y2k pending.
6 ) Interest rates dropping.
All of the above will either pull the markets down, or destabilize them.
If they begin to drop.
Inflationary:
1 ) US dollar under attack -- many reasons
2 ) AG likely to lower rates, but only after markets go down some more.
3 ) Unions showing more spunk, but still hit hard by cheap foreign labor.
The only way inflation could come to US shores before inflation would be if foreign investment is so high that WJC's woes cause massive foreign selling of US investments -- equity and treasuries. But that requires that foreign investors have a viable alternative. Not too likely given what is happening in Russia ( threatens Europe ) , Japan, and South America.
So -- it would seem that deflationary effects will dominate in the US. There is not even a whiff of inflation in the US right now.
But -- if we go into a recession for a year or so, and AG lowers rates to 'prime the pumps' that might very well trigger another inflationary round -- probably after the markets drop some more when everyone realizes tha WJC is personna non grata with his own party. Just wait till the K Starr report comes out.
What is my assessment on gold investing? Buy on the dips, sell on the rallies -- for a bit longer. Not much longer, either.
Anyone with a little cash to burn may want to wait for this rally to fizzle, and buy appropirate index puts. The continuing market bear is about as sure a thing as things can get, considering what will happen when all of those market investors find out that WJC is no longer an accepted member of the Democratic party. I doubt there is anything the 'comeback kid' can do this time.
I think a market crash is unlikely -- a crushing bear with intermittent rallies -- as the Oldman predicted -- is more likely.
From Money Daily....
"Many of the observers that Money Daily talked to said that,
even though the Fed is believed to have adopted a neutral
status at its most recent meeting last month ( meaning it is
inclined neither to raise nor to lower rates ) ,
that Greenspan will resist pulling rates down quickly.
Even after the recent stock market sag, they point out,
the Dow Jones Industrials remain at a higher level than
they were when the Fed chairman made his famous comment
about the market's "irrational exuberance." ....
And a poll of economists at several banks and investment firms
found none who expect the Fed to take action at the September
meeting. The betting on a cut before the New Year was only 50-50."
CHET CURRIER
NEW YORK ( AP ) Fear of fall follows markets' summer of discontent - Hardly anybody is in a mood to celebrate as Wall Street marks the traditional "business New Year" at Labor Day.
It has been a stormy summer in the worlds stock and bond markets. As investors and brokers pack away their vacation gear and get down to business, the big debate on the Street focuses on whether a 16-year bull market has ended.
Without question, many investors large and small have suffered painful losses in the markets recent retrenchment. Wall Streets pivotal markets have been battered for nearly two months. Canadas most important exchange has lost almost 30 per cent of its value since its May record high.
But staunch optimists say some beneficial things have also happened, setting in motion forces that may extend the bull markets life rather than killing it off.
"The average New York Stock Exchange and Nasdaq stock is down more than 40 per cent from its high," says Thomas Galvin, chief investment officer at Donaldson, Lufkin and Jenrette Securities Corp.
"The breadth and sentiment deterioration are quite comparable to those in the 1987 crash. Aside from the current global political quagmire, apprehension is mounting about a U.S. recession next year."
But Galvin offers three lessons from the 1987 experience:
- Sentiment is worse at the bottom;
- Stock market declines do not accurately forecast recessions;
- Individual investors have cooler minds than trigger-happy institutional investors.
To be fair to them, institutional money managers face pressures that force them to think about short-term trends in the market, in a way that individuals with long-term horizons need not do.
Clients of pension funds and holders of mutual funds can pull their money out of a managers care on short notice if they dont like the way things are going.
So assurances about the soundness of the domestic U.S. economy and the long-term upward bias of stock prices provide limited reassurance, and carry no promise that more nasty declines wont occur in stocks.
Nevertheless, once you get past the emotions now running so high in the markets, some important positive things can be said. To whatever extent the bull market was based on what chairman Alan Greenspan of the U.S. Federal Reserve called "irrational exuberance," that excess has been diminished.
Just a couple of months ago, many people thought the Fed might raise interest rates to cool things down. Now nobody expects any moves in that direction, and the talk instead is that the central bank should cut rates.
Or policymakers may wind up taking no action, silently thanking the stock market for having done the dirty work for them. Stable credit conditions are benign.
Already money flowing out of stocks and into bonds has driven long-term interest rates downward - indeed, to their lowest levels in 30 years.
Forgetting for a moment how the situation feels in emotional terms, each drop in a stocks price makes it more attractive to buy and less attractive to sell.
Declines may compound fear for a while, creating what looks like a vicious cycle. But sooner or later the pendulum must swing back, unless you believe the world is headed for oblivion and the Dow Jones industrial average is going to zero.
