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Gold/Mining/Energy : Gold Price Monitor

GDXJ 94.04

+0.6%

Nov 21 4:00 PM EST

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To: LLCF who wrote (52721)	5/14/2000 7:21:00 PM
From: Hawkmoon	Read Replies (3) of 116764

the CPI was up 8% on an annualized basis over the past 2 months. Excuse me? That's like saying that 1% increase in inflation from a CPI level of 0% is tantamount to 100% inflation. Better to look at the CPI tables put out by the Bureau of Labor Statistics and go back in history to find comparable periods where inflation has been this low. Price stagnation is not what the Fed wants either. Price increases are what drive profitability. What is important is whether economic growth is exceeded by those price increases, suggesting that demand is outstripping the economies ability to increase supply. ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt The US enjoyed a 2.2% increase in inflation in 1999 while at the same enjoying a 6.9% increase in productivity 146.142.4.24 (click on either the top or all the boxes for the summarized reports) And more information in that report (if you check all the boxes) includes: Manufacturing/Business Unit labor costs decreased over the same period last year in 1999. Manufacturing/Business Real Hourly compensation decreased SEVERELY over last year (meaning that more work was done for less wages paid out). Manufacturing output per hour was less than last year during the same period, but still more than double last year's lowest OPH, while business OPH was fairly close to last years number. So in sum, so long as productivity gains remain stable (we squeeze even more efficiency out of our economy) and outpace the CPI number, real prices are actually increasing with regard to the overall economy. You have to look at prices increases in relation to the cost efficiencies that business generating. And again, until % price increases outpace % economic output we remain in a relatively benign inflationary enviroment. And to reiterate, price stagnation is the goal of the Fed. Keeping price increases within the economies ability to absorb them, and not outpace GDP and productivity should be their goal. Regards, Ron

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