Date: August 30, 2003 08:22 AM Author: Danny ([email protected]) Subject: usa - how will it end?
It is common strategy of the politicians to point to one of the consequences as the cause for a problem. As a result most people cannot see the real causes of the problems. It is a clever stategy to mask the fact that the politicians themselves are direct cause of most of the problems in this world.
So, now they are trying to blame gold for the coming meltdown in dollar and stocks. (See: http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=3353162 )
It is like somebody who would explain he is drinking too much because he is drunk.
Actually, that's exactly how a friend of mine describes the current state of the US economy in this story:
"The USA drinks too much because it is drunk.
For quite a while their car has been on a straight road without any trees, and downhill..
So no big accidents have happened, and they also do not notice that the tank is empty.
It's not so sure they will end up crashing in a tree that lines the street.
More likely the car will just stop in the middle of the road as soon as it goes flat or uphill.
Then they will open the bonnet of the car to see what's wrong, and scold the Japanese for making bad cars.
Having no choice but walk home, they will sober up eventually.. And probably loose a couple of pounds as well."
We are now in line three of this story. The rising interest rates of late are an indication that the road is turning uphill.. Watch the news.
Date: August 30, 2003 01:09 PM Author: Kevin L. Padfield ([email protected]) Subject: it doesn't supprise me
I couldn't get the news download that you mention but it doesn't supprise me in the least. Can you imagine GW or Clinton admitting to the general public. "Yes, our two parties bankrupted the currency, destroyed the economy, trashed the educational system, totalled the Constitution and laid waste to every thing else!" They HAVE TO go with "It's everyone else's fault but ours!!!" It makes a whole lot of good sense not to have ANY money in gold mining shares in the U.S. because of precisely the reason that you brought up.
Date: August 30, 2003 01:17 PM Author: Danny ([email protected]) Subject: put the blame on gold
Here is the text of the article:
By Gertrude Chavez http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=3353162
NEW YORK, Aug. 28 (Reuters) -- The recent spike in the price of gold -- a safe haven for risk-averse global investors -- could jeopardize U.S. stocks and bonds, undermining a nascent dollar recovery.
Investors' motivation to seek refuge in more tangible commodities is partly the heightened security worries ahead of the second anniversary of the Sept. 11 attacks in the United States and partly the waning prospects of dollar-denominated asset markets, analysts said.
"Gold is the barometer of geopolitical tensions. If more people are investing in gold, that's telling you something is not right about the present geopolitical climate," said Philip Capone, a foreign exchange trader at Fortis Bank in New York.
Indeed, there may be some cause for apprehension. Recent reports in Britain's Sunday Telegraph that Al-Qaeda is plotting to hijack an aircraft in Britain over the next two months and Monday's lethal explosions in Bombay are yet another reminder that the U.S. war against terrorism is far from over.
After being battered for more than a year, the greenback has staged a significant rally against most major currencies over the past few weeks as a plethora of data reports have signaled the United States will once again spearhead a global economic recovery.
But with gold on a rampage, analysts say, the dollar could get hurt, albeit indirectly.
"A gold rally could harm the dollar if it results in a selloff in other asset markets such as equities and bonds," said Capone of Fortis Bank.
Already, U.S. stocks and bonds are looking vulnerable, analysts say. The stock market has faltered in recent sessions despite positive economic data because equities look increasingly fully valued.
The bond market is also in a similar slump, with improving economic prospects in the United States appearing to dispel the chances of further interest rate cuts.
Currency analysts worry that as the price of gold rises, so too will investors' antipathy toward U.S. assets. "It could incite further unrest in both the stock and bond markets, unleashing a wave of selling that could spoil the chances of a sustainable recovery," said Jes Black, currency strategist at MG Financial in New York.
>From about $254 in April 2001, December gold climbed to a three-month high of $375.40 an ounce just before noon on Wednesday in New York. The rally pushed gold to levels last seen in the aftermath of the U.S.-led war in Iraq and follows a spate of bombings in the Middle East, India, and Indonesia.
The active contract is currently trading slightly lower at around $372 an ounce on Thursday due to profit-taking.
The longer-term backdrop is a steady climb of the precious metal's price. Gold started to shine again back in 2001 after a protracted bear market as the dollar's decline and financial market turmoil gave the yellow metal, with its steady purchasing power and historic monetary role, newfound luster.
As the global economy slowed, gold also gained attraction as one way of insuring against the threat of deflation -- or an environment of persistently falling prices.
"The low interest rate environment has helped gold, contrary to some perception," said David Meger, director of metals trading, at Alaron Trading Corp in Chicago. "While low interest rates do not allow much for lending by bullion banks, this has created less selling in the marketplace," he said.
But after being trapped in a deflationary environment for many years, Japan -- the world's second biggest economy -- is now showing signs of recovery along with the United States, even raising the specter of an eventual resurgence of inflationary pressures.
Analysts also say the rise in gold is signaling inflationary expectations, a precursor to a possible fall in the dollar. High inflation can be closely associated with weakness in the U.S. currency because it induces monetary tightening and causes the contraction of dollar supply in the monetary system.
Black of MG Financial in New York said that with the shift to gold, markets are already pricing in inflation. And the more inflation rises, the more investors would want to hold onto gold as a hedge.
Already, gold traders are talking about the possibility of the yellow metal climbing higher to over $400, a level last seen in the mid-1990s.
Date: August 30, 2003 02:45 PM Author: axbucxdu Subject: And to think I was told that
"Already, gold traders are talking about the possibility of the yellow metal climbing higher to over $400, a level last seen in the mid-1990s."
the Clinton era was one of milk and honey. I'm shocked, shocked! to learn that Slick made investors so skittish back then that they actually bid the price of gold above $400. And now we have all this present day doom and gloom and gold is only now making another feeble attempt to retrace its mid-90s price. Pity an investor who has been long gold since that time. They would now have an appreciation of the term "opportunity cost."