My portfolio would bore even you. I am looooong term w/ my IRA's, keough's, 401k's, etc. I 'shoot' for ONLY thirteen percent over the long haul. I have already done the math loooooooong ago and I know what I need and I have set a game plan loooooooooooong ago. My game plan will not change and you should NOT change your game plan either. But.......DO know that there are winners and losers...........I will do EVERYTHING I can to be on the winning team. And that does not mean I must sell my soul...it just means I need to pay attention and use sound strategies that I have been taught loooooooong ago by my father and grandfather and great grandfather, etc.
PM stocks, imo, are not long term growth. They are VERY speculative plays. I think JD and Nick@C and even GSC would tell you that.
My portfolio does not consist of ANY gold stox currently......NONE. But that doesn't mean they won't ( they will ) . This is why I am here. Not to read all the rantings of cheerleaders but to read sound, thought out, reasoned posts from people who, imo, have made good market moves in the past and will be there in the future to make MORE good market moves. That is all Hatt............. ( wink ) .
Now.....where did I put that plunger?
away....to learn plumbing
ppt
What worries me about gold bullion is that demand could dry up intermediate term -- India will no longer be a major consumer of gold very soon -- their markets are weakening. One problem with gold is that you have to have spending money to buy it. Anyone who is broke will be selling, not buying.
I think the new big net buying in gold will come from Europe ( Russian panic ) or for the US -- eventually. Those growing gold coins purchases are an early warning indicator.
It is really tough being a gold bug when the US dollar is still considered the world's backup currency. Notice how much the US dollar has dropped relative to the Swiss Franc? Over 5% so far. I'm not sure the German mark can now be used as a 'gold standard' given their blown Russian investments, and proximity to the lit fuse that is Russia.
Looooooooooooooooooooooooooooooooooong term Dave.......loooooooooooooooooooooooong term.....but you can continue to buy gold I won't stop ya. More power to ya.
away...from 1929......
livesinthepresentandstudiesthepast
If gold equities continue to rise, it can only be due to WJC's problems, or AG promise to lower rates. I sure would like gold bullion to confirm, and move out of that two year bear trendline.
EVERYONE. SELL THE DOW! SELL ALL STOX NOW! BUY GOLD UNTILS IT COMES OUT YOUR EARS!!!!!! STOX WILL CRASH!!!!!!!! READ MY LIPS!!! ITOLDYASO!!!!!!!!!! YOU READ IT HERE FIRST!!!!!!!!!! YAHOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO!!!!!!!!!!!!!!!!!!!!!!
I AM SOLD!!! LOOK OUT BELOW!!!!!!!!!!!!!!!
AWAY!!!! TO CALL MY BROKER!!!!!!!!!!!! NOOOOOOOOOOOOOOW!
IGTIMEEAR!!!!
Let us hope that the AG/RR team does not fall apart too quickly with the demise if WJC. I think AG is conscientious enough that he will not jump ship abruptly -- even if he might go down in history of begginning and ending his FED Chairman with a market demise. He risks presiding over two crashes, but I think as long as he and RR stay together, the second crash will not materialize.
Who knows, AG ( and RR ) may go down in history as the few competent non-Congressionial, non-Supreme court leaders in our current government who have kept the barbarians at bay. Who else is showing any signs of leadership? WCJ?, Madeline Albright? Janet Reno? I wonder about Janet Reno's IQ -- she must not be very perceptive to have attached her wagon to the wrong horse. Now she is almost assured to lose her retirement medical coverage -- the very threat that probably caused her to support the president. Do you think she will be accused of obstruction of Justice? Everyone else seems to have got his or her fingers caught in the cookie jar -- so they are excluded, leaving only AG and RR.
The American people may look to the government for help -- but it will certainly not be without alot of house cleaning. It is entirely possible that power will shift to the states where problems will be easier to resolve. Wonder just how much more solvent the States are vs the US government.
And -- 'Big Brother' may be watching us, but we can watch 'Big Brother' too. Look what happened to the figurehead of 'Big Brother', WJC.
Crazy times, aren't they? It may not be long before your black gold flows again -- at a profit. Probably depends most on how the US dollar fares on the international markets, and on the US commodity price indices. And Saddam is being allowed to rearm, so that we will have someone to fight. Too bad our unfortunate Armed Forces have to put up with our rudderless foreign policy. Can't get any worse, I think, and our next Republican president is likely to be popular with the military.
Whoever it is will have alot of cleaning up to do, though some of it will be done before he/she takes the oath of office. Hope whoever it is does not get blamed for y2k.
