Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Dutch Central Bank Sale Announcement Imminent? -- Ignore unavailable to you. Want to Upgrade?

To: IngotWeTrust who wrote (19720)	12/2/2003 8:01:34 AM
From: philv	Read Replies (1) \| Respond to of 81247

Re: Gold demand I don't mean to pile on, but my impression also has been that there has existed a very large deficit in gold production, more than made up through C.B. selling which has been the major cause of low price. Another fact is that gold miners, inorder to survive the last 20 years, have had to high grade their deposits, and in some cases now are left with expensive uneconomical ore. Barrick comes to mind. Mark my words, as the POG rises, more people will get interested, and begin buying expensive gold chains etc. as gift items and to wear to advertise their success and status in life. It is a curious thing. But my main reason and interest in gold remains the monetary and fiscal problems world wide. Competitive currency devaluations have been going on for some time now and shows no sign of abating. You have to devalue against something or you haven't achieved anything. I'm hoping that something is Gold. Rose, hang onto yer physical. It may be worth more than you think. First: competitive devaluation Germany and France plead for easing on strong euro news.telegraph.co.uk (you don't have to read the article to understand what this is all about} Value of gold: news.goldseek.com (keep about 10 ozs., sell the rest. gg)

To: IngotWeTrust who wrote (19720)	12/2/2003 3:34:46 PM
From: sea_urchin	Respond to of 81247

Dear Tutor ................. Many thanks for the lesson and also the very interesting article by Tim Wood. I'm sure what you say is true that gold is being driven both by a certain demand for itself and also as a currency, or investment. In fact, I would add a third reason --- "gold" has become a speculative "concept" in a gambling game about any economic uncertainty. Like diamonds are "forever", gold is an "insurance" against any proverbial rainy day. Nevertheless, I will admit that sentiment towards the idea of gold is changing. I don't say changed because the true place of gold, in all its genres, in the overall scheme of things can only be gauged in time and when the present speculative fervor has passed. > It is my belief that each and every gold ounce has a home Unfortunately, true. Gold would be far more valuable if every ounce ever mined didn't still exist and the metal was actually "consumed" like Coca-Cola or beer and not available for resale by everyone who owns even the smallest trinket. Indeed, its permanence and the necessity to have to keep it in strong-rooms have given rise to a strange paradox --- that its price is being set by the most impermanent of gambling instruments, namely a derivative, the value of which is based simply on the hope that its owner will be able to sell the instrument at some future date and not on the actual possession or ownership of any gold. Further, this dichotomy which is seen in the gold market, also exists in that of the gold shares which, today, trade purely on the fact that they are called "gold" shares and not on any intrinsic value or return which they offer. The article which you posted makes this quite clear, indeed, too clear. At one time an investment in a gold mine was considered as a wasting asset which had to be amortized via its cash/dividend flow. Today, not only is a large gold mine still a wasting asset but, because of the impossibility of replacing its reserves within its existing corporate structure, it cannot even be amortized. Here is a chart of the HUI in terms of the gold price (ie HUI/POG). The chart shows clearly that, in relation to the gold price, this gold share index is now more than five times as valuable as it was three years ago. Is this because gold share owners know something that gold bullion owners don't --- or is it simply exuberance? I think you know the answer. Anyway, the index is not called "goldbug" for nothing. stockcharts.com[l,a]dalaynay[dj][pd150,2][ilb14!la12,26,9] The point I am making is that, at the moment, it is impossible to know what the true value of gold or gold shares is because what we are dealing with is, in fact, a speculative bubble based largely on the notion of the collapse of the US economy and lack of confidence in the US government's policies. > I don't believe I've been called cute for quite a few years now...and I definitely can't stick my tongue out...it's buried too deeply in mah cheek. For a moment, I thought you were going to say "someone else's"!