Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Welcome to Slider's Dugout -- Ignore unavailable to you. Want to Upgrade?

To: Broken_Clock who wrote (10854)	7/18/2008 3:08:20 PM
From: SliderOnTheBlack	Respond to of 50126

re: Homestake & the Great Depression... I edited this from my response to WillieT, it should answer your question. ------------------------------------------------------------------------------------- WillieTee RE: ["Newmont in the depression. Remember, public ownership of gold was illegal per FDR. The price was fixed at $35. Newmont stayed in business to provide the USA with bullion to support itself, along with some foreign sales. Since the price was fixed, and production purchased by the US Gvt, it was hardly similar to the current company. Also, as labor and productions costs dropped, it was able to make a profit. Thus, it was in a different situation from most for- profit companies. So forget about depression era gold vs. today. Not even in the same category."] You went and busted their bubble. Next, you're going to tell them that this post, and this famous chart on Homestake Mining during the depression had nothing to do with the gold price, of how gold, or gold stocks would perform during a deflation, or a depression, but was a reflection of earnings, and dividends... and NOT at all representative of how either a mining stock, or gold would perform in a deflationary depression today? Substitute Homestake for Newmont... same facts. www.gold-eagle.com/editorials_98/vronsky060698.html The gold price was fixed at $35 all during the earnings explosion shown on the Homestake chart. Here's the actual gold price during that timeframe of Homestakes "earnings" story. 12/31/1933 34.06 20.67 32.32 12/31/1934 35 34.06 35 12/31/1935 35 35 35 12/31/1936 35 35 35 12/31/1937 35 35 35 12/31/1938 35 35 35 12/31/1939 35 35 35 12/31/1940 34.75 34.1 34.5 12/31/1941 35.5 34.25 35.5 12/31/1942 36.25 35 35.5 Homestake's story, and performance had nothing to do with the gold price. Find a stock that makes widgets and has earnings that go from $2 to $32 a share and you'll get the same result. The story told by the Homestake chart above isn't a story about gold, it's a story about finding the next Microsoft, or Dell IPO. Who ya' gonna call? SOTB

To: Broken_Clock who wrote (10854)	7/18/2008 3:27:10 PM
From: WillieTee	Respond to of 50126

Yes, Homestake instead of Newmont. Typing from memory earlier today as I traveled. My point is that Gold was not freely traded and until 1973, does not have any relevance to any current or future environment. We have not experienced anything like deflation in the last 35 years. If you look at gold as an industrial commodity, then the potential is not as bright when compared to its theoretical purpose as a storehouse of value. The nations largest lead/zinc mining district at the time (Picher (Ottawa Co.) in NE Oklahoma) all but closed in the 1930s and only regained its production in WWII. I can name other examples of industrial commodities, but you understand my point.