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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: Freedom Fighter who wrote (673)	8/26/1998 7:46:00 PM
From: Axel Gunderson	Read Replies (1) \| Respond to of 1722

Thus the poor performance of gold in recent years. Forget recent years. When has it ever been a good performer for any sustained period? Like you said, it has been a hedge against currency collapse. Also, this new money stock is in the hands of the government and its constituents first. And historically that has been true of gold as well. Government and people can play about as many tricks with gold as they can with paper or electronic money. A couple hundred years ago maybe that wasn't true, but today we can "inflate" the supply, just like printing money. It may not be as physically easy, but that can be compensated for by govt manipulation of exchange rates. Something else that is consistently missing in the financial discussions is realism about supply. There is one continent (I'm sure you can guess which one) that when things get rolling there is going to be a source of a huge supply of gold. Gold is likely to continue to do poorly until such time as our foreign obligations reach a critical level or our current account deficit causes some holders of dollar reserves and investments to want to cash in, fearing the inevitable decline of the U.S. dollar. Just remember that on a net basis, foreigners cannot get out of holding dollars unless they exchange them for our goods and services. In other words, they would have to let us run a considerable account surplus. Axel

To: Freedom Fighter who wrote (673)	8/26/1998 8:33:00 PM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

Very nutritious food for thought, Wayne. David Tice in a recent Barron's guest editorial touched on a controversy as old as the beginnings of industrialism: Does the production process generate enough income to buy back the goods and services produced? Or, must consumers and businesses go ever deeper into debt to keep a given economic upcycle on course (in which case, upcycles are inherently self-limiting)? Or, is the increasing debt level of an ongoing expansion only a matter of the tendency of credit standards to be relaxed as the good times roll on? If the latter, then presumably expansions are not necessarily self-limiting.