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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Casaubon who wrote (13345)	5/9/1999 8:26:00 PM
From: pater tenebrarum	Respond to of 99985

Casaubon, re: gold: you raise quite valid arguments with regard to the drawbacks of gold. the status of gold as a monetary instrument is as you say devoid of logic. but the value of money, in whatever form, is an article of faith in any case. so the correct argument would be that 'faith' in golds monetary role has been undermined to such an extent that it's classic role has been abandoned in the information age society. but consider e.g. the average indonesian: to him, gold was an excellent hedge (among others) against the crash in the rupiah. almost all developing countries have restrictive foreign currency regimes, which makes gold the hedge du jour there. gold has a history as a monetary instrument stretching back thousands of years, so in terms of time the very recent demonetization process is but a drop in the bucket. one also has to keep in mind that the main factor in gold's decline has been the disinflationary environment the industrialized nations have enjoyed since roughly 1982. should this big secular trend be broken, gold may very well regain some of it's luster. all it really takes is for faith in paper assets to diminish markedly. mind you, i'm not a 'gold bug' but i'm not ready to write gold off altogether either. regards, hb