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To: Rmn who wrote (11462)	12/14/1997 5:18:00 PM
From: Joan Osland Graffius	Read Replies (1) \| Respond to of 18056

ramses, >>If so why do you think they keep selling. Could be it is a non producting asset on the books. Joan

To: Rmn who wrote (11462)	12/14/1997 6:23:00 PM
From: Zeev Hed	Read Replies (3) \| Respond to of 18056

ramses: I think that gold has lost its position as a currency of last resort for the simple reason that in an economy where gold is only a minute part of total world GP, linking money supply (and thus currencies) to gold will act as a straight jacket on wolrd economies. I think that economists have long recognized that fact (maybe even at the Bretton Woods conference), but in order to avoid major dislocations in the markets, they kept that secret to themselves, letting the world accept this simple reality slowly. Letting currencies' link to gold persist would bring a chronic inflation in terms of gold, directing unecessary resource to extract low grade golds just to be stored in such vault. The current world production of gold (at $300/oz) is roughly 22 Billion annualy, the worlf economy is well over 20 Trillion, if all new gold produced went to support currencies (even at a low 10% backing), the world economy could not grow faster than 1% per year. This is a chronic situation due to anachronism of Aynn Randist romantics, and the world is, albeit, slowly, growing out of its fascination with the yellow. So now it is just a commodity like platinum and silver and reacts to supply and demand. Since there is about 10 years of gold production in the owlrdbank's vault which will eventually come on the market, there is a lot of over supply. When supplu is large and demand is increasing only at about 5% or less per year, you get price declines. The price will decline until a al large number of inefficient producers will close to bring the demand supply into balance. That is all.