When trying to nail gold's bottom, keep an eye on Japan. I think gold's bottom is going to be one of the all time great trades, speculations and investments out to about 2007 - 2010. Japan's economy was (probably still is) the second largest in the world despite being a small multi-island nation who's only significant natural resource is (was ?) it's people ... ok, and a few good harbors. If their economy was to slow furthur, it could bust the credit bubble in the US and be terrible for Western European counties (or roughly speaking the G7 countries) who are barely managing a small amount of economic growth. Yes, Japan's equity and real estate markets topped out in December of 1989 and roughly were cut in half, but that does not mean that things can't get a lot worse. You can borrow Yen for 1/4 to 1/2 a percentage point. This has been going on for years now. In other words the Japanese government has been pushing on a string for a number of years now with not much affect. Not to mention the huge amounts of money the Japanese government is borrowing to pay for government projects to try to artificially stimulate the economy, which is not working either. G7 countries have been worried about this threat for a number of years, too; and it appears that they haven't been just sitting on their butts hoping Japan will some how recover. The G7 countries have been sitting on tons of gold that wasn't making them any money. Their gold just sits in their vaults and doesn't *do* anything. The way to really get an economy sceaming is to get capital *outside* that economy *inside* that economy at a fast rate. So, the G7 do not want capital inside Japan to leave Japan. 'cause the opposite can happen. Scared Japanese have an incentive to put their savings in non-Yen denominated safe stores of value. Like gold ... not good for the Japanese economy in it's current condition. The G7 want the Japanese to spend their savings domestically to stimulate the domestic economy. The Japanese are too fearful of the future to do much of that. So... one way to get some Japanese to keep their savings in Yen denominated stores of value instead of gold is to make some Yen denominated stores of value (particularly the Yen itself) more attractive than gold. Gold is (usually, can be) money just like the Yen is money. There's a big active gold banking industy alive and well in the world despite what the clueless mass media (including CNBC) in the US thinks or says. (Use 'em as contrarian indicators. :) Really! It might amaze you. Include the Economist, too) So the G7 (and others) are selling gold and the US is leasing gold (and maybe others). "central banks stand ready to lease gold in increasing quantities should the price rise." - (Alan Greenspan testifing before Congress in 1998) Gold's interest rate hasn't been higher than a major currency in about 400 years, except for the Mississippi Bubble of 1720, till the last 5 or so years. The cost of borrowing Yen has been lower than the cost of borrowing gold. The Yen purchasing power stability can be counted on more than the stability of the purchasing power of gold? Not historically, except if institutions with large holdings are systematically selling gold as needed to keep this illusion and backwardation going. There's a few thousand ton per year difference between demand for gold and new gold being produced. Demand being higher than production. How long can this go on before gold pops and those short gold are taking a blood bath. If there's a serious shortage of gold, a long term bottom type, a blood in the streets type, it should show up in the lease rates at: http://www.kitco.com/market/LFrate.html Look for an inverted curve. Short term lease (interest) rates higher than long term rates. Therefore I don't expect gold to break out of the base that it was building late Oct - most of November despite the try that it is making right now. There were no volume spikes to my eye either. Where is all this sold and leased gold going? I'm betting it's ending up lost in the eastern half of the world never to return for some outrageously long period of time. And I'm betting that when capital panics and flees the US and Western Europe, it follows gold. Smart money moves first. Gold's the smart money. Blood in the streets overflowing the storm drains rolling up over the curb stones and onto the side walks will be a *good* thing. It means that capital is moving (fast) to where it will be better treated. And, there's some huge amount of people in the world that need capital and will treat it a whole lot better than the US and Western Europe have been treating it. It will mean that it's time for major parts of the western world to pay the piper. That the plain 'ol iron laws of economics are kicking in. Same 'ol, same 'ol story. When's it going to happen? "It's all in the charts." - JP May (of Coconut and Banana fame!) Bob -- http://www.bearerinstruments.com http://www.bearerinstruments.com/assets/BIMDsPGPkey.txt 650C 51DA 734F 697F 5706 3D6A 7712 BCC9 D1AE 00BA --- You are currently subscribed to e-gold-list as: archive@jab.org To unsubscribe send a blank email to [EMAIL PROTECTED]
