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| Updated: 8 Apr,2005 |
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8 April, 2005
The dollar gains strength, the US economy appears to have several signs of weakness,
international financial experts predict doom and gloom. What does this mean for
gold, not much. There is still a demand for the yellow metal that is 7%
greater than the supply. The US economy is still sound, despite the doom and
gloom being bandied about today. It is not as robust as it could be, but the
Fed has been brilliant in their track record since the 1980's, keeping things
on a reasonable keel, and I do not see any drastic changes to cause me to think
they will deviate from the tried and true economic policies that have held
this economy in check for over two decades. Gold, like all commodities, is cyclical, but I see the trend up in the near future, not down. How much demand is there for $500/ounce gold? Less that there is for $420/ounce gold, but gold should hit $450 - $465 sometime later this year. Analysts whine about growing deficits, this country has had a major balance of trade deficit since the 1980's and it will continue, since we do not manufacture many goods on shore, so what are we going to export? I suggest we export some of the Wall Street Analysts. They have managed to drive business to a quarterly mind set, forgoing all long term planning, jumping through hoops to please these overpaid, under thinking financial wizards that have economics resembling more alchemy than science. These analysts only read numbers, and have no clue as to what must be the solid foundation for business to prosper and succeed in the long run. They appear not to understand what is behind the numbers they so relish in their prognostications of what each company should post this quarter or that quarter, but they are all so confident of their voodoo analysis. Well, here's my voodoo analysis. Interest rates will continue to edge up, making capital a little more costly. Capital has recently been at, or near record lows for any time during the last 5 decades, and it will return to a more reasonable cost of acquiring it. The dollar will strengthen a bit, against foreign currencies, since money will be placed into higher paying US interest instruments. Inflation will rear its ugly head, but will be kept in check, by actions led by the Fed, just like they have done over the last 20 years. Corporations will expend capital for modernization and expansion of plant and equipment, in order to remain competitive in the future and to meet the ever changing economic conditions of the global business environment. Employment should improve, and the economy will hum along, in spite of the dire predictions by Wall Street. And if anyone actually believes in the doom and gloom, what better commodity is there to have than gold? |
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Charles Kubach Mine-Engineer.Com Return To Gold Page |
