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Gold/Mining/Energy : Gold Price Monitor

GDXJ 93.43

-4.5%

Nov 20 4:00 PM EST

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To: Hawkmoon who wrote (57695)	8/30/2000 8:36:59 AM
From: John Soileau	Read Replies (1) of 116764

<<Something you should ponder Vet. Don't get caught up in the rhetoric about the trade deficit. It is irrelevant so long as the US continues to provide the best return for an investor's capital in comparison to all other alternatives.>> Yeah but what happens when there is a change in investment flows arising from geopolitical developments? I think the point you're missing is that the trade deficit can become VERY "relevant" to the nation's financial health, VERY quickly. A massive and sudden repatriation of greenbacks (or even the threat of one) can certainly serve as a weapon for nations holding the ever-increasing stack of overseas dollars, and i think it's reasonable to be concerned about this vulnerability. You appear to dismiss it out of hand. <<On a micro-economic level, you can see where many cities have trade deficits with their rural bethren. It's not that the city dwellers wouldn't like to sell them stuff, but the fact that the farmers standard of living doesn't permit such luxuries as the city folk get to enjoy. Now overlay that on a global scale and you'll understand what I'm talking about.>> HUH? Not analogous at all. A US state cannot use its foreign currency surpluses to bring a neighboring state to its knees. Vermonters depositing New Yorkers' dollars are hardly comparable to mainland Chinese depositing a foreign currency issued by a geopolitical adversary. <<What will make this scenario change is when Japan, Europe, or China, restructure their economies to the point where they can challenge us as recipient for the world's capital.>> Agree entirely. But dismissing our ongoing and cumulative trade deficits as not "relevant" because we haven't yet reached the "scenario change" is akin to saying, "Keep walking toward the airplane propeller, everything's fine since we haven't gotten there yet." John

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