X-Message-Number: 14096
From: "Phillip Labry" <>
References: <>
Subject: Gold vs. diamonds
Date: Fri, 14 Jul 2000 08:41:11 -0400

> > I would rather buy gold and hide it somewhere in the states. The value
> > will increase tax free. >>
>
>  What about diamonds?
> There is a political will to maintain the gem value, this is not
> the case for gold. In real term, gold price has fallen continuously
> in the past half century (outside some short "spikes").
>     The best choice could be a mix, for example diamond + real estate
> + technology shares administered by a cryonics organisation...

Diamond prices are set by the diamond cartel. Gold prices are more of a free
market commodity. If diamonds were to move to a free market system their
prices would fall dramatically. I collect coins and know a fair amount about
gold and the platinum group metals(PGM). While it is true that for a period
gold has had a downward trend, it is not that significant. Gold is still a
great way to retain the value of your assets. For example a one ounce piece
of gold would buy a good man's suit at the turn of the 20th century. This is
still true today. In other words it retains its value in relation to other
tangible commodities.

I personally prefer platinum. Platinum is currently twice as expensive as
gold but it is 25 times more rare. I believe that platinum is terribly
undervalued due to its rarity and its use in manufacturing*. Platinum has
often been considered a hedge within a hedge because of this. Currently
platinum is used at some point in the manufacturing process of one quarter
of all products. It is used in catalytic converters and is used heavily in
fuel cell technology. The fact that it is a critical component of fuel cell
technology leads me to believe that platinum and palladium (another PGM)
will increase dramatically in price over the next few decades. Palladium has
already started to exhibit this upward trend and platinum has been rising
steadily for the last two years(from around 370 to 560 per ounce today).

There is also a numismatic value to coins. If you were to buy proof or  to a
lesser degree mint gold eagles and keep them preserved for a hundred years
it is likely that their value will be double the melt value.

I strongly recommend keeping platinum and gold in your portfolio.

Phillip
*Gold is also used in manufacturing of electronics but gold is not so rare
that manufacturing demands make as much of an impact on its value as they do
for platinum.

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