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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Jim S who wrote (35951)	6/26/1999 5:27:00 PM
From: Richard Mazzarella	Respond to of 116788

From Friday's Nightly Business report on some gold stocks (John Murphy): <<KANGAS: You also gave us two gold stocks, Homestake (NYSE:HM) and Placer Dome (NYSE:PDG). And they're down from 12 to 8 and 14 to 11 respectively. What do we do with those? MURPHY: We moved out of those a long time ago, Paul. We've kind lost interest in gold. With gold trading at 20-year lows, that's an area that we've just, we've lost interest in. So, we moved out of that group, fortunately, quite a while ago.>>

To: Jim S who wrote (35951)	6/26/1999 8:23:00 PM
From: Hawkmoon	Read Replies (1) \| Respond to of 116788

I'm going to recklessly stick my toe back into these turgid waters. <g> Nothing ventured, nothing gained... :0) Ron, I disagree with a lot of what you say, but I have to admit that I'm impressed with your ability to support your contentions. You've clearly thought through your ideas. Of course many disagree with my views and that's fine. No offense in presenting other viewpoints and perspectives if you're presenting logical reasons for doing so. So many others just choose to state a belief without examining the logic behind it. I'm having trouble with the concept of all currencies being relative. Yeah, that's a toughie and difficult to understand when people mistakenly believe that gold is backing the global financial system. We've had "relative" currency exchange for years off and on. Currencies around the world have been on and off the gold standard various times when they finally realized that adherence to a gold standard was preventing actions necessary to revive economic and financial activity. Everyday we can look at exchange rates around the world and see how investor psychology is percieving the value of various currencies against each other. That determination is made based upon relative factors and not in a manner that includes gold. Gold to a bank tomorrow and tell them you wish to exchange so many dollars for so many Yen and gold will never come into the equation. Thus, the value of the dollar/yen exchange is relative to perceptions of strength/weakness between them. Now the goldbugs try to make the claim that gold is an inherent part of the global financial system. But that only been true because CBs have been willing to accomodate that belief in order not to disrupt investor psychology as well as to maintain control over gold. When was the last time you had to consult the price of gold vis-a-vis the dollar in order to exchange your currency for another?? If gold increased in value against the dollar, would that impact your exchange rate with that other currency or do all currencies become devalued equally relative to the increased value of an ounce of gold?? Inverse to that, does the dollar become stronger when gold goes down?? The answer to that question is yes and no. Money that is tied up in gold will be diverted to the next most valuable currency, in this case the US dollar. Gold going down maintains the strength of the dollar and at the same time the weakness of the Euro and Yen. Gold going up only devalues ALL currencies as dollars, yen, and Euros are sold and gold purchased. So gold going down serves a vital purpose in maintaining strength in the dollar for nations seeking to maintain their export positions (weak currencies) versus the US dollar. Those who sell gold will most likely receive dollars in exchange, that currency being the one that has show the most financial and economic strength. And that suits the Japanese fine so they can limit the amount of yen they have to print to maintain the current exchange rate and provide economic impetus. Let the dollar fall and the Japanese would have to print more yen (selling public debt) and buying dollars. That is why I believe gold is being pressured and rightly so. As a global standard of exchange it serves no purpose since their is not enough of it to properly back the global GDP. It's only purpose is to provide a "safe-haven" that undermines all currencies and thus, all economic stability. But that safe haven really and truly belongs only to the people who have the ability to buy, store, and protect large quantities of it (and that most likely doesn't include any of us on this thread). So as they store it and allow the global financial system to suffer a crisis of confidence (after all.. all money is merely a confidence game, gold included), prices plummet... people lose jobs.. national GDP collapses, and those mega-wealthy with mega-gold would be the ones who would call the shots. It would just result in a transfew of wealth from the middle class to the mega-wealthy (again, those with the ability to physically store and protect their gold from confiscation and theft). I hope this gives you some food for thought Jim. The most difficult thing to accept is that ALL MONEY is a confidence game, whether that money be Fiat or backed by gold. It is only worth what people are willing to accept in exchange for hard goods and services. Having a gold backed currency has to positively imply that anyone should be able to be confident that their demand for gold in exchange for their gold-backed demand notes will be honored. In a financial crisis (like 1929), do you really believe that your bank will keep its doors open just to honor your demand that he exchange your gold certificates for gold?? Figure the odds.... The real key is not to let anything get so bad that an outright crisis of confidence is permitted to manifest itself. Even if that requires printing money. More economic potential will be lost from outright depression than from inflationary monetary policy designed to maintain the velocity of money and economic activity. Regards, Ron