Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : At a bottom now for gold? -- Ignore unavailable to you. Want to Upgrade?

To: Vieserre who wrote (1389)	7/11/1998 7:31:00 AM
From: Bobby Yellin	Read Replies (2) \| Respond to of 1911

Hope you and Ahhaha comment on some of Dohmen's thoughts..(I value his and Joe Carson's assessments immensely.) dohmencapital.com

To: Vieserre who wrote (1389)	7/11/1998 8:29:00 AM
From: Alan Whirlwind	Read Replies (1) \| Respond to of 1911

"Such savings is a most unseemly investment that only attracts moronic 'closet' doomsayers who have a perverse view of society, a propensity to revel in catastrophies, a distrust of government and its leaders, and who are imbued with a self-sense of preservation brought about by paranoia." Quit talking about me. --AG

To: Vieserre who wrote (1389)	7/12/1998 1:56:00 AM
From: ahhaha	Read Replies (2) \| Respond to of 1911

It is impossible to predict the price of money. Gold always is the final arbiter of that price. It is in our genes to believe it works that way. When gold soared during in the late '70s, the worst ravages of inflation had already occurred. There is a stimulus,a lag, and then a response. Big money develops a conviction slowly and buys the top. We are in the reverse situation now. Big money sells the bottom. It is all mood and emotion. The points you make are solid. Like all economic phenomena you can always create as many good pro as con arguments. Which side the rational or irrational money flows is random. At the top in 1980 few had any reason to sell gold. No one knew that was the top. I didn't. No one knew if 21% interest rates would be enough. I didn't. I did know the 15% yield on T-bonds was a terrific buy even if fed funds went to 30%. I bought. I feel the same about gold now, but I don't have the strength of conviction I did with the bonds. The bonds were a safe claim on future return. Gold never implies a future return. It is a speculation on a surprising change coming in the future. Like all investments it's just a guess. One thing you didn't list: an assessment of the unexpected. There is no con argument for the depreciation of gold under a regime of unexpected good news. There can't be because there can't be any better news. Every event in the world has been negative for gold and the economic circumstance in this country simply can't get better. Any better would actually go beyond the optimum and precipitate the bad. But the downside to the economy knows no bounds. I assert this because nothing in legislation has been significantly constructive such that the root problems that caused the malaise of the past have been rooted out. When the FED threw in the towel in 1982, they sank the chance to stay the course to a disciplined monetary future. As you've heard me say before, they now are compromising on inflation. That is the issue. Everything else is window dressing. It took me ten years during the '70s to realize that and I had created the same list as you have with different names and places. They are practicing inflation support through targeting interest rates, free market interference so the market never knows the equilibrium level. This isn't pronounced now because the economy still supplies back enough money to the money market such that tinkerings are presumably inconsequential. That's what the Burns FED thought too. They could never see how the problem crept up on little cat's feet. By the time the problem was significant they didn't have the guts to go in and take America back to the Greeeaaat Depression and leave her to her own devices to get out. Volcker had to come in and do the hatchet work, but by that time the powers that be accepted that the route back was inevitable. So actually I'm claiming that the only reason for gold is these subtle changes in attitudes and sudden unexpected change. Think about the big earthquake that racks California busting lots of the fiber optic cable in ground. In 1906 the SF quake effectively ended the era of the big railroad expansion, not by track destroyed, but by confidence waylaid until it came to a crescendo in the Panic of 1907. It was an old fashioned run on money at the NYSE money post (see Jesse). Before it was over JP Morgan had to bail the entire country out with the eventual effect of forcing Congress to create the FED in 1913. Well, we've got a new kind of transportation now, so all we need is the Cal quake which is long overdue. In light of that I like my gold stock hedge.

To: Vieserre who wrote (1389)	7/13/1998 12:26:00 PM
From: Ming	Read Replies (2) \| Respond to of 1911

Good post. But there are some supporting facts that I'd like to challenge. a) deflation. Asian Crisis and imports can't change U.S. service sector inflation(I don't see any price pressure there,only the opposite), and the chronic supply shortages for college grads and computer science personnel.(unemployment rates for them are now below 2%) Service sector is more than 2/3 of the U.S. GDP output. b) Asian crisis and dropping commodity profits increasing profits for many firms! (Dell, Airlines for example) These firms buy a large amount of parts from Asia, or consume commmodities that have been slammed by Asia. c) industrial firms are a decreasing percentage of market capitalization. And most of them have already fallen anyways. (Steel, Chemicals, etc.) A few haven't fallen yet-3M, Dupont, but these willnot impact the market in a major way. d) Safe Haven & Currency Hedge: Gold needs a global crisis to re-establish its role. If Asia is contained, then gold will lose more lustre. And gold does not pay interest like dollar deposits. e) Containment of Asia. All eyes are on Japan. If they act quickly(And it seems that voters there have sent a clear message to politicians that they must), then the Yen's decline will be contained. But if the politicians still think it's business as usual, then the U.S. will intervene if necessary to stem the collapse of Asia. There will be pressure on the Yuan and the HK$, but only if the Yen undergoes a sudden crash. Intervention will cushion that crash, as it did a few weeks ago. In any case, gold seems to be linked to the yen right now. I wuld put the chances of an Asian Debacle at 30%. If that happens, gold will skyrocket. But thatis assuming that everyone in the treasury and the Japanese government are idiots who don't realize the gravity of the situation right now. f) Y2K. Would love to hear yur opinions about this issue. There is an Asian adage that states that "paper money will always beworth the paper it's printed on." In order for that to happen, everything will have to go wrong for Asia, the US and Europe. And Y2k just might be the factor, IMO.