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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: double-plus-good who wrote (47604)	7/8/1999 7:28:00 PM
From: Fun-da-Mental#1	Read Replies (2) \| Respond to of 95453

To Double-plus-good, "I'm not sure i should expect someone of your skills to have a handle on the futures side of gold trading" -that first sentence didn't go over too well with me "I'd be curious to hear your thoughts if you care to share them." -Oh all right, I guess you didn't mean it in a bad way. Here goes. I think the future of gold is very hard to predict, because like diamonds its value is determined more by convention than by any actual use value. Basically gold has 3 uses: 1) industrial applications 2) currency reserve / hoard under the mattress 3) jewellery #1 is growing, but it's not the biggest use. #3 may or may not be growing. Let's say it has the potential to grow, for the sake of argument. Unfortunately, #2 is going down the tubes, and imho this puts gold in danger for the foreseeable future. Gold has been in decline for centuries. Once it was used as currency. Then it was used as a standard to back up paper currency. The gold standard was first diluted and then abandoned altogether. At that point gold became a commodity like any other, except that banks happened to have huge amounts of it in reserve, so they continued to use it as savings for a rainy day. As long as everybody agreed to keep it in reserve, there was no problem, but once some of them started to sell it, that created a crisis of confidence. The amount of gold consumed each year is miniscule compared to the amount of it sitting around in storage. Furthermore, it's not even really consumed when people buy it because 99 point whatever percent of it is recycled - I mean would you throw it away? That means the world gold supply is always growing - a dangerous situation for a commodity that doesn't have many practical uses. Once people start to lose confidence in its value, there's inevitably a rush to sell because nobody wants to be left holding the bag. Okay, people will still regard gold as precious for some time to come, because traditional attitudes take time to change, and in fact you may be right that gold is oversold this year, but I wouldn't put my money on it, because unlike oil, when it goes down it doesn't necessarily have to come back up. I'd much rather invest in oil and gas, because it has so much more use value, the demand will inevitably grow, and the supply will inevitably shrink in the long run. Oil is on a long-term rising trend because as it gets more expensive to produce in the rest of the world, OPEC will more and more be able to dictate the price. (This is a reason to look at Canadian oil and gas companies. While the US is a net importer, Canada is a net exporter. We have 2% of the world's oil, 6% of its gas, and only 0.5% of its population.) If you want to invest in the mining sector, pick some other metal. Titanium, nickel, and silver come to mind. Sorry everybody for the digression from OSX. Fun-da-Mental