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 : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: banco$ who wrote (18731)	9/13/1998 3:13:00 PM
From: paul ross	Read Replies (1) \| Respond to of 116845

"...the IMF's substantial gold reserves could not be used..." Sunday, September 13, 1998 Published at 16:26 GMT 17:26 UK Business: The Economy IMF cash crisis The IMF's coffers are in urgent need of a cash injection The International Monetary Fund has been left strapped for cash after lending record amounts to countries facing economic and financial turmoil. Presenting the organisation's annual report, Deputy Director Stanley Fischer said reserves have sunk to historically low levels. Only $5bn-$9bn are left in its regular reserve fund. The last year saw member countries borrow $26bn - almost four times the amount lent in the previous year. Mr Fischer said the organisation would consider using some of the money left for future loans but only if it knew that more resources would be available soon from the United States and other members. Stanley Fischer: "A functioning IMF essential""Demands on our resources are not declining...everyone knows the fund's role in Latin America is at issue," he said. There are fears that Latin American markets could be on the brink of financial turmoil like that seen in Asia and Russia. But Mr Fischer said no Latin American nation had, so far, requested IMF funds. He said the IMF's commitments and possible future financial emergencies in other countries made it even more urgent for the US Congress to approve additional funding as quickly as possible. "The international financial system needs a functioning IMF," he added. US debates extra funds President Clinton's administration has requested an extra $18bn for the IMF - $14.5bn as an increase in the US contribution and $3.5bn to boost the emergency fund. Last week the US Senate approved the request in full, but a House panel would only authorise the money for the emergency fund. The administration hopes negotiations between the House and Senate will lead to the full amount being approved. Increases in the IMF's regular reserves and the emergency fund cannot be adopted without the approval of the United States, which is the largest contributor. Mr Fischer said it was be premature to speculate on what would happen if Congress failed to support the IMF. He said the IMF's substantial gold reserves could not be used because they assured members of the organisation's financial viability He also said that the IMF could not borrow funds from international financial markets because it would mark a fundamental change in the way the fund has operated since it was created 53 years ago. The report was published ahead of the annual meetings of the IMF and the World Bank on September 30. Mr Fischer said the meetings would focus on strengthening the international financial system based the experiences gained from the Asian and Russian experiences. news.bbc.co.uk

To: banco$ who wrote (18731)	9/13/1998 3:38:00 PM
From: Investor-ex!	Respond to of 116845

banco$, Note that that excerpt makes no reference to gold's other role as a deflation hedge and/or currency of last resort. The authors assume that the current monetary system is sufficient to ensure long term confidence, plus price stability. Unfortunately, as recent events have shown, the currently configured global monetary system was an accident waiting to happen. The only economic backdrop that I can consider bad for gold is disinflation. Gold as an inflation hedge is easily understood. The confusion arises during periods of sustained disinflation. During this period, gold loses ground, as inflation, though still positive, is declining. However, once disinflation continues into outright deflation, i.e., increasingly NEGATIVE inflation, we're not in Kansas anymore. Most people see this transition as one and the same thing. It isn't. Disinflation is the best of all possible worlds for lenders: rent x dollars and get x dollars + interest + fees + stable purchasing power of dollars in return. Deflation is a disaster for lenders: rent x dollars and get defaults + devaluations + near-zero interest + competitively lower fees + central bank reflation threats in return. IMHO, we're at or very, very near the inflection point, right here, right now. Either deflation is left to run, in which case banks fail, industry shrinks, and deficits balloon, leading to first an extended loss of confidence in paper followed by the inevitable stimulative inflation; or central banks skip over the deflation bit and go to printing and pumping straight away, which, though more obviously and immediately inflationary, bypasses the wholesale loss of confidence in the paper-based monetary system! Which do you think will happen? GO GOLD!!