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

To: lorne who wrote (31746)	4/14/1999 11:29:00 AM
From: sea_urchin	Respond to of 116779

Lorne : Pity goldbugs can't munch rock while the POG went down. It would have saved their fingernails! Also cheaper than chewing gum.

To: lorne who wrote (31746)	4/14/1999 6:07:00 PM
From: Alex	Respond to of 116779

Gold and International Tensions Blanchard and Co., Christopher Holton – March 25, 1999 Gold has often been called the "crisis commodity" because it often outperforms other investments during periods of international tensions. The very same factors that would cause other investments to suffer cause the price of gold to rise. Recently, it has been argued that tensions now have a muted effect on gold and that gold has been replaced by the dollar as a safe haven during crisis periods. Most recently, many traders have been quoted in the financial press claiming that, because gold has not shot up due to Operation Allied Force, it no longer has a role for investors as a safe haven during international crisis. Most traders today have no experience whatsoever with world crisis. Three times over the past 25 years, during periods of truly serious international tensions involving military conflict, gold proved to be vital to investment portfolios. Because the world is a dangerous place today, you should take these lessons from history and include gold in your portfolio. For example, gold did exactly what it was supposed to do during the Gulf War. During the period of uncertainty before the allied attack, its price climbed 14.8% from $351/oz. to $403/oz.--while stocks were falling. When very soon after Desert Storm began it became obvious that allied forces were likely to be overwhelmingly successful against Iraqi forces, the uncertainty was gone. Not surprisingly, gold fell $24 per ounce on the first day of Desert Storm. Stocks soared. The sudden turnaround had nothing to do with gold losing its status as a safe haven. It was more a tribute to the astonishing effectiveness of allied planning and the high level of training and boldness that seemed unusually common among the fighting men and women of our armed forces. The same situation exists with regard to Kosovo and the conflict with the Serbs. The operation lacks the uncertainty that has historically been associated with gold's role as a safe haven. From the very start of Operation Allied Force, no one expected the Serbs to pose an overwhelming threat to anyone outside of their limited theater of operations. NATO's 1995 conflict with the Serbs in Bosnia demonstrated that Serb forces had neither the will nor the means to deal with a U.S.-led NATO air campaign. After all NATO aircraft returned safely from their sorties on the first day of the operation, any worries about a militarily unsuccessful operation were extinguished. Moreover, despite Russian protests, Russia quickly stated that they had no intention of taking "extreme measures" or using force as a result of NATO's "violation of international law." Therefore, the threat of a wider conflict evaporated before it ever developed momentum. Because there is no real danger to the world economy, financial markets, or balance of power associated with the conflict in Kosovo, there is no need for gold to serve as a safe haven. This would almost certainly not be the case in a variety of other possible scenarios: •What if a major civil war erupted in Russia? •What if India and Pakistan came to blows? •What if terrorists succeeded in obtaining nuclear, biological, or chemical weapons? •What if the regime in Saudi Arabia became destabilized and sympathetic to the Islamic fundamentalist cause? Any one of these scenarios would shock the financial markets and, with the U.S. military stretched beyond its limits already with commitments around the globe, the Free World may not be able to react effectively to some of these threats. This is just one of many reasons that investors need to hold gold as an insurance policy against unexpected negative events. gold.org