In their just published numbers, GFMS projects investment demand for the year 2000 at a negative 418 tonnes vs. a positive 203 tonnes in 1999. Investment demand appears to be negative in the GFMS model in order to balance the numbers. Not to pick on GFMS, but these numbers simply don t make sense. I believe that investment demand will be positive in 2000, and will begin to crowd out jewelry consumption. The world is not awash in gold, it is awash in dollars.
Interest rates are in a rising pattern across the yield curve.
The monetary base grew at the highest rate in 50 years during the fourth quarter of 1999. While inflation numbers as measured by the Labor Departments PPI and CPI still appear tame, the precursors of higher inflation numbers are impossible to ignore for anyone not caught up in market mania. The Atlanta Fed finished prices index has increased sharply and the Euro PPI increased much more than expected in November. In this context, it should be remembered US average hourly earnings gains also appear to have bottomed out in recent months . Expect the sanguine low inflation, goldilocks economy, Greenspan is a genius mentality to be severely challenged in the current year.