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  • azalphainvestor azalphainvestor Mar 15, 2005 11:51 AM Flag

    Steve Forbes on Gold

    And now a word of sanity regarding gold:

    "The Federal Reserve has made it clear that in order to curb incipient inflation it will continue to jack up short-term interest rates until they reach 3.5% to 4%.

    The move is misguided. The raising of interest rates in and of itself does not restore soundness to a currency. In the early 1980s prime borrowers had to pay rates that were higher than 20%, yet we experienced virulent inflation.

    The solution is simple: Our central bank should sell bonds from its portfolio, thereby removing cash from the economy, until the price of gold dips below $400 an ounce. Contrary to what most economists have been taught, gold--for a variety of reasons--is the best barometer of monetary disturbance. Its price quickly tells us if a central bank is printing too much, too little or just the right amount of money.

    As the chart shows, the Federal Reserve overtightened from the late 1990s until early 2002. Commodity prices collapsed, and we suffered an unnecessary recession.

    Now Alan Greenspan & Co. have gone in the opposite direction, and we're undergoing a mild inflation. At least $10 to $15 of the cur-rent price of oil, for instance, is the result of inflation, not of legitimate supply and demand factors.

    Quick rule of thumb: If gold drops below $300, we're in for a credit squeeze and an economic contraction. If it goes above $400, we'll experience inflation and rising interest rates. It if goes much above $450 for a period of time, watch out--long-term rates, includ-ing those for mortgages, will quickly pass 6% and probably rise above 7%. If gold settles in the area of $350 to $380 an ounce, you can breathe easy. Long-term interest rates won't zoom, and short-term rates will start to recede."


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    • ok..what in the hell happened to tipi or what ever it was...

      >>also...that's a lot of thinking...maybe even a lot of common sense...

      lets start in the beginning...put it all down in one place and publish "that book "

      ** note 4 anal...i still click on the ducks links....altho it cost me abou 255 $ last week...may or may not have been related to clicking on ducks links..BUT..a possibility

    • QWAK,don't know why that link did not work??

      THIS one WILL!

      the DUCK

    • QWAK,Bear,I search for TRUTH and do not FEAR to stand ALONE, and I SHARE what I find, it is JUST "WHO I AM", been doing it since I was a little kid----NO reason to STOP NOW----I have been to WAR and also been DEAD (being DEAD was FUN), One must STAND for somthing and AGENST other things, it is FREE WILL and MY choice! :)

      BTW: This two part post to another board may be of some intrist.

      the DUCK

    • RE: Most people etc ...

      What they WANT and search for, is CONFERMATION that what they BELIEVE---IS TRUTH! It lets them feel WARM and FUZZY inside,safe and SECURE

      >> the above would OBVIOUSLY not apply to you my fine feathered friend...since you are -just a duck!! (albeit on a golden pond..) thh

    • What has Steve Forbes accomplished in his life that deserves our attention to his editorial? Grandpa and Dad gave him everything. I know of nothing of significance he has added to the Forbes empire. He shows little historical context for his discussion. I wouldn't have expected this ommission from Malcolm on this subject.

      • 2 Replies to canucanoe1
      • QWAK,canucane, WHY, LOL, Simple---because alpha WANTS to believe, EVERY THING is basicly OK and will continue and the WHEELS will NOT fall off the WAGON!

        Of corse he is TOTALY WRONG, but believing that TRIPE is reasuring and aleviates FEAR that the DOLLAR can and WILL see a RUN that will render it virtualy WORTHLESS and CRUSH what little is left of the USA ECONOMY!

        It is some what like knowing DEATH will come SOME DAY to each of US, but AVOIDING thinking about it, because it is UNPLEASENT and SCAREY!

        I would bet NICKELS to DONUTS that Forbes has a goodly amount of HIS personal WEALTH squireled away in GOLD,SILVER and FOREIGN CURRENCIES, just like ALL the other BILLIONEARS DO, but does NOT want the LITTLE PEOPLE to FREEK OUT and start to take action to PROTECT them selves, because it would bring an abrupt END to the multitude of SCAMS going on and END the STOCK market and HOUSING MARKET as we know it today!

        The ELETE seldom, if EVER, tell the little people the TRUTH,THEY keep THAT to THEM SELVES and their FRIENDS, that is HOW they maintain their ELETE STATUS and apear to be WISE and ALL KNOWING!

        the DUCK

    • thank you

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