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

To: Ming who wrote (1408)	7/13/1998 1:34:00 PM
From: Ahda	Read Replies (1) \| Respond to of 1911

I think you could add Yeltsins' health and proposed bail out of Russia by the IMF somwhere in here as in my humble opinion this is important too.

To: Ming who wrote (1408)	7/13/1998 11:30:00 PM
From: Vieserre	Read Replies (1) \| Respond to of 1911

I appreciate the reply and the well-stated comments. I concur regarding the cost-push on services and that certain industries may benefit as well as harmed by the Asian devaluation consequences. But I do not believe that gold needs a global crisis to reestablish its role. I believe it is helpful to look at gold, not in how many dollars one needs to buy gold, but how many dollars one can receive in exchange for 1oz of gold when bartering for dollars with gold as a medium of exchange in its role as a "monetary asset". Gold as medium of exhange must have the same value throughout the world for if it were of higher value in one location than another, there would be a transfer to that place where it can be exchanged for the greatest value. But, the way this works, as I contemplate it, is that since gold has an exchange value based on the dollar, and since gold and other "stuff: is priced in dollars or local currency, the dollar acts as a proxy for gold. And the dollar is presumably valued relative to other currencies such it has the same purchasing power when converted into the local currency where ever the "stuff" is to be purchased. But what ties this all together is that gold's value is determined relative to the dollar. Thus, anything that will cause gold to appreciate in value as a monetary asset relative to the dollar will cause gold to appreciate in price, ie inflation. In recent times, this has not always worked, for if there were an inflationary concerns the fed would raise rates, and gold would fall as it became more expensive to hold. So therefore, the pundits say gold has lost its value as an inflation hedge. But I think this has to be put in perspective, since during this time period there has been a LT trend of disinflation. But I believe when this trend reverses, gold will be a beneficiary w/o the need of a global crisis. In any event, a global crisis will not beneifit gold unless as a result of the crisis, the dollar becomes less valuable than gold as a monetary asset. If not, the dollar will continue to be sought after, rather than gold, as a safe-haven in the crisis. So as I see it, if one is expecting a crisis, one must determine what the consequences of that crisis will be, not just on the dollar, but its relationship to gold as a monetary asset. For example, IMO the Asian crisis has not caused an increase in the price of gold, as many pundits earlier predicted, since it has reduced, not increased, inflationary expectations in the US and thus made the dollar more valuable. As to the Y2 factor, I regret that I have not addressed the issue as well as I should. Reports I have read are all over the place with some predicting the end of the world and others claiming it is nothing to be over-concerned about. I understand the technical problem and consequences of failing to correct it. But, being experienced in business, I have a hard time accepting the fact that in the main, the issue is not being properly addressed - particularly considering the alarms that have been rung concerning it. The question I have for you is that if there is a failure, why should gold particularly be a beneficiary. Vieserre