          
          
          
                      GOLD -- THE PILLAR OF SECURITY
          
               Gold is a traditional means of inflation protection. 
          Some investors have been disappointed with the
          performance of gold in the past decade, but they are
          forgetting the primary purpose of gold as an inflation
          hedge.  There has been very little inflation in the
          American economy in the past decade -- so there has been
          nothing to be protected from.  This does not mean that
          gold has been a bad investment.  The proper comparison is
          not to other investment performance, but to buying life
          insurance and not dying.  The gold did exactly what it
          was supposed to do in the investor's portfolio --
          provided a store of value with inflation protection.
          
               An investor who is paying attention to the current
          price of gold is completely missing the point.
          
               Speculators have often lost badly with gold, but
          that is true of any speculation, and is not because of
          some inherent characteristic of gold.  This speculation
          is very different from the proper use of gold in an
          investment portfolio, as a way of achieving balance,
          diversification, and inflation insurance.
          
               To put an entire savings program into diversified
          paper investments, without a gold diversification, is not
          a truly balanced plan.  The security of the Swiss franc
          is one step in that diversification, because of its
          strong gold backing, and its traditional strength as a
          currency. But only a step.  The next step is to also
          diversify some of the portfolio into a pure gold
          investment.
          
               Every paper currency buys less than it did at the
          turn of the century, but gold buys almost two times more. 
          That is true inflation insurance, and has nothing to do
          with overnight speculations on a belief in short term
          price trends.  There is nothing wrong with speculation,
          but it should not be confused with balancing the
          portfolio.  In fact, a small percentage of any
          diversified portfolio is devoted to speculation.
          
               As we have seen in the history of money section,
          paper money inevitably declines in value and purchasing
          power.  In an era when most governments have legally
          freed themselves from any requirement to act responsibly
          or tie their paper to real assets,  This makes it
          particularly important for the investor to create his own
          "reserve fund" since the government's paper money no
          longer is required to have one.  
               For thousands of years, gold has been man's premier
          store of value, more trusted worldwide by individuals
          than any paper investment or paper currency.  Gold cannot
          be inflated by printing more of it. It cannot be devalued
          by government decree.  And, unlike paper currency or many
          other kinds of investments (such as stocks and bonds),
          gold is an asset which does not depend upon anybody's
          promise to repay.
          
               Although gold has been mined for more than 6,000
          years, only about 110,000 metric tons have ever been
          produced. If you could bring it all together, that is
          just enough to make a cube measuring only 18 meters
          (approximately 55 feet) along each side.  Gold is one of
          the scarcest, and so most sought-after, metals on earth.
          
               Gold cannot be fabricated by man.  Nature limits its
          supply. the amount of new gold mined each year totals
          less than 2,000 metric tones -- an amount that could be
          fitted comfortably into the living room of a small modern
          house.
          
               Throughout recorded history, gold has held its value
          against inflation.  Experts say, for example, that the
          same quantity of gold is needed to buy a loaf of bread
          today as in sixteenth century England.  This is why so
          many investors world-wide see it as the "ultimate asset"
          -- an important and secure part of their investment
          portfolios.
          
               Gold has an international value that tends to
          respond to the changes in value of national currencies. 
          Time and again, gold has proved a successful hedge
          against the devaluation of an investor's national
          currency.
          
               Gold is one of the few investments that has survived
          -- and even thrived -- during times of economic
          uncertainty.  Gold is man's classic hedge against almost
          any monetary crisis, moving independently of paper
          investments.
          
               For example, in the slump following the "Wall Street
          Crash", from September 1929 to April 1932, the Dow Jones
          Industrial Index slid from 382 to 56 -- a drop in value
          of 85% -- and some 4,000 U.S. banks closed their doors.
          Meanwhile,the price of gold actually went up.
          
               Gold also increased in value during the events
          following "Black Monday", October 19, 1987, when the
          Morgan Stanley index of world shares fell 19% over 10
          days.  And during the mini-crashes which have afflicted
          the stock markets since then, gold has held its value and
          ignored the travails of share investment.
               Gold is essentially a long term investment with
          daily movements in price and there is no tactic to ensure
          that you make your purchase at the best possible time.
          
               One of the best ways to build up a keenly priced
          gold portfolio is to purchase relatively small amounts,
          on a regular basis, over an extended period.  This is
          called "cost averaging".  This will ensure that your
          total investment will have been acquired at the average
          gold price during the period of your investment program.
          
          
