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

To: long-gone who wrote (27471)	2/1/1999 1:25:00 PM
From: Hawkmoon	Read Replies (3) \| Respond to of 116762

Richard, I am certainly looking at imports vs. exports. Did I not previously mention the alledged 18% increase in exports reported by the Financial Times the other day? I have also mentioned the dumping of steel on the US market as well. So please do not mistate what I am, or am not, looking at. The reason the trade deficit is so high is that the dollar has appreciated against every minor currency, (to include gold for you goldbugs... :0). The round of devaluations in emerging markets, reflective of the lack of investor's confidence in those countries has sent their capital flying here and to Europe. There goods are now cheaper, and they are producing just as fast as they can (pending available credit), in order to export their little economies out of recession/depression. In order to accomplish that, the Fed is expanding money supply in order to accomodate those goods, hopefully preventing a complete economic collapse in those countries with the requisite debt defaults that would entail. Expanding money supply also lessens the pressure on our economy from the appreciating influences driving up the value of the dollar. The Fed recognizes that to do nothing, or to have the US gov't raise protectionist measures would accomplish nothing except tearing down the progress made to free trade accords. Raise the barriers and and everybody loses, trade decreases, and political unrest/disruption will manifest itself. Yes, our trade deficit sucks. But that money that is spent and the dollars that these countries collect are almost always used to purchase US denominated equities and bonds. Or it is used as a reserve currency to support their own devalued currencies. But you're right, it can't go on forever and that is why US officials were placing so much pressure on Japan to get its house in order and for the Europeans to take some of the burden of accepting goods from these floundering economies. As for mining companies, I sympathize with their plight. But I would also sympathize with the plight of numerous other workers would would be displaced should global trade accords break down. The Fed and other "free-traders" fear a return to 1930's style protectionism that led to kind of disruptive political situations resulting in WWII. This is a situation that has to be unwound gradually and with the help of other large financial powers. Btw, I was reflecting on Y2K this morning and the apparent call for people to have sufficient cash on hand. We know there is a lack of hard currency available in quantities to handle likely demand. And as gold is accumulated, I wonder if CB's may "surrender" to a certain extent and permit gold to be "monetized" again, thereby permitting them to sell quantities of gold to augment their hard currency reserves. The Fed certainly would rather have people holding gold, instead of cash in order to prevent the appearance that there isn't sufficient money available. What do you all think? And what would that mean should the CB's use that justification to sell gold reserves into the market to help meet demand? Regards, Ron