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Strategies & Market Trends : Making Money is Main Objective

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To: Softechie who started this subject	9/8/2001 1:21:11 AM
From: James1000	Read Replies (1) of 2155

My theory on gold & zero inflation: The only reason that gold would go to the $320+ level is if there is real investment interest in the metal. Obviously the gold used in the electronics sector is not increasing. Nor is the gold used for jewelry. At this point gold is virtually forgotten except for that little $300 speculative bubble a few weeks back. A simple stock market decline is not enough of a reason to create investment interest in the metal. Assuming the real-estate market crashes it will provide a decent boost to gold. What is important is inflation will have to show up in big numbers for an improvement. Looking at the 1970 to 2000 numbers, I noticed that inflation is linked closely to the M2 & M3 money supply when adjusted with the by the aggregate hours worked number. Looking at the adjusted figure, the amount of money during the 90's in the economy was actually LOWER than the 80's. As a matter of fact, I would have expected some deflation. Commodities are one sector that did decrease during that period. Perhaps that means they are especially linked to the adjusted money supply number. At current interest rates, the M2 & M3 money supplies are quickly meeting the 1980's number. Based on numbers I looked at a couple months ago, they will meet sometime in the second half of 2001. Inflation would show up full steam around that point, assuming interest rates of under 5%. Since the real-estate market will have a real problem holding up though late 2001, I would expect that would be the time which real interest shows up in gold. If my theory holds up, then the economy would likely enter a deep recession. Not only would people's assets and wages shrink, but inflation would be full steam ahead. To throw salt on the wound, 2003 is the year at which the first wave of baby boomers will hit retirement age. That figure isn't expected to improve until 2009.

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