Regarding your point #1 go do your research before making these points. The Japanese economy of the early 90s was soaked in debt. If you want actual statistics their Government debt was 100% of GDP, and their total debt including public was 130%, their fiscal deficit was 10% of GDP. The debt the US right now is a equivalent to a late payment on a car loan compared to what was going on over there 10 years ago. Yet their Yen rallied to insane levels. I wonder why? Speculate on it and maybe you'll realize that there are 2 types of supply and demand. The normal supply and demand of free markets and the supply and demand generated to support a cause.
As to your point two, the Japanese is similar ot the Americans in that respect. Tier 1 and 2 Infrastructure (resource gathering & manufacturing) was outsourced to other countries like China. All that was left was the Tier 3 & 4. And guess what Tier 3 & 4 were. Service and Information Technology. Ah, the growing pains of Globalization.
You do realize the direction of globalization. The world is being rebuilt into interdependent specialized regions each based on 1 of 5 Tiers of infrastructure. Resource gathering still cannot be specialized to one location, but it seems the Middle East has been the energy core of the world for some time. China has been building out to be the manufacturing core, while is shares low level information systems for Japan, the US and Europe who have become massive consuming economies who in turn Invest excess back into the system to support the rest of the world. The World Economy is becoming an organism all its own. Somewhat like mob mentality if you’ve ever studies psychology. each person may be independent of mind and freewill, but a large group of people tend to lead emotionally toward the sentiment of the group. So if you can incite enough people in a group you can shift their sentiment.
As far as Gold is concerned, is there any wonder why it, metals and energies are starting to sow weakness. IMO, Gold is the inflation benchmark and took a severe hit on the recent rate hike. I was expecting it earlier when Greenspan went to Capitol Hill, but there was one big push and the Dollar double bottomed. Then every big mogul comes out and says they are short the Dollar. Bill gates even. When you get 3 of the richest men in the world talking the dollar down its like shepherds leading sheep. So I went back and studies commodity prices over the last 200 years. Gold, Oil (which is hard to find mind you) and the USD as an index and against other currencies. There is a reoccurring cycle, not related so much as to time but certain economic indicators. I have to give Greenspan credit he has been doing quite well building bubbles in everything, distributing them almost evenly and now the coup de grace and measured pace of slow and steady deflation. They are going to try to create gradual price deflation without spurring a true deflation.
As far as gold is concerned. Its been 4 years to the month with the Weekly 50MA showing signs that the momentum is slowing over the last year. With RSI\MACD and price divergence over that time frame. But if I had to take a stab at it, I would say 355 to 331 would be a likely target to shoot for, with a possibility that it could go lower depending on what happens in 2006. It’s all about the Interest Rates and how bonds react.. There will be bumps along the way though, so expect Gold Bugs to get excited. But I know it will not stand another rate hike hit. Watch the Fed’s Target Rate. That is an important number.
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