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Gold/Mining/Energy : Gold Price Monitor
GDXJ 93.98+0.6%Nov 21 4:00 PM EST
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To: IngotWeTrust who wrote (28129)2/13/1999 3:19:00 AM
From: John Mansfield  Read Replies (2) of 116764
 
'....(8) A massive global bank run is not the only threat that Y2k poses to the
banks. When there are significant economic disruptions, the exchange
demand for money drops (i.e. fewer goods chase the same quantity of
dollars). Also, foreign holders of dollars will be inclined to use their
currency reserves to maintain their own solvency, meaning that the
reservation demand for dollars declines sharply also. Also, the federal
government will be sorely tempted to run the printing presses to make up
for shrinking tax revenues. Declines in monetary demand and increases in
money stock add up to one thing - a significant depreciation of the
dollar's value. Under such circumstances, gold and silver coin will look
increasingly attractive as alternatives to dollars as a liquid store of
value, if not as an alternative media of indirect exchange. Of course, if
there are any significant problems with the functioning of banks (due to
power grid crashes, etc.), the dollar's utility declines very sharply
relative to gold and silver, since the dollar can't effectively compete
with gold and silver without the various advantages that the banking system
confers on dollars now. Why should I risk holding potentially worthless
dollars (whether in or out of a bank is not particularly relevant here)
when gold and silver coin are much more likely to hold their value?

...

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