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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: pogohere who wrote (8643)	1/11/2008 1:31:02 AM
From: Patrick Slevin	1 Recommendation Read Replies (1) \| Respond to of 33421

One thing about gold is that is stays relatively constant during times of fluctuating commodity prices. For example, from what I gather roughly the same amount of gold could buy a barrel of Crude oil today as it could 60 years ago. In that sense it's a constant. I'll see if I can locate a chart that marks the value of gold versus the cost of crude & post it. EDIT, found this on the Goldmoney website....

To: pogohere who wrote (8643)	1/11/2008 10:04:24 AM
From: Hawkmoon	Respond to of 33421

Yeah.. I don't like goldbugs.. They seem to believe that restraints upon US economic potential should be governed solely by the productivity/discovery of additional gold deposits. And if we suddenly had a major gold find that doubled the global supply of gold, does that mean we should then be able to double the size of our economy? They also seem to believe that the gov't should have the right to FIX the price of a commodity, as it did with the POG for well over a century. The reality is that almost any commodity could be used as a backing for Fiat money if everyone decides to accept it at a fixed price. But the comparison someone else made about a barrel of oil remaining equal to an ounce of gold in comparable price appreciation is more due to both being priced in USD's than it is anything else. From what I understand jewelry prices have not kept up with the price of gold.. Some pundit on CNBC the other day mentioned that pieces of gold jewelry he'd purchased recently were almost the same price as they had been 5 years ago. He accounted for hedging by jewelers as the reason since quadrupling the price of their jewelry would definitely have cut into their sales as customer demand was reduced. I can't confirm this because I seldom buy gold jewelry, but maybe we should ask Mr. T.. ;0) I just don't believe economic potential (money supply) should be determined by the ability to produce more gold from the ground. The hyper-inflation of the Spanish empire should be a lesson, as they fed their economy on Inca/Aztec gold and silver, while the rest of Europe based their economic growth on mercantile pursuits. Some historians have asserted that it severely retarded Spain's economic growth since then. As for China, my gut tells me that there are 100's of millions of Chinese who's jobs depend upon exports to the US alone. Now, of course, China has accumulated tremendous reserves of foreign cash, but there's a damn good reason they are rabid purchasers of US debt. They don't want to re-patriate those reserves to China and fuel inflation even more. But it seems that there is tremendous corruption in the Chinese banking system and very little transparency. I also have read that it's possible that around 50% of outstanding credit in China is based upon non-performing loans (bad debt). Also, were they to suffer the kind of credit crunch that we're seeing here in the West, it's possible that their cultural aversion to being shamed might prevent them from being willing to write off that bad debt. This could lead to a similar situation as Japan faced when they their own "come to Bhudda" session.. I don't know.. I respect that view of the Economist.. But all that money slushing around, with their currency pegged to the currency of their largest marketplace, strikes me as a recipe for eventual disaster.. Hawk