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

To: lorne who wrote (27183)	1/27/1999 9:26:00 PM
From: Bob Dobbs	Read Replies (1) \| Respond to of 116927

Hi lorne: The author of the gold article, Jerry, and I had a further exchange below: >From: jheaster@kcstar.com >To: bob_dobbs@hotmail.com >Subject: RE: The reason the price of gold is so low >Date: Wed, 27 Jan 1999 12:29:02 -0600 > >Dear Bob: There are, I am sure, any number of good reasons for gold's >depressed price beyond the ones I listed in my column. However, the >important thing is that the price is down and hase been for a long time. >Meantime, gold has so much going against it right now that its potential as >an investment is nil. That was my point. Sincerely, Jerry Heaster > Jerry: In light of my point, however, any statement about the prospects for gold changes radically. After all, you hint that from historical precedence, gold should have risen in light of worldwide events in Asia and elsewhere. I agree, and it's not hard to see why that is so, because governments are acting in concert to pin price down, to prevent a panic or even an awareness that there is a problem. Veneroso calculates that, in order to clear the market and get rid of the short position, the gold price will have to rise to $600/z. Historically speaking, using data adjusted for inflation over several centuries, $600 is also close to its long-term value. What this illustrates is not that gold is a bad investment in this environment, but that at low levels at which governments pin the price down, the price can only rise, once the market asserts itself, as it did in the 60's and 70's. All artificial attempts to hold down the gold price have met with defeat. The picture you paint, then, is not a complete one, without these facts coming to light. Saying that "gold has so much going against it" but failing to name the coordinated government intervention is much like claiming the cherry tree fell to the ground, when it was actually chopped down. Adam Smith's invisible hand is at work all right, but it ain't the hand of the market. Bob