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Gold/Mining/Energy : Global Platinum & Gold (GPGI)
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To: Zeev Hed who wrote (4688)1/9/1998 8:49:00 AM
From: Henry Volquardsen  Read Replies (1) of 14226
 
Zeev,

Thanks for the welcome. I was very interested in your response. I had come to believe I was the only person on the internet who believed in the demonitization of gold <VBG>. I STRONGLY agree that the evolving nature of the global economy precludes any return to the gold standard. The market has become fairly good at policing countries that attempt to debase their currencies. Also the greater freedom of global capital flows has provided numerous more flexible alternatives to gold.

I very much agree that the market will find it's true level. The supply and demand equation is always obscure but it is worth pointing out that the excess in supply appears largely to be from central bank sales.

As far as why I am considering the possibility of a bull move in the future is not because I expect a return to gold's historic status but more because I anticipate some inflationary facts which will be reflected in many commodity prices. You are correct that it is very telling that the crisis in Asia did not cause a flight to gold. But what I do find interesting is the growth in money supply in the latter months of 97 in many of these economies. Couple that with my belief that once the Europeans complete the process of EMU they will no longer have the strong incentive for deflationary policies that the have had. In fact the EMU will have several structural flaws that will encourage inflationary policies. I am not concerned about any nightmares of hyper inflation but I am concerned that we could see inflation back in the 4-5 % range. Yes there are other factors such as technology advances that will work against this but it is something to keep an eye on.

As far as my interest in mining companies. I don't invest because of an ideaological attachment to the product. I am onlt interested in companies that know how to get the stuff out of the ground for less than they can sell it for.

Henry
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