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Gold/Mining/Energy : Gold Price Monitor

GDXJ 126.30

+3.6%

Jan 12 4:00 PM EST

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To: Heretic who wrote (4167)	12/12/1997 4:21:00 AM
From: Alex	Read Replies (1) of 116854

Thanks for the link Reed. ........... A Well-Reasoned Analysis of Gold Freemarket Gold & Money Report, James Turk, November 24, 1997 A worthwhile article appeared in The Times of London on November 20th penned by Lord Rees-Mogg. The tone of the article is set by its first sentence: "In the past fifteen years an interest in gold has not been a good way to make money, but it has been a good way to think about money." Just reading that first sentence I knew that his article would be a good one. No appeals to emotion or fear here -- just reason. After quoting Alan Greenspan -- in the absence of the gold standard, there is no way to protect saving from confiscation through inflation -- Lord Rees-Mogg sets about analyzing the historical purchasing power of gold. He notes: "The recent fall in the gold price has taken gold back through an interesting landmark. The purchasing power of an ounce of the metal is below where it was before Britain went off the gold standard in 1931." But this fact is not a cause of concern; rather, it is an opportunity. Citing the work of Professor Roy Jastram, Lord Rees-Mogg discusses the "centuries old pattern" that the purchasing power of gold fluctuates but is always "drawn back" toward the mean. He goes on to show how gold "is at present on the cheap side of its historic valuation", and cites the cost to purchase farmland in Britain as an example. He then notes that in recent years: "No investment fashion has been so thoroughly exploded as gold; most people think that there will no more be another gold boom than there will be another boom in tulip futures in the Netherlands." But he cautions prudently not to accept this conventional wisdom on blind faith. "One cannot be so sure about the future of the mysterious metal...It has certainly outperformed paper currencies" since 1600.

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