To: Al Gordon who wrote (14304 ) 7/11/1998 2:42:00 PM From: Pete Young Respond to
Well, Al, deflation in small quantities is pretty bad for gold (and commodities in general). This has been the trend for some time (since the mid 70's). As long as it stays "reasonable" (wage and commodity/manufactured good prices declining, slowly), it will be bad for gold. But what if it speeds up? What if the realization dawns on the market that there has been an overinvestment in manufactured goods worldwide (just as there was an overinvestment in the production of commodities worldwide in the decades before '75 when the prices generally started to turn south) and the dominoes start to drop like hail on a tin roof? According to Bill Kaye, managing partner, Asian Hedge Fund @ the Far Eastern Economic Review feer.com "Also, in nine to 12 months, as all the central banks begin to ease around the world, gold could start doing very, very well, as it did in the 1930s. The experience then, when the world faced similar strong deflationary forces and people had to print money to keep nominal incomes from falling, could be repeated and gold will start to finally perform."
