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 : Barrick Gold (ABX) -- Ignore unavailable to you. Want to Upgrade?

To: valueminded who wrote (879)	12/18/1998 12:25:00 PM
From: ahhaha	Read Replies (1) \| Respond to of 3558

An abundance of money is only water for the garden. If the soil isn't in proper condition, plants won't grow. You can have rich soil, but without proper sunlight the plants remain stunted. Inflation is a mental state. The soil of the mind is not yet ready to support seed sprouting though rains are heavy. From 1/1/80 to 9/1/98 the world has been in intrinsic deflation. This natural economic state was abetted by a rattled FED erring on the side of restraint in order to convince the markets their mistaken generosity of the past would not be repeated. The gradual change from borrowing to speculate on future price increases, to paydowns in order to reduce the cost drag in a regime of difficult incremental top line growth, has reduced the need to add to capacity. The world is in transition away from heavy industrial orientation with its high borrowed financing requirements. Other factors like major political change away from economy minimizing socially oriented systems has brought on massive cheap semi-skilled labor even while machines continue to improve labor efficiency. These factors will persist and will give central banks time to transition back to the L'ancienne regime of erring on the side of ease which will be evidenced by the acceptance of ever higher levels of inflation. When the world is in full boom and labor cost worldwide is in parity, then demands for increases in compensation will rise faster than demanders additions to productivity. It is then that water, soil, and sunlight will all be in the proper state to make the plants grow like wild weeds. Japan refuses to print money. When they do start, then world money supply growth will have more of an inflationary effect. As long as Japan remains in a deflationary state, money stimulus in the US only increases Asian output. The problem is that Japan needs to import more from say, China, than exporting to the US to move Japan to a more balanced economy. FED pumping only causes more exports from both to the US and distracts Japan from domestic stimulus proper course. Japan has structural industrial problems like excess plant much of which is unutilizable. Japan needs to remake their orientation as a low labor cost Asian "tiger", to a skilled labor technologically oriented producer. The result would be a better balance in Asia in terms of capital flows and industrial output. The current circumstance has only bought time for Japan to address these problems. They aren't doing it. They're looking for a supply side only solution. It won't work and the result will be another massive move into T-Bonds with Asian stock markets plunging in response. This should happen early in '99 and definitely will correct the unsupported upside since 9/1 or 10/6 in stock markets. Because of this gold is not ready yet. When Japan starts the printing presses, you may begin the purchase of gold stocks. ABX is the premier way to play. Current levels are attractive for the stock, but conditions aren't right yet to go long. I can tell you that the money flow into the stock is better than just about any other including the Internet stocks. The latter may have more, but the quality of buying indicates not only a completely sold out market, but also intense accumulation and tremendous work being done without commensurate price increase. The Internet stocks have a little work being done, but with tremendous price increase. Though this state is quite constructive, until you get the "ok" to buy from the price mongers who let out the fish line, you have to stay out and watch. Check out the web site for St Louis Fed. All data is there. If you have problems, send me a private. There are few good books for the periods you want. Friedman and Schwartz have a good tome. Even Galbraith is ok. There are many, but each is too narrow. I have written so much about these topics, I hate to rehash it all again. It's all in the SI threads, "ABX", "Is this a bottom for gold", "gold price monitor", others. I suggest that you just ask me specific questions. My views are very much different from most. My orientation is Smith, Von Hayek, Von Mises, Schumpeter, Friedman, Mundell, Roberts. Greenspan has this orientation too though he tends to hide that fact. As far as the what the FED did from '47 to '80, it was simply erring on the side of ease in order to create eternal prosperity. Since then they have reversed that. My only complaint about the FED is that they try to manipulate the free market's determination of the price of money. This causes the price equilibrium level to be unknown. They only need to target money supply growth according to anyone's definition of productivity growth and let price do what it will. They did this from '89 to '95 and I believe that effort is what sowed the seeds of our current prosperity. Now they are reversing that good work, but the effects will only be gradually seen. The seeds are germinating. The anil is yet to be cracked.