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

To: Rarebird who wrote (67342)	4/8/2001 7:40:48 AM
From: Richard Mazzarella	Respond to of 116764

Michael, maybe we should forget gold and go to a plutonium standard for currency? Plutonium production is dependent on productivity, only governments would own it, store it, and they would not want to waste it or give it to someone else. With time, even it has to be replenished. LOL

To: Rarebird who wrote (67342)	4/8/2001 11:09:54 AM
From: Hawkmoon	Read Replies (1) \| Respond to of 116764

Missing in your analysis is a confidence indicator in currencies Michael, while physically missing, it was implicit in my viewpoint since I believe currencies should reflect the economic strength of the nation, either actual or perceived. When an economy is perceived as being weak, it's currency normally adjusts to levels where their goods and services become more competitive than their stronger economic competitors. Thus, although the US economy has slowed down, it is obvious that global investors have more confidence in the US dollar than the other foreign currencies against which it competes. Since this is a recession occurring in the midst of global deflation and not a global shock like an oil embargo or major war, the USD rises, rather than declines, against gold. And it will continue to do so, imo, until the USD is perceived vulnerable to better returns overseas, thus restoring the previous equilibrium, or economic stimulous by the Fed and Treasury, deemed to be ineffective. And as I said before, the govt has a lot of bullets left. The very fact that we're been running a budget surplus is indicative that capital is being removed from the private sector and placed into the hands of the politicians. That's why Bush's tax cut is all important to helping resolve the current economic slowdown. A tax bracket roll back, combined with govt fiscal discipline, will set the stage for a strong economic recovery. And in fact, we may look back and perceive that had we not had the current slowdown, the tax cut would not have been passed, and future economic growth impeded. Sometimes it requires a crisis for the politicians to do the "right thing" for the economy, as we're currently seeing with the energy shortage in California. Gold is the "ultimate" vote of no confidence in government. And I have to believe that few of us really desire to see such a situation develop. But let me ask you something... Let's say that suddenly a new technology was developed that required a large amount of gold (but the economic benefit justified the cost), and the price of gold soared upon this expected increase in demand?? Does this, all of a sudden, suggest that economies are weaker because there is a stronger industrial demand for gold, and thus a higher price?? Does this mean there is global devaluation in Fiat currencies because all currencies decline in value vis-a-vis gold? And the converse is pertinent as well. What happens if some mining company find the "mother lode" that nets them 5 ounces per ton of rock? Would the resulting decline in the price of gold suggest that global fiat currencies have suddenly enjoyed a valuation windfall? This is my problem with a gold standard. It's a financial hybrid, having both industrial use and the perception of value as currency. This makes it highly unstable vis-a-vis fiat currencies that properly reflect economic fundamentals. Btw, thanks rarebird for passing that post on to me. Regards, Ron