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: Bob Dobbs who wrote (26946)	1/24/1999 4:41:00 PM
From: Gord Bolton	Respond to of 116764

Many good points in your post Bob. I think that sometimes the arguments on the thread get way too complicated. Many years ago, people were much more practical. They compared the price of gold to a loaf of bread. There is in a sense a limited but unlimited supply of gold in the world. The problem is most of us have to work to get it. If the price of gold goes up relative to the price of bread, more efforts will be put into the recovery of gold- ie. previously uneconomic resources will become economic. If a farmer had an unusually good harvest he could exchange his surplus for gold and keep the gold for hard times or he could go on a pilgrimage or vacation using his gold to buy bread along the way. If he took his grain to the local miller and accepted an iou for XX bags of flour he would have to consider the ability of the miller to actually deliver on demand. Most would prefer the gold. The paper is only as good as the ability of the issuer to actually deliver something tangible at some future time. Using a gold standard would not neccessarily restrict the money supply to the actual amount of gold in existence or even in possesion. Many other things have value that could be converted to gold equivalents and be used for credit purposes or money (value)creation. There is no probem in saying that a barrel of oil is worth X ounces of gold or that Joe's Service Industry is worth X ounces of gold based upon the ability and actuallity of JSI to add value or perform valuable work. The danger in all currency not backed by gold is that it may eventually turn into a bad check or a much devalued check which does not serve as a store of value. This is not inevitable, but perhaps irrisistable without a discipline check. The only real danger with using gold would be that everyone might forget that Gold is a measure of value and does not have significant intrinsic value in itself. Ie. if everyone in the world went mining for gold and no one was growing food there would be a problem. I suspect that it would be quickly corrected as some would soon discover that there was more gold to be obtained by trading very scarce food for very cheap gold. Of course the same is true of any currency. Normally if one concentrates on some value creation or value added process they will be rewarded by the ability to trade that added value for needed goods and services. A company that concentrates solely on printing ious and does not create value will eventually not be able to cover the ious with anything other than more worthless ious. The same can be said for a country.

To: Bob Dobbs who wrote (26946)	1/24/1999 5:33:00 PM
From: goldsnow	Respond to of 116764

Inflation Now Haunting Brazil Sunday, 24 January 1999 R I O D E J A N E I R O , B R A Z I L (AP) A COMPUTER store removes price tags in Brazilian currency and writes them in dollars. General Motors Corp. hikes prices and hastily lowers them when the government threatens retaliation. The ghost of inflation is back to haunt South America's biggest economy, days after the government abruptly devalued the real on Jan. 12 to stem a hemorrhaging of foreign exchange. Naturally, Brazilians hope this doesn't mean a return to the old days of prices that increased 30 times in a single year. "Inflation used to make my family's life so complicated: we didn't know where we stood from one day to the next," said civil servant Silvia Santana, 27. The currency, left to float freely, has already lost 30 percent of its value against the dollar in the last two weeks, prompting manufacturers and retailers to try to protect profits with price increases. GM announced last week it was raising prices 12.8 percent and Ford Motor Co. said it would do so by 11 percent. Fiat and Volkswagen soon followed, also blaming the weak real and cost of imported parts. They weren't the only ones. A hotel in the capital Brasilia raised rates by 30 percent. Some computer stores in Sao Paulo illegally marked up prices in dollars or indexed them to the exchange rate. Inflation has plagued the nation for decades. But soaring prices were brought to earth when President Fernando Henrique Cardoso introduced the Real Plan in 1994 and pegged the real to the dollar. During Cardoso's first term, inflation plummeted from 2,700 percent a year in 1993 to just 2 percent last year. But now, weeks into Cardoso's second term, Brazil has scrapped its inflation-busting plan, battered by global market turbulence and investor flight. The six-month drain of some $45 billion in foreign reserves proved too severe. Worried about the latest round of inflation, Rio taxi driver Fernando Alves de Abreu, 38, remembers when gasoline prices used to rise almost every day. "It was very, very difficult, although people just got on with it," he said. "This time, if crazy inflation returns they'll take to the streets." Some Brazilians are already taking a stand against price hikes. New car buyers in Belo Horizonte, capital of the central Minas Gerais state, are going to court to challenge 30 percent increases in monthly payments, which are pegged to the dollar. After tourists at the inflationary hotel in Brasilia denounced the hikes, the hotel faces legal action for breaking a consumer code that forbids raising prices without justification. "Whoever wants to take advantage of this moment will be castigated," Communications Minister Pimenta da Veiga warned last week, attacking GM and Ford. "First by public opinion, and then by the government." At the end of last week, GM hastily decided to lower its 12.8 percent price rise to 5.5 percent. Until now, inflation has yet to hit most Brazilians, but it will soon. "We advise families to keep a close eye on prices at the supermarket - their shopping bills are likely to increase up to 10 percent this year," said Marcos Silvestre, director of Brazil's Personal Finance Advisory Center, in an interview with CBN radio. It is unclear if the inflation is a one-time adjustment to the currency devaluation, or will take hold. "We are really in the dark but I believe the government won't allow inflation," said Anderson Souza, 42, manager of a gift shop in Rio. "It knows how to handle it better now." Finance Minister Pedro Malan agrees. "Inflation will not come back," he pledged in Sunday's O Globo newspaper. "It will be controlled by monetary and fiscal policy." "During the inflationary era the consumer was obliged to buy because he thought the next day or month the price would be higher," Malan said. "That's not true now. The consumer has had four years to learn he doesn't need to accept every price rise."

To: Bob Dobbs who wrote (26946)	1/24/1999 5:36:00 PM
From: Hawkmoon	Read Replies (1) \| Respond to of 116764

<< The only other alternative would be that the price of gold be raised to a price level where it is divided into current money supply nad the restrictions that would follow where money supply could only grow as fast as gold is mined and stored. >> * Great idea! Let's do it! * Then Bob, you are basically saying that future monetary expanision should be dependent upon the ability of the world to find, extract, and deliver more gold to the marketplace?? I think you are given the adamant response to my comment above. And those countries possessing the largest reserves of gold will decide which currency is utilized as the global reserve. So if we find ourselves running short of gold here in the US, we can justify a colonialist imperialism for the sake of sound money backed by that shiny metal. You, by advocating a gold standard for currency, are now declaring that enourmous economic resources must now be diverted to the purpose of locating and mining that shiny metal so necessary for the backing of your proposed currency. And you stated: * Yes, and that bolsters the argument that only 1 metal is desirable for the standard. Introducing a bimetallic standard only increases the fluctuation of money value, because now there are two mine supply fluctuations to deal with. Eventually, any bi-money standard will suffer from Gresham's Law - bad money chases out good. * Who are you to decide that Silver should have no value that would be in competition with gold? That's somewhat snobbish and arbitrary, isn't it?? <VBG> I also believe that is the same analogy I made when I asked why Fiat money, backed by Gov'ts FF&C, should have to be challenged by a shiny metal mined from the ground?? Furthermore, you entirely ignore the fact that all fiat currencies throughout history have tanked in value to ZERO. Should a gov't fiat money fail, holder's of that currency will sell it and buy currency from another gov't they consider more credible. Should that currency also fail, they will then transfer their wealth to the next currency of strength (hopefully the Dollar). When that fails, they will transfer to gold. When that fails, they will transfer to actual commodities and foodstuff and "Katie bar the door". When that fails we will lie, cheat, steal, and kill from those who have what we desire. (and don't tell me that if it was a choice between your family and someone else's we wouldn't all take care of our own first. It's human nature that goes back farther the the history of gold.) Regards, Ron