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

To: goldsnow who wrote (49717)	2/27/2000 8:16:00 PM
From: Hawkmoon	Read Replies (1) \| Respond to of 116764

The collapse in old-economy stock prices may ultimately impact on new-economy stocks, That's about the only thing Abelson says that I agree with. Let's break it down and analyze it. Why are old-economy (OE) businesses the best customers of the new economy (NE) companies? Simply because they are finding their profit margins, or better put, their ability to raise prices, hampered by the increased competition within their markets, as well as the ability of the consumer to dictate prices (within reason, of course). So OEs want to maintain and grow their markets, increase their profit margins in an increasing competive marketplace, and increase their productivity. The only way they can do this is with technology, appropriately applied and executed. And they will need to consult and obtain this technology from the NE companies. That's why GM, Ford, and DaimlerChrysler did the unthinkable. They linked their procurement mechanisms amd invite the rest of the competition to join in. This will likely reduce their operational costs and raise their profitability. And the nice thing about what the Fed is doing is that they are being PROACTIVE, NOT REACTIVE, in dealing with inflationary potential. This means that if they get it wrong and overact, they can reverse those rate hikes without having their backs against the wall. Gold only reacts to inflation that is uncontrolled and rampant (or major global events that create political uncertainty). It will not react positively to preemptive strikes by the Fed against inflation. In fact, bonds will do better in the long term because of their higher interest rates, which also bodes well for the strength of dollar denominated assets. Don't listen to Abelson. He is viewed as the consumate contrarian indicator (and maybe he writes his stuff with that perspective in mind). Regards, Ron