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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Ron Wilkinson who wrote (4285)	12/15/1997 12:52:00 AM
From: PaulM	Read Replies (2) \| Respond to of 116753

Ron, can't disagree with diversification, but I suspect such worries may be exaggerated. 1. As we mentioned earlier, unlike in the past, the gold price is a world gold price. Very difficult for all the govts to get together on this because they have varying interests. 2. Your earlier suggestion that the U.S. might set one price for foreign transactions and another, domestic price seems unlikley because it encourages smuggling (which has to be policed) and off-the books transacations with domestic gold mines which reduce tax revenues. Even the Chinese today realize that and do not control gold prices for those very reasons. Note that most miners also operate in foreign countries. 3. In the past, gold has been confiscated from those willing to comply. But I doubt police were breaking down doors. 4. During the depression at least, the gold price was set, but it was set much HIGHER than that earleir. I have even heard opinion that it was possibly OVERVALUED in order to allow an increase in the money (dollar) supply, which was pegged to the dollar. Who knows, a crisis of confidence may result in a return to a gold standard, in which case a higher gold price will be in govt interest. Or maybe the CB's, deparate for funds, will have to talk the priceof gold UP one day. 5. The U.S. consititution, I believe, forbids the confiscation of property unless "just compensation" is paid. A confiscation in the current context, as opposed to one where the price of gold was already govt controlled like in the 20's, would trigger that provision. The reason, I suspect, would be that someone buying in the 20's knows in advance that the govt control the value of gold. Today, an owners expectations would reasonably differ. 6. If the U.S., did nationalize the mines, do you really believe they would put them out of business? Quite the contrary, in that context they are performing service for the govt. Regulated monopolies do quite well in general. 7. In short, the system is based on CONFIDENCE, not COERCION. The measures you suggest would only reduce confidence and I believe drive people in the opposite direction (towards gold).