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Simms-
You wrote that: "once that ball
gets rolling, the government has no choice except to pull an "Argentina"
and massively reflate...if they can do so in time. If they can't, wham,
depression occurs..."
Is the scenerio then EITHER inflationary depression
OR deflationary depression;
assuming things got out of hand?
chas
<BLOCKQUOTE
style="BORDER-LEFT: #000000 2px solid; MARGIN-LEFT: 5px; MARGIN-RIGHT: 0px; PADDING-LEFT: 5px; PADDING-RIGHT: 0px">
----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
M.
Simms
To: <A
href="mailto:realtraders@xxxxxxxxxxxxxxx";
title=realtraders@xxxxxxxxxxxxxxx>realtraders@xxxxxxxxxxxxxxx
Sent: Monday, August 19, 2002 12:27
PM
Subject: RE: [RT] GEN: DEFLATION AND
GOLD....
DEPRESSION and
DEFLATION not EXACTLY the same......
<FONT color=#0000ff
size=2>
yes, in a
depression, real assets worth nothing, and the US dollar worth little, so gold
shines....can't be printed, can't be forged.....
BUT With a
slower evolving deflationary scenario, all assets groups decline......pricing
power is gone.
This is why
everyone is watching the housing market so carefully.....
as once THAT
market begins to decline, then we are really in trouble and a depression
becomes likely since mortgage holders (banks, etc) begin to foreclose on
properties whose value is less than the principal on the mortgage
due.
Once that ball
gets rolling, the government has no choice except to pull an "Argentina" and
massively reflate.....if they can do so in time.
If they can't,
wham, depression occurs....
if they do
catch it in time, then massive inflation results with mortgage holders and
other creditors, the big losers.
<BLOCKQUOTE
style="BORDER-LEFT: #0000ff 2px solid; MARGIN-LEFT: 5px; PADDING-LEFT: 5px">
<FONT face=Tahoma
size=2>-----Original Message-----From: Charles Meyer
[mailto:chaze@xxxxxxxx]Sent: Monday, August 19, 2002 11:39
AMTo: REAL TRADERSSubject: [RT] GEN: DEFLATION AND
GOLD....
Group-
Excerpt below from interview which references price of HM during the
great depression. I wanted to know Pretcher's logic for expecting the
opposite in the event of a deflation this time around.
chas
==========================================================
TAYLOR: Well, I have had some experience in analyzing gold shares
in all sorts of markets. Homestake Mining shared with me their daily share
prices dating all the way back to 1888 through 1998. During the depression,
Homestake Shares appreciated very greatly despite the fact that we
experienced deflation rather than inflation.
BATRA: Did the price of Homestake rise right from the beginning
or...
TAYLOR: No, actually Homestake's share price initially fell too
from $83.50 just before the crash to $65 about two weeks after the crash. So
perhaps the law of substitution did initially apply. But from November 15th
and thereafter, Homestake's shares rose dramatically, to a high of over $500
by 1936. And during 1932, when the DJIA had lost 90%, Homestake's shares had
reached $162. So investors who diversified their portfolios with a little
Homestake were able to travel through the Great Depression relatively
unscathed, while those who owned only the Dow Jones Industrials, were
devastated.
BATRA: Ok, what I am saying is that timing is
important. Gold stocks are also going to do very well. <FONT
color=#990000>However, at this stage, my advice is to start preparing
yourself by buying gold bullion. Then begin buying gold shares the
moment there is a whiff of inflation or when the market begins to favor
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