From: James Rogers (jamesr@best.com)
Date: Tue Feb 19 2002 - 10:46:19 MST
On 2/17/02 7:59 PM, "Duane Hewitt" <duane@immortality.org> wrote:
> In the current environment positioning yourself to be sheltered from the
> implosion of fiat currencies appears to be prudent. (In other words buy gold.)
There is no necessity that fiat currencies implode. Mismanagement HAS
caused a large number of fiat currencies to crash, but it isn't an intrinsic
property of fiat currencies and there are a few currencies around the world
that have long histories of being relatively well-managed. In this light,
it may be better to evaluate currencies like you would evaluate so-called
value stocks, by looking at their management history and guessing whether or
not that historical management trend will continue.
As a separate issue, gold is not generally a good investment (nor are most
mined commodities these days). Ignoring fluctuations caused by political
concerns and a weakening perception of its "intrinsic value", there is the
problem of it being not nearly as rare as it used to be. There is a
continuing problem where production capacity has outstripped demand such
that the current spot price is barely over the cost of production from the
most profitable mines. In terms of supply and demand, it is far more
appropriate to treat gold as something manufactured rather than as something
that is intrinsically scarce. For all practical purposes, we have the
capacity to produce as much gold as the market needs at relatively low
prices, even if the demands of the market rise dramatically.
-James Rogers
jamesr@best.com
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