David Brooks wrote:

>>At 02:56 PM 9/18/2002 -0400, Kenneth C. Griffith wrote:
>>    
>>
>>>Why do you say the gold economy seems to be falling apart?  
>>>      
>>>
>>Which, IMHO, is the reason the gold economy is stagnant.
>>
>>George
>>
>>    
>>
The demise of osgold and SR have a lot to do with the current stunned 
effect the gold economy is having.  

It can be somewhat of a shock to any economy when a fair sized 
percentage of an economy  goes down the tubes.  In this case there is an 
apparent loss somewhere of  several millions of dollars,  Some people 
will have to pull back and regroup.  Funds have to be replaced.  There 
is an emotional shock to contend with.

I, for example, have clients who have losed many thousands, I am not 
talking about businesses here either, just individuals.  As well as 
recouping the loss from somewhere there is also the emotional shock 
accompanying such losses and when it is in the millions and including 
thousands of people the effect will make itself felt.
I am sure, despite comments to the contrary, that everyones business has 
suffered  (with the exception of Graham perhaps as he deals almost 
exclusively in credit card.  There is a delay factor with credit and I 
dare say he will experience a delayed slow down at some time) and that 
is evidenced by the surplus of gold available  and the drop in the price 
above spot.  

Having said all that I estimated in June that the gold economy would 
start to pick up around the end of September begining of October. 
 Having seen Gold Today drop into the doldrums and now start to pick up 
again I can see I was right.  The emotional and financial shock is just 
temporary.  You cannot keep a good man down  and the gold economy, as 
distinct from a paper one, is far more solidly based and so easier to 
recover.  Traditionally out of every depression, recession, or whatever 
you want to call it and for whatever reason  there is always a recovery 
 and the economy is usually better off and more stable  than before.  I 
can see that our economy will come out of this stronger and more 
resilient.  The weakness are being flushed out and the stronger sections 
of the economy and the community will prevail.  I said last year that 
our economy is like a frontier town, going through various phases. This 
is just one of them.

 But what of expansion?

George has consistently pointed out that one of the major stumbling 
block is the entry point for most people.  The concept of buying an 
exchange medium is unacceptable to most people. Yet, by the same token, 
why would thousands of people pay 15% over spot for gold with a credit 
card on which they are ALREADY being charged interest?  Goldnow has 
thousands of customer still busy ploughing thousands of dollars into 
gold.  I do not feel our economy is being hindered by the entry point. 
 Perhaps by people's perception of it.   If there is sufficient 
determination any stumbling blocks can and will be overcome one way or 
another or  people will bear the cost if the reward is perceived to be 
great enough.  It is also possible that Pecunix will have a partial 
answer to the entry point problem  in that the cost for entry will be 
greatly reduced and may bring a new level of playing field to the 
economy when it opens.  This is likely to result in the larger players, 
who can withstand a lower per sale profit margin surviving better than 
the smaller ones who may either change their operating basis or their 
business or join forces with a larger exchange provider.

I can visualise, in about 2-3 years, there only being about 4-6 large 
exchange providers with rates in the .25 to 1% range to the public on 
under 500USD amounts and competing with each other on fractions of a 
cent.  By then of course there will most likely only be 2-3 DGCs  and 
the possibility of mergers there is not inconceivable.


Just my 2 grams worth......

Kind regards,

[EMAIL PROTECTED]
A Member of the Gaithman Group of Companies
An Accredited Founding Member of the 
eCurrency Trade Association Inc
http://www.gold-today.com

'Always check that gold account before you spend.  Go to 
www.currencyregistry.com  it's free!'

 
















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