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

To: Bill Murphy who wrote (19705)	9/25/1998 7:51:00 AM
From: Alex	Read Replies (1) \| Respond to of 116762

Back to the Gold Standard................. A must read................... intellectualcapital.com

To: Bill Murphy who wrote (19705)	9/25/1998 8:50:00 AM
From: Hawkmoon	Read Replies (2) \| Respond to of 116762

Bill, I'm tracking with you. I read Hutch's analysis on Gold going down to $250 or lower with great interest. I still don't grasp his logic but here I will present a little of mine. A global depression, Y2K generated or otherwise, will likely result in a flood of defaults from debtor nations, like we have seen in Russia and Indonesia. This destruction of raw money supply, will undoubtedly weaken belief in fiat paper money as economies slow down worldwide. This includes the US dollar as well. And since the US dollar has been the island of safety in a sea of recession and instability, only when the waves of declining profits and defaulted loans wash over onto the US, will the forces of inflationary monetary policy be unleashed to reinflate the global economy. Lower interest rates will result in a weaker US dollar, inflationary pressures 6-12 months downstream, and an anticipation of inflation by gold investors resulting in higher prices. However, throwing in an extemely likely scenario of what currently seems to be the onset of an deflationary spiral that may have achieved a momentum resistant to Fed intervention at this late time, let's look at several factors that should shape investor attention for the next several years. First, we are seeing tremendous capital flight from emerging markets to the US. And we are seeing perilously low commodity prices, which are crucial sources of revenue for emerging markets. This will eventually result in default if not reversed with resulting calamity for major lending institutions (and the taxpayers whose gov't deem these institutions as "too large to fail"). There will be increasing repercussions from exposure to derivatives position which could threaten the stability of the Global financial system, also bullish for gold (and again involving institutions that the FED deems too big to fail, like yesterday). But most important of all is the growing awareness that other markets are lagging in their Y2K remediation. There is great uncertainty as to which companies/countries will be left standing on Jan 1st, 2000. The fact that emerging markets present the greatest uncertainty on this issue, I don't see why, EVEN with steps by the Fed to inflate economies, why people will place precious capital at risk in economies unprepared for Y2K. And if they don't trust US efforts for Y2K, there is little left other than AU as a safehaven of value. As far as I'm concerned the Fed's movement to a downward bias is too little, too late. He would have to lower rates by a full percentage point to make a dent in the capital flight problem. And were he to do so, reverse psychology dictates that someone as conservative as Alan G. would not do this unless the problem was more serious than imagined. Thus, Greenspan has to act assertively to counter a deflation the likes we haven't seen since 1929, but to do so may create a sense of panic in itself. I don't envy Alan G. right now. People are looking for a storehouse of value, either the US dollar or something else. When the dollar starts getting pounded, the only alternative are precious metals.. I'm certainly am open to discussing alternative scenarios. Regards, Ron