Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: russet who wrote (52463)	5/8/2000 5:14:00 PM
From: Enigma	Read Replies (1) \| Respond to of 116815

Well we've had a lot of discussion in the past to the effect that gold does well in deflationary times - whether a recession correlates with that who knows at this point. Maybe a recession here will bring down the dollar?

To: russet who wrote (52463)	5/8/2000 5:20:00 PM
From: Zardoz	Read Replies (3) \| Respond to of 116815

This recession relationship with gold seems counter intuitive, considering many believe gold correlates with inflation. I assume you have observed this in the past. Do you have an explanation? Yes. It has to due with inflation outpacing growth. In times of rapidly rising inflation {usually when the FED is behind the yield curve} Gold rises rapidly. So unless you have hyperinflation, or a recession; gold falls due to growth driving the economy. Had this argument way back with Ahhaha and others. They could only see inflation as the be all for gold. Yet the most rapid growth of low inflation is what drove the price of gold lower. It wasn't until mid 98 when growth was dwindling, that the deflationary spiral came to the US shores. Initially both the US Dollar index and gold fell. It wasn't until the realization that growth was going to fall as well that the POG dramatically raised. This is why gold is where it is. Even after the ECB actions, there was/is very little to reasons to keep gold. The deflation fear is gone, but inflation is still less then growth. If you check back to mid 99, I stated that growth for 2000 F1 would be strong due to the excesses of M2-M3 in 99. But that the removal of Y2K induced cash would create a HIGH growth environment. This lead to the presumed bubble in Nasdaq and DOW. BUT even with removal of M2 recently, USA is still in a Bull market. Those on the shelf calling it bear markets are looking at the old Bull. This is a new one. As in 94, it gives the appearance of stymie weakness. The recent rise in the DXY0 suggests that greenspan actions are causing the weakness. The Fed funds rate should be HELD. In late 98 when Greenspan lowered rates to rescue the world, he blew it by over stimulus. Now he is erring on over caution. Hutch