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To: L. Adam Latham who wrote (98093)	2/2/2000 5:59:00 PM
From: Jim McMannis	Respond to of 186894

RE:"Why do you think gold is still hovering around $300? Is it because of last year's dump of gold by the UK? I'm no inflation or commodities expert, but doesn't the price of gold typically lead inflation? I'd appreciate your thoughts." Gold is not an industrial commodity and the fear of central bank gold sales looms over the gold market. In one sense it's rigged. Jim

To: L. Adam Latham who wrote (98093)	2/3/2000 7:55:00 AM
From: GVTucker	Respond to of 186894

Adam, RE: <> Why do you think gold is still hovering around $300? Is it because of last year's dump of gold by the UK? I'm no inflation or commodities expert, but doesn't the price of gold typically lead inflation? First, gold's correlation with inflation is overstated. The only reason a lot of people believe that gold leads inflation is because that indeed happened in the 70's, with the price declining in the 80's and 90's. Yet that relationship happened for only one cycle. I want a few more data points before I'm ready to concede that gold is a leading indicator of inflation. Second, as was pointed out elsewhere, gold has little use in the industrial world. The central bank sales also have had a muting effect on the price of gold, although since the UK removed the uncertainty from a large portion of those sales, note that the price of gold has increased more than 10%. I guess that I see gold participating further if inflation is indeed here, although not to the extent that a lot of other commodities will.