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Politics : High Tolerance Plasticity
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To: kodiak_bull who wrote (10594)11/19/2001 9:09:18 AM
From: Tommaso  Read Replies (1) of 23153
 
Noticed your courteous nod in my direction.

I guess what I do is the best indicator of what I think. I had been holding LEAP calls on NEM and when the price dropped after the tender for the other gold companies, I tripled my position in those. I am holding the strike 20 calls for January of 2004. After some figuring it seemed to me that I had the best chance of salvaging some capital out of the position in case I was totally wrong.

The demonetizing of gold by central banks does remove a certain level of support. In effect, it turns gold into a private enterprise currency. I guess I am willing to believe that if Barbee Dolls and baseball cards can become valuable, even though they are not part of bank reserves, so might gold.

But the economics of scale that huge earth-moving machines make possible--the vast amounts of ore that can be moved and crushed--would seem to me to put a lid on gold. That "lid" could rise with the inflation of the dollar, but it looks to me to be about $300 an ounce at the moment. But a giant company like the expanded NEM could make a lot of money anyway, and any temporary speculative revival of interest in gold could allow me an exit from my NEM calls with a good gain. By "good" I mean 25%.

I guess those calls represent about 5% of my non-IRA investments, so you can see that I'm not much of a gold bug. I also continue to hold gold coins valued at about the same amount, but I don't even think of them as investments any more. I think of them as an expensive reminder of how useless gold really is.

As I have posted before, about 55% of my non-IRA investments are in the non-dollar bond funds, FAX and BEGBX. So I guess that's where I think some safety combined with some possible gain from a sinking dollar might be found.

Thanks for the link--it brings a lot of things right up to date.
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