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To: Davy Crockett who wrote (111529)	7/6/2001 9:37:35 PM
From: Box-By-The-Riviera™	Respond to of 436258

catch any one of those high points and the game gets won

To: Davy Crockett who wrote (111529)	7/6/2001 10:12:54 PM
From: craig crawford	Read Replies (2) \| Respond to of 436258

yeah well i've read that article before and i have some problems with it. >> This table lays out Jastram's periods with the change in commodity prices, as well as the change in purchasing power of gold and silver. << 1) he lists the purchasing power of gold, rather than how it did in absolute terms. how did he arrive at it's purchasing power? without telling us, how can we know that his methods for calculating purchasing power are valid? >> 1929-1933 -31% -5% +44% need I say more << 2) commodities and deflation (and stocks) bottomed in 1932, not 1933. gold went from an average price of 20.69 in 1932 to 26.33 in 1933. silver averaged 25.4 cents in 1932 and 43.7 cents in 1933. when he tries to include the year 1933 in his calculations for deflation of course gold will look better. that also shortchanges his calculation for his alleged inflationary period from 1933-1951. the data is manipulated for his own benefit. second of all his definition of inflationary and deflationary periods are off base. he shows 1951-1979 as an inflationary period when the fifties and much of the sixties were disinflationary or deflationary. inflation pressure peaked around 1951 after the war, not just started surfacing. how come he doesn't show the price of gold relative to deflation/inflation since 1980? he also doesn't show 1920-1929. i notice he leaves out certain periods which he must consider benign or not majorly inflationary or deflationary, but in other case (where it seems to apparently suit his argument) he does include benign periods of no major inflation or deflation. simply put the methodology behind his numbers are not detailed and the time periods he chose to label as deflation and inflation are suspect, thereby rendering his conclusion highly suspect as well. of course this doesn't even delve into the government's intervention in gold markets back then which probably renders all comparisons to previous time periods useless! >> Deflation Hedge: Gold & silver's profitable performance under so many past deflations strongly argues that they will perform well in future deflations. << ok, if that's going to be true, why hasn't it been borne out this go around? most people would argue we are in a deflationary environment correct? how come gold is not going higher, and it bottomed within one day of the nasdaq bottoming, implying that when the worst deflationary bust was priced in by the markets gold was at it's low point? how come gold rallied along with stocks as a fed induced reflationary scenario unfolded? how come gold is faltering again as talk of inflation is subsiding and people are more worried about deflation again? how come gold sold off when the fed cut rates only 25 basis points instead of 50 bp which clearly would have been viewed by the markets as more inflationary and less deflationary? >> Under a regime of debt money a deflation means a collapse (implosion) of debt. Unlike any other financial assets, gold and silver are not backed by debt. Whenever creditworthiness is called into question, demand for gold and silver will rise << well how come when our financial markets were at the darkest point at the start of april gold was at it's lowest point in the last 30 years??? just a coincidence? i think not! furthermore, the credit worthiness of a u.s. dollar is not viewed as in question, so it's no surprise gold and silver are sinking yet again. >> For example, the change in the gold price from $35 in 1950 to $350 an ounce into the 80s matched precisely a tenfold increase in US national debt. Similarly, homes that cost $10,000 in 1950 increased to $100,000 over the same period. Gold's decline to less than $300 an ounce since 1996 has been matched by rising US budget surpluses. << there's no surplus. we are in as much debt as we have ever been, yet gold continues lower. i don't see what point he is trying to make of the correlation anyway. next argument. >> Wanniski warns that if the US government tolerates gold drifting below $270 an ounce, then we can expect: "a series of declines in corporate earnings, bankruptcies, layoffs, unemployment, until the whole economy is adjusted to the lower gold price. Unless the problem is fixed, it could drag the administration down with it << sounds like that supports my argument better than yours! my point is gold weakening further here is signaling deflation which of course will lead to massive bankruptcies, layoffs, unemployment, etc. i don't see how this makes your case for deflation being positive for gold. >> (kinda of sound like the Kemp article from a week or so ago...note the date on this article). & ""The contraction part can be overcome by lowering short-term interest rates or cutting marginal income-tax rates and capital-gains taxation. The deflation part of the problem can only be rectified by having the Fed add sufficient liquidity to cause gold to climb back over $300. Otherwise, there will be an slow, grinding, downward adjustment of all dollar prices -- the mirror image of the slow, grinding upward adjustment of all dollar prices that we knew as the inflation of the 1970s." << he is saying that the fed needs to add liquidity (inflationary) to keep gold from plummeting. that is not helping your case at all, it is helping make mine! >> & any comments about this...Gold was at $385 when the deflationary process began. In our classical framework, inflation begins with a rise in the price of gold and deflation begins with a decline in the price? Believe it or not I think we are in a major deflationary enviroment... just look @ the commodity prices... << did you change your tune all of a sudden? more info supporting my claims that deflation is bad for the price of gold. the opposite of your argument! >> So let me educate u... << ahem, perhaps it is you who needs a little educating. lesson number one--don't believe all the crap you read spewed out by websites like gold-eagle and such! they clearly have an agenda and cannot see things rationally!

To: Davy Crockett who wrote (111529)	7/6/2001 11:49:57 PM
From: Ilaine	Read Replies (1) \| Respond to of 436258

US dollar-to-gold ratio was fixed by US federal law at $19.39/ounce in 1792. Raised to $20.67 in 1844. From 1861-1879 (U.S. Civil War era) it floated, then was again fixed at $20.67. Did not change again until 1934, when it was raised to $35 by fiat of Franklin Delano Roosevelt. The suggestion that the price of gold in the United States increased during the Great Depression due to market forces is bogus. Roosevelt wanted to reflate the currency and picked $35 out of the air. P.S. It worked. Every country in the world that went off the gold standard in the 1930's recovered financially almost immediately. ~~~~~~~~~~~~~~~~~~~~~~~~~~ If you study the price of commodities prior to and during the Great Depression, you will see very clearly that commodity price decline predated the financial devastation the global economy suffered. People then understood that deflation was what destroyed the economy. During World War I, the combatant nations went off the gold standard, and printed money. After the war, Great Britain and the United States returned to the gold standard at the same ratio as before the war, despite the fact that there was 3-5 times as much currency in circulation. The worst example of commodity deflation I am aware of is wheat. It was $2.19 a bushel in 1919 (a year of great inflation) $1.43 in 1925 (the year that England went back on the gold standard) and .38 cents a bushel in 1931-1932. (1932-1933 were the darkest years of the Depression in the United States.) I think it would be interesting to compare the price of commodities to gold AND dollars. The raw material is available here for free: nber.org