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

To: Gary105 who wrote (86847)	6/13/2002 8:41:24 PM
From: E. Charters	Read Replies (1) \| Respond to of 116915

Prices falling are not "inflation under control" It is a recessionary contraction of the economy. From 1929 to 1933, most prices fell and gold price rose. It may be counter-intuitive, but that is what happened. If commodities fall in value, what is happening is that they are not being "chased" by money, so their prices shrink. (Commodities are chasing money, so they fall in price.) In other words, the reason commodities are not high in value, is because no one is buying them, partially because the money supply is shrinking. It is also true that money is acquiring more power, as its supply shrinks. On the other hand, gold is perceived as value which can acquire dollars and commodities, by command, i.e. it is money. So it rises in value.In effect when prices are falling, money looks for somewhere to park itself that is stable. Who is going to put money on an item that will be worth less tomorrow? If gold retains its value by its ability to purchase money, then it commands attention. It is the preferred investment. It is hard for most people to see, but during the depression the record is there. Gold experienced a steady rise in price from 1929 to 1934. In 1933 it was 32.33 and in 1934 it was 35.00. Most people think that it got to 35.00 by government edict. That is not true. And if you think about it, it is a bit far fetched. Not even the word of mighty Washington has that much power. But once it was fixed at 1/35 of an ounce to a dollar, there was no point in paying any more for it! And nobody would sell for less. There is a bit of circularity to the argument that the reason gold holds it value is that people wish to pay for it, or trust it, and the reason they trust to pay for it, is that it holds its value. But in all commodities there is that inherent circularity. The become valuable as people pay for them, and people chase them as they increase in value. In gold's case, however its use is as value, so it does not behave like things that have other end uses solely. EC<:-}

To: Gary105 who wrote (86847)	6/14/2002 12:09:35 AM
From: Ahda	Read Replies (2) \| Respond to of 116915

The money supply is not shrinking there are so many dollars out there that dollars are having difficulty creating future dollar value. Gold is rising as costs of operations here are very high so the ability to maintain the standard of living that has been set for our economy and servicing the debt we hold in our economy is also a factor in golds rise. Take into consideration interest rates if you have an economy that is moving very fast the rule if the market determined the rate the price for using those dollars or interest would be higher as more people want money so you can charge more for it. Here we have very low interest rates which by all means should be causing growth we are not seeing hiring in our large corporations. We are seeing a huge increase in housing price in CA. If you start thinking about wages and who can afford a house the whole thing becomes questionable. If our wages start to inflate to meet the cost of housing you are looking at a very high labor rate. When wages are too high and profits which are already tight will be too slim. This cam be seen in the wages of many top CEO's where many made out fine but employees and share holders lost. If the US does not show strong signs of a recovery in the form of new business growth that is going to mean high unemployment. That inturn will reduce the demand for products here and impact other nations who are relying on future sales to here. this will cause certain areas of the world to slow down. Japan had inflation due to too many dollars rapid growth and an increase in wages that ended up as an increase in property values. What Japan did not have that we have is very high consumer debt. Other currencies are pegged to the US dollar and that peg if our dollar dropped over night would reduce the value of their dollar. This amounts to many currencies who would then have debt that was created at a higher currency level needing far more currency to be able to repay the debt when the value of that currency is reduced. simple way of putting it would be you had a debt obligation of 2 Canadian dollars you took on that debt by converting 4 dollars in your currency to buy the 2 in the Canadian. Your currency drops so now it takes eight of your dollars to buy two Canadian dollars you have doubled your debt without any expansion but your currency has failed to keep its value. I tried to write as simply as i could but there are derivatives and there are numerous hedges to cover this possibility but they carry a cost factor to profit if they reduce risk they contribute to currency swings. So when a currencies value is questioned the economic system that produces that dollar is being questioned. Gold then has a real value as it is a commodity with value.

To: Gary105 who wrote (86847)	6/14/2002 7:38:41 AM
From: long-gone	Read Replies (2) \| Respond to of 116915

<<with inflation under control and anemic recovery, why should gold move back up?>> Diversification of assets. People are learning Precious Metals are a valid asset class, an asset class to which most investors have had no, or almost no exposure. There are people whom just three years ago had a net worth in the millions of dollars and today are having homes repossessed with their net worth now less than $10k! During this period where their paper assets became worthless they've watched daily reports of precious metals related mutual funds winning & not just winning but gaining hundreds of % gains. I suspect they will now always want some exposure to this asset class. In a world where homes are worth millions & dotcoms one day worth everything & the next worthless, let me see the 1/4 of 1% of the US total investment dollars placed in Precious Metals & people no longer hate gold jewelry & I'll be pleased - and my (step) grandchildren will be able to afford college without working.