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.

Gold/Mining/Energy : Hecla Mining(HL) -- Ignore unavailable to you. Want to Upgrade?

To: Roebear who wrote (114)	11/10/1997 2:04:00 PM
From: Terrence Von Holidae	Read Replies (1) \| Respond to of 629

Roebear: Thank you for the referring post. I do not draw the conclusion Princeton has; indeed, I would not own HL, were it be otherwise. As long as foreign sources of liquidity find they must repatriate capital to support their domestic sources of liquidity, pressure will influence a decline in the US dollar, and asset equivalents. Secondly, as these foreign sources of imports flood our economy, in an attempt to maintain full-employment to control some of the effects of a cheaper domestic currency, the US' wherewithal to compete with these cheaper manufactures will decline. Corporate profitability will shrink, resulting in layoffs, and reduced capital expenditures. As usual, tax reciepts to the US treasury will decline, once again leading to an expanding fiscal deficit, while a simultaneous trade deficit expansion also occurs. The result is a higher cost to the borrower through levied rates of interest. Additionally, if the borrower issues its own form of currency, it must also reflect the reduced creditworthiness by devaluation. It is common sense to expect a net debtor, both fiscally, and economically, by way of trade, to be asked a higher level of return commensurate to the risk. So, while in the short-term, we are flooded with imports, are ability to absorb those through greater credit liquidity will quickly expire. While the Federal Reserve increases liquidity to meet domestic need, because our market is flooded with cheaper imports, are inability to compete will evidence itself in an expanding trade deficit. An expanding trade deficit will reveal an inability to make good on our commitment to purchase without borrowing more. Ultimately, to compete worldwide with cheaper currencies, we must cheapen our own, or suffer a serious economic downturn as corporate profitability whithers, which will effect the same adjustment anyway. I believe, unless there is a world reserve currency, independent of all participants, the currencies will ultimately choose a rare commodity, as they have always, hence the cause for owning HL. So, while I acknowledge much of the Princeton cause for events, I draw a much different interpretation of the result. Yours, T.V.H.