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Gold/Mining/Energy : Global Platinum & Gold (GPGI) -- Ignore unavailable to you. Want to Upgrade?

To: Henry Volquardsen who wrote (4705)	1/9/1998 9:55:00 AM
From: Zeev Hed	Read Replies (2) \| Respond to of 14226

Henry, I got a lot of heat from the IPMCF threead over the last 18 months for pointing out the possibility that IPMCF will never be able to get the stuff out for less than they can sell it for. But [people there were talking about zilion of tons of ore (having goodies concentration that are relatively low, and unknown costs of extraction). Thus, I know wherefrom you cometh. As for inflation, I think that the recent increase in the money supply is due to the weakening of the south east asian economies. The way I see that growth is that it compoensate for a drastic reduction in money velocity worldwide, and the central bankers have primed the money pump just enough to counteract the slowing velocity. If that is the case, than thios increase in money supply will not have an impact on prices until velocity resumes its upward march. Now, the question is why has velocity decreased? I think that the asian flu simply took off the table some $100 billions or so of the money that used to slosh around and slowed its rate of flow to almost nothing until things clear up. Remember that the money base of some 5 tigres economy has been reduced by a factor of 2 relative to the dollar, without having a similar reduction (in dollar terms) in the respective economies. This is actually a major reduction in world money supply, and thus for the time being a deflationary influence rather than an inflationary influence. Yes in those countries we are going to se rapid increase in money supply and an inflation in term of the local currencies, but due to the massive effective devaluations, it will still be exported as deflation, not inflation. Do I make any sense? Zeev