ponnarasi
09-12-2006, 02:02 AM
Why Gold may fall.
All professional economists have theories about government and what they should or shouldn't do to control the economy.....for instance raise or lower interest rates and so forth. I am suggesting they have no idea what they are talking about...any of them!
I am suggesting government has little or no control over economic events, the best they can do is to appear as though they are in control.
Fact....interest rates are not controlled by government but by Bond traders at the quarterly or half yearly bond auctions depending on the T Note.
How interest rates are established.
When bonds are sold down the bond yield rises which directly results in an increase in the interest rates when the next auction takes place. The opposite is true if traders are buying into the bonds.
News, world events, inside info, all help to create the ebb and flow of the day-to-day markets be they bond, currency, stocks, now gold since it was allowed to trade freely on the open market since 1971.
Bond markets appear to react in the most dramatic way, the $US reacts less dramatically and generally in a lagged reaction to the bond markets. The price of Gold appears to react marginally faster than Bond Yields but without the extremes except for periods of ramping up the price by speculators.........
All professional economists have theories about government and what they should or shouldn't do to control the economy.....for instance raise or lower interest rates and so forth. I am suggesting they have no idea what they are talking about...any of them!
I am suggesting government has little or no control over economic events, the best they can do is to appear as though they are in control.
Fact....interest rates are not controlled by government but by Bond traders at the quarterly or half yearly bond auctions depending on the T Note.
How interest rates are established.
When bonds are sold down the bond yield rises which directly results in an increase in the interest rates when the next auction takes place. The opposite is true if traders are buying into the bonds.
News, world events, inside info, all help to create the ebb and flow of the day-to-day markets be they bond, currency, stocks, now gold since it was allowed to trade freely on the open market since 1971.
Bond markets appear to react in the most dramatic way, the $US reacts less dramatically and generally in a lagged reaction to the bond markets. The price of Gold appears to react marginally faster than Bond Yields but without the extremes except for periods of ramping up the price by speculators.........