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TROY RESOURCES NL 2002-05-23 directors interest., page-3

  1. 4,330 Posts.
    Longer/term/Gold/April12 2002/bullishness http://goldinfo.net/rally.html
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    April 12, 2002... OK, let's talk about the longer term, say within 2 years. Here we have a problem, and it's a very difficult problem. The problem is that over a 25-year period the average P/E ratio for the broad S&P is 17.05. The average P/E ratio for a 50-year period is 16.17. When the S&P has advances above a P/E ratio of 20.2, the market has lost 2.5% in the following three months; it has lost 7.3% in the following six months. And it has lost 1.4% over the following 12 months. That's according to Ned Davis Research.
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    And here's the problem. The P/E for the S&P is now 45 based on the current price of the S&P and reported earnings. If corporate profits further erode, PE’s may increase more. They have never been this high before.
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    So all we can really say now is -- because stocks are currently selling at such rarefied prices, the chances are that, on average, total return over the next five years are not going to be attractive at all.
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    Probabilities suggest that either stocks will drag along for years with average total returns remaining in the doldrums. Or, over the next few years a bear market will knock stocks down to the point where they represent great values. Therefore starting from much lower levels, stocks could be in for profitable total returns again.
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    Investors have observed Japan’s bubble and stock market dragging along for over 10 years. If Greenspan’s synopsis for growth does not occur by October 2002, where do you think investors will turn? Remember there is over $2 trillion in money market funds. If ¼ of 1% is spent on gold stocks, we’ll see an amazing rise in prices because the entire market cap of all gold stocks is estimated at $85 billion, or ¼ the size of just Microsoft.
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    Will Gold Ever Rally?
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    Yes Because:
    Unsustainable supply/demand imbalance
    ·1 Mine production has flattened out at 2,600 tonnes annually
    ·2 Scrap supply is flat at about 600 tonnes annually
    ·3 Current annual demand is about 4,900 tonnes (85% jewelry) and continues to grow
    ·4 Growing deficit of about 2,500 tonnes annually
    -5 Remaining gold - loans/swaps in the central banks have to be 14,000 to 15,000 tonnes. The Central banks have about 32,000 tonnes. That leaves about 17,000 tonnes left
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    Will Gold Ever Rally?
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    Yes Because:
    Unsustainable short position
    ·1 Central banks have loaned gold to earn income on reserves
    ·2 Bullion banks have borrowed gold for their own account (carry trade) and for producers (hedging) and used derivatives to limit their risk and generate additional income
    ·3 Loaned gold has been sold into physical market and now is jewelry
    ·4 Size of short position ( estimated over 3 times available supply) cannot be covered in the derivative market all at once; rapid covering would lead to much higher gold prices
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    Will Gold Ever Rally?
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    Yes Because:
    Unsustainable low inflation
    ·1 The gold price rises with inflation
    ·2 CPI inflation has been very low due to strong dollar (Asian collapse and investment flows)
    ·3 Aggressive interest rate cuts and monetary expansion to avoid recession/deflation by re-inflating. "The race to the bottom"
    ·4 YTD Fed liquidity injection = $1 trillion
    ·5 CPI inflation inevitable: the Fed must inflate away excess debt or see debt defaults
    ·6 War is historically inflationary
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    Will Gold Ever Rally?
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    Yes Because:
    Unsustainable U.S. dollar
    ·1 Historically high U.S. current account deficit (> $400 billion annually)
    ·2 Deficit recycled primarily into U.S. debt securities
    ·3 U.S. now world’s largest debtor nation
    ·4 Foreign demand for U.S. securities declining and U.S. Dollar beginning major reversal
    ·5 Gold is only down in U.S. Dollars
    ·6 Since 1995 the U.S. Dollar is up 30% vs gold, 33% vs French Franc and 50% vs German Mark
    ·7 The Canadian dollar, French Franc and German Mark all buy as much gold today as in 1991
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    Will Gold Ever Rally?
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    Yes Because:
    Unsustainable pricing for financial assets
    ·1 Investment demand drives the gold price
    ·2 Gold is counter-cyclical, investors buy it when financial assets are out of favor
    ·3 Ownership and pricing (P/Es) of financial assets are at historic highs
    ·4 If financial assets continue to decline, investors will shift to gold The ratio of the Dow Jones Industrial Average to the price of gold reached an all time high in 2000 and is now declining rapidly, reflecting a major turn in the relative values of financial assets and gold.
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    Will Gold Ever Rally?
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    Yes Because:
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    Unsustainable gold price manipulation
    EVIDENCE OF GOLD PRICE MANIPULATION
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    ·1 Aggressive gold lending has filled supply/demand gap
    ·2 NY Fed gold has been mobilized when gold price is rising
    ·3 Timing of ESF gains/losses corresponds to gold price movements
    ·4 Audited reports of U.S. gold reserves show unexplained variances
    ·5 Fed minutes confirm officially denied gold swaps
    ·6 IMF rules on swaps revised but denied
    ·7 U.S. gold reserve recently re-designated as “deep storage gold”
    ·8 Statistical analysis of unusual gold price movements since 1994 indicates high probability of price suppression
    ·9 NY gold price movements versus London defy odds
    10 Timing of huge increases in bullion bank gold derivatives consistent with gold price declines
    11 Rapid decline of U.S. Treasury holdings of SDR certificates not explained
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    Will Gold Ever Rally?
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    Yes Because:
    Gold is money again
    ·1 September 11 attack: The world is not the same
    ·2 Only gold is final settlement
    ·3 Return on gold is catching up to the dollar deposits
    ·4 Negative real U.S. interest rates (now 0.5%) undercut dollar, always gold bullish
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    Gold Price Now Poised to Move Higher?
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    ·1 Falling interest rates are removing the incentive to short (hedge) gold, that could lead to a major short covering squeeze in the derivatives market
    ·2 Monetary inflation is on the rise
    ·3 Gold supply/demand imbalance growing
    ·4 Production is set to decline abruptly at the current gold price
    ·5 Veneroso estimates true gold equilibrium price of US$600
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