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To: Lizzie Tudor who wrote (46042)	6/9/1999 11:46:00 PM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 86076

Michelle, inflation hedges are relative. Real estate are inflation hedges but are not transportable, gold, diamonds, platinum and the like are inflation hedges because they do not oxidize and are easely transportable. The problem is that after periods of strong inflation it is usually followed by recession then real estate fall in price diamonds have no buyers and only gold is still considered a currency for over 3/4 of the world population. In a nutshell go figure <gg> aside of all this the consumption of gold for industrial and fashion needs with Asia recovering will be well over present mining supplies. But wen will Asia recover ?? <gg> Haim

To: Lizzie Tudor who wrote (46042)	6/9/1999 11:46:00 PM
From: BGR	Respond to of 86076

Michelle, A true inflation hedge is one whose relative supply and demand remains constant over time. The focus on precious metals comes from the supply side which is limited and thus generates financial demand (i.e. outside of industrial and personal usage which is typically not very significant for most precious metals as compared to financial usage) - making them an inflation hedge. A self-fulfilling prophecy, but it works (like small float internet stocks which only go up). Of course, like all self-fulfilling prophecies, when it breaks it breaks good. Thus, IMHO, gold is no different from platinum. There is scarce little driving demand. OTOH, for those things for which demand will probably be very strong for the forseeable future like gasoline, you never know when oversupply is going to hit you. Isn't it ironic that the Gulf states fell into poverty not when the gas wells dried up as predicted, but instead when too many gas wells were opened, even as demand continued to grow? So I believe that there may never a 100% guaranteed inflation hedge. Personally, if I were to hold cash equivalents (which I don't as I am always 100% invested) I would hold a basket of diversified currencies. The supply will forever be suspect but hopefully diversification will help and the demand will be there forever thus providing excellent liquidity. -BGR.