![[Powered by Blogger]](https://lh3.googleusercontent.com/blogger_img_proxy/AEn0k_uf8Hq3e6_j1jJJn9GP21zYOh0WAa9sp_XsDwQF3YEKLHaIZm6zbiS9qlqHT95ne_ZBnnINcO1HpNx0vJDwfcWjRKwSji8uZRwyi6-vc-VC=s0-d){kind=small}
Friday, May 09, 2003
JANUARY 27 - GOLD PROTECTS AGAINST INFLATION?
As I said at the beginning of this commentary, when investors cannot get an honest return on their money, they turn to other liquid assets that protect them from the ravages of inflation - gold being one of them.
But what if, with the dollar depreciating against the pound and the euro, the price of gold is rising absolutely in terms of dollars, pounds sterling, and euros? That would be consistent with the notion that investors are becoming fearful of not being able to get an honest return on their money. And Chart 3 shows that the price of gold is rising not only in terms of dollar, but pounds and euros, too.
An acquaintance of mine, Clyde Harrison, a managing member of the Rogers Raw Materials Fund, says that fiat currencies do not float, they just sink at different rates. That gold is starting to glitter in terms of dollars, pounds, and euros seems to bear out what Clyde has said.
As I said at the beginning of this commentary, when investors cannot get an honest return on their money, they turn to other liquid assets that protect them from the ravages of inflation - gold being one of them.
But what if, with the dollar depreciating against the pound and the euro, the price of gold is rising absolutely in terms of dollars, pounds sterling, and euros? That would be consistent with the notion that investors are becoming fearful of not being able to get an honest return on their money. And Chart 3 shows that the price of gold is rising not only in terms of dollar, but pounds and euros, too.
An acquaintance of mine, Clyde Harrison, a managing member of the Rogers Raw Materials Fund, says that fiat currencies do not float, they just sink at different rates. That gold is starting to glitter in terms of dollars, pounds, and euros seems to bear out what Clyde has said.
JANUARY 17 - M2 ABSORBED BY HOUSEHOLDS RESTORING A BIT OF SAFETY, VELOCITY DECREASED
With all of the economic uncertainties following the bursting of the biggest stock market bubble in this nation's history, it would be reasonable to expect that households would want to build up their liquidity in case a "rainy day" came along. Thus, because the demand for money has increased, a given increase in the supply of money would lead to less of an increase in domestic demand for goods and services. This makes the recent sharp slowdown in real M2 growth all the more menacing. The money supply is emitting some bad economic karma these days!
With all of the economic uncertainties following the bursting of the biggest stock market bubble in this nation's history, it would be reasonable to expect that households would want to build up their liquidity in case a "rainy day" came along. Thus, because the demand for money has increased, a given increase in the supply of money would lead to less of an increase in domestic demand for goods and services. This makes the recent sharp slowdown in real M2 growth all the more menacing. The money supply is emitting some bad economic karma these days!
MAY 3 - THERE IS NO CASH OUT THERE TO BUY CAPITAL EQUIPMENT
In sum, unless we see a sustained pick up in corporate cash flow from some source other than economic depreciation, net increases in the capital stock and increases in equity prices are likely to be disappointing.
In sum, unless we see a sustained pick up in corporate cash flow from some source other than economic depreciation, net increases in the capital stock and increases in equity prices are likely to be disappointing.