| Well my friend, I do admit that the period I chose does come right at the breakdown in the value of the US dollar. A period you call the beginning of the spike in gold. It of course is largely a falling away of the post WWII valuation premium of the US dollar that we are about to watch as Nixon defaults on US convertablitiy of gold in 1970 and the US dollar takes it in the neck for the next twelve years. You call this period a bubble in gold prices and clearly part of it was, say from $550 to $800/ounce, but largely what was going on was a longterm realignment of the US dollar and the economy it represents with the realities of rebuilt european and asian competitors. Barrick hedged or not hedged over this period is absurd since there was no Barrick at that time as you well know. If I am correct there was barely a Newmont MIning. The cyanide leaching process that helped the gold production so much in the US was still in it's extreme infancy. The question that you are trying to answer though and that I sympathise with the search for is an interesting one. "What really is gold and is it money or is it something else?" Here let me ask you a question. Why do you think that the interest rates or lease rates on gold are so low? Many of my fellow travelers mistakenly claim that the low interest rates on gold leasing is some kind of central bank conspiracy to allow the manipulation of the markets or something. They are just plain wrong in my opinion. But you are a thoughtful person and hold a differnt opinion on these matters then I do, so I would be interested in your opinion of why when money, in most cases over all the periods of history that you have sited carries an interest rate of two to three times that of gold leasing. If we can agree on that one point then maybe we can agree on the bigger issues as well. The answer to the American Barrick better off hedged or not really swings on this same point. Since if as I postulate that gold is money, whether or not the governments of the world like it or not, then the shorting or pre-selling of it is very dangerous for the hedger in a period where paper currencies can fall significantly. But the real question is how do you explain the low leasing rates on gold for literally decades? What is going on here? I disagree with your postulation that gold means nothing to the average man as well, since there are a billion chinese who would think you wrong, almost as many Indians and Pakistanese who would as well, and some very new converts in Argentina, Turkey, Venezuela,Ecuador, Korea, Malaysia, and soon Japan. Whose current relationship with their own fiat has caused them to rethink the only refuge from the damn politicans script. |
