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To: Jim S who wrote (4256)	12/14/1997 3:45:00 PM
From: goldsnow	Read Replies (2) \| Respond to of 116753

>>>So, my strawman arguement is that there seems to be an effort underway to reduce some of the psychological value of the yellow stuff, and replace it with psychological value of faith in world currencies.>> There was a good piece by Kutyn, posted by Alex I think on a very same subject. "Whoever issues money has many economic and political advantages. We are presently seeing a hidden battle between gold and the U.S. dollar. This battle will continue to intensify until the crash in Asia is complete. The key to financial independence is to know who will win this battle." gold-eagle.com My point was that Gold, not salt or rocks survived times for a reason Dollar has no prayer beyond first obstacle (recession, EMU fiasco ets)

To: Jim S who wrote (4256)	12/14/1997 4:55:00 PM
From: Ron Wilkinson	Read Replies (1) \| Respond to of 116753

JimS. Excellent deduction concerning psychological value of an item. But even these items have rarity in their initial rise prominence. To erode that psychological base, intrinsic value must be debased. It happened with salt (it became too plentiful) and it happened already to silver in the same fashion as the effort to debase gold is proceeding. If you bet for gold, you are betting against the powers orchestrating the effort to debase it, unless you think the entire idea that someone could contol it is ludicrous. Have an oar, I'm afraid we'll find out where we are going when we get there. Regards, Ron.

To: Jim S who wrote (4256)	12/14/1997 9:12:00 PM
From: Jim Ilchyshn	Read Replies (2) \| Respond to of 116753

Jim, In your questioning you asked, "If we can agree that that "consumption" of gold (that is, its actual use in manufacturing or jewelery) only accounts for about 30% of production, that means that 70% of all gold produced has only psychological value, and that currently hoarded gold (by individuals as well as CBs) would satisfy any real need for gold for a helluva long time, even without any more production at all." I hope this helps answer part of your question ... from gold-eagle.com If confidence in financial assets and government controlled currencies was to significantly reduce, then the total gold reserves of all CBs (worth 320 billion dollars at current gold prices) could be absorbed in an instant by private investors. Government controlled currencies are liabilities of the monetary agents and are backed by debt. Their value is hence based on the level of confidence in the financial and political systems and their rates of exchange tend to oscillate daily based on changes in this confidence level. For example, if doubt arises regarding the quality of the debt which provides the asset backing for a currency, then capital will shift from that currency into an alternative investment. Gold, a tangible asset which has been valued as a store of wealth for thousands of years, provides an ideal alternative. However, it must be remembered that there are 3.8 billion ounces of gold in the world and the supply is increasing by 1.75% each year (probably less for the next few years due to mine closures), whereas there are 5,300 billion US dollars in the world and the supply is increasing by 9% each year. The end result is obvious.