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

To: goldsnow who wrote (14326)	7/10/1998 1:13:00 PM
From: Ming	Read Replies (2) \| Respond to of 116756

Deflation is stalking Asia, not the U.S. and Europe. And you can point to the decline of raw material prices as a sign of deflation. But let me stress the fact that we're in peacetime, and that military consumption, which during the height of the cold war amounted to 7% of U.S. GDP and nearly 1/3 of Russian industrial output. With such a significant amount of demand disappearing overnight and the dumping of surplus stockpiles, the prices of many basic materials and manufactured goods have taken a plunge. But that doesn't point to deflation. Because resources and manufacturing accounts for barely a third of total U.S. GDP, the rest coming from the tertiary sector, which has been red-hot of late. That is why the Fed is still concerned about inflation. Most people don't care about the price of gold. For them, it's now becoming just a commodity like any other. Americans haven't seen dramatic inflation for nearly two decades now, and they feel that a vigilant fed will guarantee that things stay that way. More importantly, the U.S. must continuously finance its massive national debt, and therefore needs to maintain a strong dollar. Little surprise, therefore, that the balanced-budget debate in 1995 caused the dollar to dip to record lows. With the U.S. Gov in surplus and fears of a debt spiral gone for now, the dollar has since skyrocketed. Japanese investors, sickened by the pathetically low yields and lack of returns in their bond and stock markets, have flocked to the greenback in droves, especially after the eruption of the Asian crisis. Long-term speaking, I agree with you that the price of gold is cheap. There are many threats and uncertainties to the dollar, Y2k being one of them, an overheating and ensuing cyclical downturn in the U.S. economy, caused by monetary inflation, being another. In the meanwhile, people will continue to flock to dollars, which has replaced gold as a safe haven in the minds of many. That's why I feel that gold will go lower before it goes higher again.