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Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: SofaSpud who wrote (1649)	5/21/1999 2:39:00 PM
From: Henry Volquardsen	Read Replies (3) \| Respond to of 3536

Hi David, welcome aboard. I was a gold bug when I was younger as well but have grown out of it. As you point out there is the issue of storage costs. Interest income is not as big an issue any longer as the widening use of gold leases now allow central banks to earn interest on some portion of their gold holdings, even if it is a low rate. My biggest argument against high gold reserves is utility. The main reason for holding gold has been as a hedge against debasement. It is my view, which I'm sure some will take issue with <g>, that as capital controls have been removed the free market has developed into a very active policeman against currency debasement. Most free trading currencies have interest rates that insure a yield in excess of inflation. In addition any country that tries to follow inflationary policies elicits a response from the currency vigilantes. In this environment gold still acts as a store of value but it now has competition from various currencies.