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

To: The Fix who wrote (3320)	11/20/1997 12:39:00 AM
From: Jim Ilchyshn	Read Replies (1) \| Respond to of 116815

Deflation will never be a factor in our lifetimes, mark my words when I say this to you. From gold-eagle.com "Since 1990, the world has witnessed a large economic expansion in the U.S., and explosive growth in South East Asia and China. Within Japan, short term interest rates were decreased to 0.5% and the government initiated the largest fiscal stimulus program the world has ever seen. Has anyone questioned why the second largest economy in the world, with all of its major trading partners having sustained growth, with the lowest interest rates the world has ever seen, with the largest fiscal stimulus package the world has ever seen, has not grown and now the economy is contracting at an annual rate exceeding 11%? " Now if contracting 11% per year is not deflation I don't know what is. Japan will slowly call in their loans to help lessen the blow of their depression and when they do it will not only affect Asia but the whole world economy. From Strategic Investment... As Lord Rees-Mogg and I documented in The Great Reckoning, the price of gold has tended to rise in deflations On average, the price of gold rose in real terms within four years of the end of the cycle to exceed its inflationary high by 8.5% in real terms. This implies that the inflation-adjusted price of gold would exceed $925 in 1980 dollars. Gold not an inflation hedge. The historic tendency for gold to rally in value during deflations is not appreciated, in part, because most investors wrongly assume that gold is primarily a hedge against inflation. The record here is clear, but apparently over-looked. It was documented in a thorough study, The Golden Constant: The english and American Experience, 1560 - 1976, by Professor Roy w. Jastram. Here, in Jastram's words is a summary of his findings: "The evidence drawn from the English experience for 400 years is clear. Gold is no hedge against inflation of a prolonged character. Even worse, it lost operational wealth (purchasing power) consistently and seriously in each inflationary episode... From 1897 - 1920, a person would have lost two-thirds of his operational wealth just by holding gold in bars from the beginning to end. And this was in the golden age of the gold standard." What about deflation? Jastram continues: "Four pronounced price deflations took place in the four centuries recorded, with the three most severe occurring since 1800. In all four price recessions operational wealth in the form of gold appreciated handsomely. When one sees that just by holding gold for 13 years from 1920 to 1933 operational wealth would have increased 2 1/2 times, one realizes that gold can be a valuable hedge in deflation, however poor in inflation." So much for the conventional assumption that gold is a hedge against inflation. Its hedging value proved induring from one inflationary peak to the next only because gold appreciated enough during deflations to recapture the value it lost during prolonged inflation. EOM

To: The Fix who wrote (3320)	11/27/1997 12:37:00 AM
From: John Barendrecht	Read Replies (1) \| Respond to of 116815

Mr. Fix, my only reason for buying Maple Leafs is tax. One buys coins for the gold. Why pay 7% more. Also, since the apartheid thing fell apart, Krugs are out of favour. Gold bars (even 1 ounce) are cheaper than coin but as I stated previously, coin may have advantages in mobility (from country to country). As for the Asian currency crunch - this will spread to Canada and US. Their exports will be much cheaper, forcing NA companies to hold line on prices or lower them. Voila, less profit, lower stock price. The other alternative is to devalue US dollar (i.e. higher price for gold). Personally, I still betting on higher gold prices and keeping my eyes open for bargains. Have done sporadic buying (gold stocks) but will buy more - probably before year end.