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

To: ahhaha who wrote (1762)	10/3/1998 5:10:00 PM
From: Zardoz	Read Replies (1) \| Respond to of 1911

So in your opinion, gold is reaching a new local maximum.

To: ahhaha who wrote (1762)	10/3/1998 9:39:00 PM
From: David R. Schaller	Read Replies (1) \| Respond to of 1911

ahhaha, I guess I'm not sure of your point. Is it that you don't think enough dollars could come back from Europe to affect our inflation in this country? Inflation is usually considered to be caused by too many dollars chasing too few goods. (Usually the result of printing presses turning perfectly good paper into worthless paper with US printed on it.) The money growth has apparently been at over 10% per year, so the fuel has been added to the fire. But where's the inflation? It is my understanding that we have been exporting our inflation & importing other countries deflation. It happens like this: Huge trade deficits with Japan and other asian countries would normally result in a weakening US currency as dollars were converted into the native currency and exchange rates adjusted to reflect the the trade imbalance. But what happens if the asian country decides to leave the dollars in this US in the form of T-Bills? The exchange rates don't adjust & the asian investor benefits from higher interest rates on their US investments. As their own currency devalues against the Dollar they receive a double benefit. This is starting to unravel. Japan & other Asian countries are finding that their currencies are starting to strengthen. US interest rates are dropping. Their companies need hard cash. BINGO...Repatration of funds. They need to buy yen..raising the value of the yen further. (adjustments that should have been taking place all along) All of a sudden we start to import inflation and export deflation. Ouch. The European situation is similar but not matching. They "kept" the Dollars. And use them as an alternate currency. The new EU and a weakening dollar could upend that apple cart also. My point is that there a lot of dollars out there floating around that better stay where they are, or we could find ourselves awash in green paper. Should Europeans buy gold with their Eurodollars it wouldn't necessarily cause inflation. But they're more likely to convert into other currencies that they have more confidence in. Hope this makes some sense, Dave