To: Bobby Yellin who wrote (1496 ) 8/5/1998 2:36:00 PM From: Vieserre Read Replies (1) | Respond to
Bobby: Thanks for bringing the "Armstrong" article to my attention and for your earlier comments. I gained little out of the article during a first scan as I am not sure I understand it. I have read Armstrong for some time, appreciate his original thoughts, which usually are against mainstream thinking, but have not found his conclusions particularly reliable. In 1994 he wrote "By our analysis of many sectors, we see that the overall LOW in the long-term historical trend for inflation most likely took place during the 1991 time period. This year also represents the low for gold expressed in 1982 dollars. Accordingly, it appears that we may be on a serious change in long-term trend and that inflation as a whole will tend to rise at least over the next three decades and perhaps even much longer". In May of 98 he reportedly stated, that that gold would, however, begin a bull market during the second half of 1998 as private investment capital seeks a haven from the chaos created by EMU. He is a cyclist, and during the period of time I was a member of the Cycle Foundation, to which he submitted articles, I found his cycle forecasts interesting but not necessarily reliable. Cycles have a tendency to invert or disappear. Owing to his following, I must have missed many of his good forecasts. As mentioned earlier, in economics one can take a set of data and interpret them to support a desired conclusion. And I am not sure his logic is deductive or inductive. The opposite views of Baverman and Roach, two experts in the field, are explempary as they use the same set of facts to arrive at opposite conclusions. The main thrust of Armstrong's current theme appears to be that a strong dollar is necessary to support a rise in commodities and gold. This is hard to square with recent events which have found them to fall in face of a rising dollar. Further, if the dollar is rising, relative to other currencies, it suggests that the US monetary assets are well well-managed. Why then would one want to buy gold as a "safe haven" monetary asset instead of dollar debt in which interest is obtained as well as having superior liquidity.
