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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (21231)	11/2/2004 3:36:52 PM
From: ild	Read Replies (1) \| Respond to of 110194

Date: Tue Nov 02 2004 14:52 trotsky (P. Yorkie, 12:51) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved "What POG needs to get it moving up is some noticable inflation. If you are going to get inflation, oil will be the cause IMHO. " wrong on both counts. 1. historically, the real value of gold has fared best in times of DEflation, not inflation. while nominal price gains tend to be larger during inflations, they can't make up for the purchasing power lost in the denominating currency. 2. high oil prices do NOT CAUSE inflation. inflation is caused by the Fed's printing press. if e.g. the money supply were totally fixed, oil prices could still rise to denote a shortage. but it should be obvious that no 'general' price inflation could possibly occur - other prices would have to fall, or oil demand be sufficiently curtailed, to make up for the price rise. since year-on-year money supply growth rates are currently at or close to 10-year lows ( depending on the money aggregate one is watching ) , it is highly unlikely that inflation will strike, and if it does, it won't have been 'caused' by high oil prices. first, money supply growth rates would have to expand again.