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To: Ming who wrote (14349)	7/10/1998 2:06:00 PM
From: Al Gordon	Read Replies (1) \| Respond to of 116753

Ming i liked your analysis.Two things here:1)for Asia even though the price of base commodities and precious metals are down,their currencies have depreciated so much this year in U.S. dollar terms, that over there prices for these things are way up.In Indonesia for example rice is up 50%.The real value of gold also becomes clear because as these currencies plunged against the dollar the purchasing power of gold held steady against the dollar.It rose relative to the decline of the paper money.That's why gold is the ONLY hedge against a meltdown of the paper money system.For example in Canada the dollar is 67cents but an ounce of gold is around $450.

To: Ming who wrote (14349)	7/10/1998 2:17:00 PM
From: goldsnow	Read Replies (2) \| Respond to of 116753

Raw material (mostly oil) clearly is a part of the deflationary pressures on Western World..The larger problem though is a rising dollar and as such rising Trade Deficit putting pressure on Corporations unable to raise prices..that conflicts with full employment and inflationary pressures.This build-in deflation ironically may benefit commodities in a huge way..As jobs in China (and Japan) start to disappear massive attempt to re-inflate economy would start in earnest (especially long-overdue infrastructure build-up in China.. I found myself in profound disagreement with people questioning role of China...For starters it is a rapid emergence of China after cold war ended that was an engine of growing consumption..The size of its Economy is already Huge (someone mentioned California size-That is Huge) yet it is nothing in comparison to what it will be Unified China (Taiwan, Singapur, Hong Kong) that should eventually emerge..The very process of emerging, no matter how long is Huge...India (almost 1 bln people is on a horizon.. A collapse of the Soviet Union was a double blow-not only Military Industry (along with every other) collapsed but massive amount of base metals/oil came into pipeline..Russia at the brink of the economic collapse would not be able to sustain that production...Yes inflation in commodities and inflation in general is coming..The first sign will be Gold breaking-out..Untill than it remains a buying opportunity, insurance opportunity and hedge against disastrous and very real event of deflation spiraling out of control...Can this happen? Of course!