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

To: Investor-ex! who wrote (26692)	1/22/1999 12:59:00 AM
From: Hawkmoon	Read Replies (5) \| Respond to of 116766

You seem to be unduly concerned with the rise in value of gold, in what "appears" to be deflationary times, but that is exactly what gold SHOULD do, countering the "appearance" of deflationary times. No... that's not what I have said. I have stated that I'm concerned about a rapid and rampant rise of gold as a result of a massive short squeeze by those unwilling to permit that mistakes and irresponsible acts of the CB's and Hedge funds to be unwound gradually. A buying panic would cause so much more damage than what almost occurred in August because it directly impacts the confidence in Fiat currency as it would imply inflationary pressures were evident requiring higher interest rates to cool the economy, INSTEAD of deflationary pressures where prices are falling (as represented by the global reserve currencies), and too many goods are chasing too few dollars. This is why a huge upsurge in gold would be depressionary. It would weaken the dollar and Euro and their underlaying economies at a time when they are the only engines of prosperity left. This would inhibit emerging growth economies from exporting their way back to a semblance of liquidity and would essentially nail them in their economic coffins, with the political and military ramifications that would obviously follow. The challenge is how to wring the excesses from the global supply of goods by "culling the herd" of financially weaker corporations, without destroying or crippling the stronger ones as well. This challenge is being met with varying degrees of success in some of these economies where new transparency and regulations are being implemented. What is inflationary to a non-reserve currency is deflationary to Dollar and Euro based economies (Yen as well). There devalued currency makes theirs good cheaper in comparison to dollar denominated goods. Lower prices are deflationary and require economic stimulus to bring them back to stability. Again, a sudden upsurge in Gold would force the Fed and ECB to raise interest rates as bonds are sold off and capital flees to gold in the perception that the reserve currencies are being inflated and worth, thus making goods cost more. It would create a FALSE INFLATION due to gold's competition with fiat currency in the hearts and minds of investors. I would think that this result would be obvious to anyone who thinks this through. You seem to worry that the movement of gold is somehow dangerous at this time, yet was its previous collapse not signaling the danger now already upon us? Hindsight is 20/20. I live in the present, not the past. So let's not play the blame game and figure out a means for gradually returning gold to a semblance of previous perceived value. You claim gold is anachronistic, yet you fear its hoary power. Why? If gold truly is the side-show you make it out to be, surely you believe it will be of little import in the coming self-induced implosion?. I fear the hoary power of any bubble, whether it be a bubble of debt, or a man-made bubble in gold as a result of reverse manipulation through a massive short-squeeze. There may be an implosion on the way. But not being one who is given to through in the towel quite yet, I would like to see a little bit of grace permitted in order to let the CB's to be permitted to unravel this situation slowly and without severe shocks to the system. The global economy will under enough pressure due to Y2K. I can find no reason to excerbate it through equally reckless behavior on the part of gold bugs. If you guys want to hold gold, so be it. But chumming the waters in order to attract the speculative sharks in order to force a squeeze in gold is MORE IRRESPONSIBLE than the shorting activities by the hedge funds. Why?? Because you know it would destroy the confidence game of the present fiat money system in order that you could replace it with your own version of a monetary confidence game (that just happens to have a few thousand years of history behind it). Money of any kind, from coins, to salt (salary), to the huge stone coins of the pacific islands, only had value because each person in that financial system recognised that value. Gold is no different. It only has value because enough people believe it does. And one final point... the history of gold and silver has certainly shown both inflationary and deflationary impacts. The Spanish induced inflation in 16th century Europe DRASTICALLY increased the amount of "money" during that time. The same thing happened during the gold rush of 1848 and '98. But then you have to look at the great deflation after the civil war through to the early 1890's. Greider speaks of this on pg. 245, giving examples of where farmers would borrow money to plant crops in fall, only to have the price of their goods erode by harvesttime. So gold is no guarantee that there will be greater price stability. But gold certainly limits gov'ts options in dealing wtih price deflation or inflation. No the Fiat system is not anymore perfect than your gold standard is. But at least it is backed up by the economic strength of the country issuing the currency and their ability to levy taxes to service their debt. Anyway... I can see we disagree. I hope you guys fail in your attempt to exact your revenge on the Federal Reserve and hedge funds. But since I would have no choice but to hop on the bandwagon as well, or face a devaluation of my assets, I have little choice. I'm going to bed... and yes it has been an enlightening discussion. But I think this thread needs a rest now. Take care, Ron