Watch the next couple of days to see if the down trend continues....that should be a sign to bail on gold mining stocks IMHO.
http://www.pcis.net/jeannev/jeil.htm
Also, the KS team is going through the Nixon records for impeachable offenses.
According to M Drudge, the Starr report is going to Congress in the next few days. Could be devastating to the equity markets if KS has anything significant. Security must have been tight if WJC's lawyers are asking for a preview on the Monica part before it goes to congress. I'll bet KStarr had a good laugh about that one. Recently KS looks alot happier than WJC.
http://www.drudgereport.com/matt.htm
My guess is that gold equities will get another pounding if the WJC business makes the markets take it on the chin, offering an opportunity for purchase of some gold equities. Unfortunately, one must be nimble in these markets, so I don't think it is worthwhile to 'shoot your wad' in precious metals equities quite yet. Gold bullion needs to confirm the gold equities rally -- probably would happen if WJC is likely to be impeached.
The irony of the impeachment proceeding is that a large portion of the process is a popularity contest. The Dems are moving away from WJC, and once it is clear that the polls are revealing his popularity is heading south, the feeding frenzy will begin. Kenneth Starr has played the media almost as well as if he had access to WJC's spin team, IMHO.
Probably the only thing that would save WJC at this point is a persistent market rally. Pretty unlikely --.
Thus, the financial crisis has finally focussed on where it was always ultimately going to focus, the ultimate world "lender of last resort", the U.S. Fed - and Treasury. Everyone else, the IMF, the G-7, the World Bank, the Japanese Government, has tried and failed. Now, the Fed and Treasury are front and center. And, of course, they MUST succeed. There is no "higher authority" to appeal to.
The bet that they will succeed is awesome, as witness the huge 380 point upside explosion on the Dow today.
The Privateer has posted an update on our Dow - Japanese Nikkei comparison charts. They are still moving in lock step as they have been doing ever since the Fed/Bank of Japan joint intervention to save the Yen back in mid June.
We have added a feature to the chart this time. Three links to the ideas of Fed Chairman Alan Greenspan - spread over a time frame of 32 years. First is the speech made at Berkeley on Sept. 4. Then, there is the famous "irrational exuberance" speech made in December 1996. And finally, there is an article written by Mr Greenspan in a "different life" - way back in the summer of 1966.
You will find a link to the updated charts, and Mr Greenspan's ideas, on The Privateer's home page.
This is the biggest bet I've ever seen, based on two assumptions. The minor assumption is that the Fed will lower rates. They very well may. The second and major assumption is that this act will "fix" everything. I have one question to ask. How?
I lost 10k in gold equjities Oct 97, and am proud to profess bailed out of almost all equities the day before the 20% correction ( much worse in gold equities ) . They make an excellent early warning indicator for the general markets.
By hindsight, should have bought some at the current gold equities bottom, as you did. So -- my hat is off to you if you put all your liquid assets in gold equities at the last bottom, and made 30%, without losing on the earlier downside.
Out of curiousity, do you know the American phrase 'shoot your wad?' It means take all of your safe assets and put them in somthing that appears to be a sure thing.
Please tell the rest of us why you think gold equities are so safe that you can risk all at this point. What if South America implodes in a few days? Will gold equities go up or down? What if CRY0 continues to fall off a cliff?
My best investments by far in the last few months have been in non-US currencies and Mexican index puts -- the latter up nearly 400%.
The consortium, which includes Canada's Noranda Inc. , Rio Algom Ltd. and Teck Corp. , must formally commit to developing Antamina, one of Latin America's most prized mining projects, by September 16, or forfeit its rights.
Growing fears of a global economic downturn and its impact on stagnant metals markets had led to speculation the consortium had asked or would ask the Peruvian government to postpone the deadline and allow the companies more time to arrange Antamina's financing.
Consortium members dismissed the rumor as unfounded.
"That's wrong. We are working to the September 16 deadline which was in the original contract and we will make an announcement by that time," said Rio Algom's Corey Copeland, a spokesman for the consortium.
Copeland said the consortium remained positive about Antamina, but he refused to indicate whether it was close to giving the green light to the project, located about 385 kilometres northeast of Lima in the remote Peruvian Andes.
The high-grade Antamina deposit could, if developed, become one of the world's largest copper producers. A feasibility study released in March indicated the mine could produce 600 million pounds of copper and 360 million pounds of zinc annually over a 20-year period.
But the $2.5 billion needed to finance a mine and processing facilities has already forced one Canadian company, Inmet Mining Corp. , to bow out of the project.
Toronto-based Inmet had planned to share Antamina with Rio Algom until earlier this year, when the project's price tag prompted nervous shareholders to lobby for the sale of Inmet's 50-percent stake.
