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Strategies & Market Trends : Strictly: Drilling II
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To: c.hinton who wrote (28953)3/2/2003 4:32:39 PM
From: Art Bechhoefer  Read Replies (2) of 36161
 
chinton--as the latest economic figures show, inflation is already here in the form of relatively higher producer prices. And remember that the latest data do not factor in the recent increases in the price of fuel oil and gasoline, nor the fuel surcharge on airline tickets, nor the surcharge on express mail, etc.

As happened in 1973, a sudden increase in oil and gas prices will almost always trigger a recession or at the very least a lower rate of growth in gross domestic product. The lower growth rate leads to higher unemployment, lower tax revenues, and a worse budget deficit than already predicted. Meanwhile, as interest rates rise to reflect real inflation, the U.S. loses its appeal as a safe haven for foreign money, whether invested in equities or in bonds. That in turn puts pressure on the dollar and causes yields on government securities to increase.

I can't think of a better prescription for higher gold prices.

Art
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