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Gold/Mining/Energy : Gold Price Monitor

GDXJ 129.86

+4.7%

Feb 3 4:00 PM EST

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To: long-gone who wrote (26270)	1/15/1999 11:57:00 AM
From: Gord Bolton	Read Replies (1) of 116960

I think that the significant factor here is that Brazil and many other countries have been selling gold to prop up their currencies and thereby making themselves less competative in a world market. This is bad for their economy and puts further pressure on their currency. For countries that produce gold it also lowers the POG and makes mining less economically attractive. Countries that try to fix their currencies must either sell gold in the market to prop up their currency (or sell someone elses currency) or increase interest rates to attract money. These are strickly short term fixes that eventually create worse problems. Productivity, stability and efficiency of trade are the factors that matter and improve the economy and currency value. All of the countries that sell gold to prop up their currency will have to buy it back to show that they can back up their currency or they make themselves vulnerable. It is in some ways incredible to watch all the central bankers holding tonnes of gold in their vaults and meeting to discuss the possibility of regional and world "money" to improve trade and stability. Why not just use gold? They can still do paper, plastic and electronic transactions. The only difference being that the holder of paper would know that if he wanted to he could go to the bank and exchange his paper for gold. Countries would not be limited to the precise amount of gold in the vault, as the value of all all assets and resources could be given fair value. Countries that printed 10 times the paper that their assets and potential could possible cover would be disciplined by the market. Foreign holders of their currency could come in and claim their gold if they were not satisfied with goods or services that could be purchased with the paper.

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