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Strategies & Market Trends : Precious Metals mutual funds (gold, silver, PGMs) -- Ignore unavailable to you. Want to Upgrade?

To: Ray Hughes who wrote (209)	7/6/1998 9:27:00 PM
From: Larry S.	Respond to of 972

Ray, I apologize for taking so long to respond to your post. I don't have any expertise or special knowledge that would give substance to my views. I look to people like you with the appropriate expertise and track record and I very much appreciate your posts on the various threads. I spoke with you at a couple of the mining conferences. However, I have read a lot lately concerning the issues you raise. While the problems in SE Asia have certainly caused fear and despair, I do not believe that their lack of stimulant to the POG necessarily discounts the view that the price of gold responds primarily to fear and uncertainty. I have assumed the fear and uncertainty of concern is associated with the global financial system or something that could upset it. I don't think the problems in SE Asia should be expected to have the same effect, at least in the near term, as an outbreak of hostilities in the Middle East or somewhere else that would disrupt the flow of oil. More to the point, the SE Asia problem stimulated, as you have noted, not only a reduction in demand in some Countries but negative demand. But, the negative demand in So. Korea is clearly transitory only and I believe that a major part of the reduction in demand in other Countries is also only transitory. It is not clear that the long term demand has been impacted very much. On the other hand, as the we begin to feel the full impact of the SE Asia problem (I don't think we have begun to feel its full impact), there may well develop a lot of uncertainty concerning the world financial system and we may see the POG respond. While I'm at it, I would be interested in your comments on the thought that the major demand for silver (your favorite play) in places like Thailand is for the manufacture of jewelry for export and to be sold to tourists. I visited that part of world two years ago and came away with this understanding. While the cost of the raw material hasn't been impacted by the problems there, the cost of labor has been impacted and must have resulted in making the Jewelry a better buy. This should increase demand for Silver though I understand that tourism has been adversely impacted and may compensate for the lower costs. I think the same consideration applies to gold jewelry but I believe they work more with Silver. Thanks again for your comments. Cheers, Larry Smith