Toronto-based Rio Algom and Noranda now own 37.5 percent each of a partnership formed to develop Antamina. Vancouver-based Teck owns the rest.
A decision not to go ahead with Antamina would be a crushing setback to Peru which has suffered a string of delays to major investment projects, including the withdrawal of Mobil and Royal Dutch Shell from the $3 billion Camisea natural gas project.
Peru's economy has been hard hit by the Asian financial crisis and the impact of freak El Nino weather on the economy. The Peruvian government had counted on international investment to help it cope with a widening current account deficit.
( $1=$1.52 Canadian )
I knew he loved Bongo Drums, and was a very colorful sort -- but quality poetry I did not expect.
That poem describes local entropy violation -- eddies in the space-time continuum where life eventually coalesced from the elements -- when it should not have happened according to the Second Law of thermocynamics.
Even Feynman's lecture series -- which I am looking at right now -- do not describe how life could have formed on this planet. Should not have happened.
So -- now we know that local fluctuations can occur in entropy, and order can arise from disorder -- as long as excess external energy is available -- with cyclic oscillations near a critical opalescence point.
By the way, I also have several collections of Einstein's works -- one titled Ideas and Opinions ( essays ) , and one in a book called 'The Art of Creative writing'. I have yet to come across a poem that Einstein wrote, but I expect that he did, too.
Have you noticed that mathematicians, poets and musicians have alot in common?
a few billion dollars could buy the whole market. The total market cap for Dell computer is only 80 billion dollars. One could take two billion and buy all the Gold funds. Even if the entire pc sales is 160 billion, your money would be better in Dell? ( think about that one for a while ) .
I dont mean to pick on Dell but a computer is like a telephone, everyone will be making them. Back to Gold, Alan Greenspan threw in the towel and told the world that the dying patient could get another pain killer.
The patient is so very ill but constantly crying for more pain killer.
I really think we may be in the eye of the Hurricane. Go outside and it is calm. Everthing is ok. Everthing is ok. Everthing is ok. everthing is ok. But our gut tells us this is different than 1987, 1990, 1993 ,1973 and 1929-1933. This is different. Only god has the script.
All life was born in a cyclic cauldron of energy --
Semi-stably shifting back and forth near critical points
in the condensation of matter.
Is it no surprise that our actions are still governed by cycles, even though we do not consciously sense them?
But -- we do observe these many cycles in the life around us --
The lunar cycles in the feeding of fish,
even when the oceans are missing and only the moon remains.
We may be capabable of independent thought, intellectual flights of fancy, creations of great brilliance --
But -- we are still creatures born of cycles.
When we learn what time really is,
we will begin to understand our cyclic essence.
What you describe makes sense -- entice their foreign assets back home by strengthening the Yen, and propping up the Japanese markets long enough for the process to take hold.
I remember one of Aesop's fables. The Wind and the Sun were discussing how to get a solitary man to take off his coat.
The Wind said: 'Let me blow the coat off -- it will be easy'. But, no matter how hard the wind blew, all the man did was to hold on to the coat even tighter about his body.
The Sun said: 'This is easy.', and proceeded to gently bathe the man in warmth. Once the Wind had died down, the man eagerly took off his coat.
It seems to me that the IMF is more like the Wind -- forcing a response from markets in crisis, by raising interest rates among other things, only worsening the crisis. The Japanese may have chosen the Sun. It is fortunate that they are such good savers, and still have so much foreign wealth. Few countries ( the USA included ) are so well prepared for hard times.
It may not be long before the tables have turned again, and we look once more to Japan for investment capital.
As far as I am concerned, I only dabble in the arts. But you are a professional artist -- that is much more. Perhaps someday you can tell us which profession is your favorite - the one that probably puts most of the food on your table -- or your musical profession.
At work I find those individuals who have more than their day job have much richer, more interesting, fulfilling lives. Good release, too.
The Japanese like to think very long term -- even 100 years into the future -- for better or worse. If is very likely that they foresee a time when the US is a minor trading partner, secondary to their SEAsian partners.
If we get through our current difficulties relatively unscathed, there will probably be three large trading blocks: The Americas, the EMU, and Asia/SouthEast Asia.
My guess is that Asia/SouthEast Asia will be first to recover. Partially because they were first to falter. We are probably repeating the 1929 - 1935 era, albeit imperfectly. Those that fell first, recovered first.
the London Evening Telegraph quoted gold analysts as saying "funds have been
caught short gold, possibly up to 1000 tons due to recovery in the gold price, and
may be force to buy back more. This short-covering is seen triggering a massive
gold price rise." To give you an idea of the relative important of this statement,
annual mine production is on the order of 2000 tons! Where is this gold going to
come from?
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