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I think gold is rising because the dollar is falling (the big dollar rally
since 1995 is over).
This inverse gold-dollar relationship is well-established. See John Murphy's
book, "Intermarket Technical Analysis," chapter 5.
Also, some people perceive gold as a permanent store of value. When
everything else
is crashing, they might turn to gold to feel "warm and comfy." I believe this
factor is much less important than the reason given above, but it might be
playing a minor role in gold's
recent rally.
Fred Bender
John Manasco wrote:
> Bill
>
> While I agree with the conclusion I believe the Fed was raising interest
> rates to fight inflation not cutting them. But now they are cutting them
> which makes utilities a good investment. Look at the recent rise in the
> Dow Jones Utility average. What I don't understand is why precious
> metals are rising in a deflationary environment if they are a hedge
> against inflation, which I also question. Is this just a rush to
> something that makes us feel warm and comfy or are we really going to
> see a rise in precious metals? Good question.
>
> John
>
> Bill Saxon wrote:
> >
> > Still more grist for the mill. To me this is scary. Any comments?
> > And the dollar is going to H..*
> >
> > Henry T Lee wrote:
> >
> > > Hi -
> > > One of my friend is a really bright econo type
> > > from the London School of Eco who just called
> > > me today about his thoughts on the world
> > > economy. Here what he said in a nutshell.
> > >
> > > The world's economies are going into a deflationary
> > > recession. Prices for commodities have been
> > > dropping for a while now. He thinks that the Fed
> > > will try to "inflate" the economies to fight a deflationary
> > > recession. One way to do that is to cut interest rates
> > > which is what the Feds are currently doing and will
> > > probably continue to do in the future.
> > >
> > > He believes that the recent rise in the gold prices
> > > reflex this change in the Fed's policy. And that
> > > precious metals will be a good investment now.
> > > He also thinks that the difference between now
> > > and the last ten years is that we are entering
> > > a deflationary recession whereas from 1980 to
> > > now - the Feds were cutting interest rates to
> > > fight the inflationary fears from the 1970's.
> > >
> > > So with that in mind - I checked the most recent
> > > performance of the following mutual fund types:
> > > 1. Precious metals
> > > 2. Energy Prices
> > > 3. Zero bonds
> > > 4. compared to the DJ-30 and Rydex Ursa fund
> > >
> > > So here are the % numbers based on the last
> > > 15, 30 and 60 trading days
> > >
> > > Investment_Type------15days------30days-----60days
> > > DJ30------------------------- -4 ---------- -10 ---------- -15
> > > Rydex Ursa fund-------- +5 --------- +9 ----------- +17
> > >
> > > Avg (gold funds)---------- +17 --------- +25 --------- +10
> > > Rydex Prec Metal fund +23 -------- +31 --------- +19
> > > AmerCent Global gold +22 -------- +34 --------- +17
> > > Fid Sel Prec Metal------ +21 -------- +32 --------- +13
> > >
> > > Avg (zeros bond funds) +6 --------- +8 ----------- +11
> > > AmerCent2025----------- +11 ------- +15 ---------- +20
> > > AmerCent2015----------- +6 --------- +9 ----------- +13
> > >
> > > Avg (energy funds)----- -3 ---------- -2 ------------ -16
> > >
> > > Any thoughts on this are welcome
> > >
> > > Yours,
> > > Henry
> > >
> > > -
> > > To unsubscribe: mail majordomo@xxxxxxxxxxxxxx with
> > > unsubscribe fasttrack <email>
> > > in the body of the message, substituting your actual
> > > email address for <email>
> >
> > ------------------------------------------------------------------------
> > [Image]
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