Show BABSON'S I a B Hi HiA A HARD LOOK AT G GOLD LD Wellesley Hills Mass The International monetary system has received some very punishIng punishing punishing punish punish- ing blows over the past year or orso so A A few of these could have been almost fatal had it not been for concerted rescue rescue res res- res cue measures As a result gold has become a focal point of interest on on a worldwide basis Demand for the yellow metal became so great that it was necessary to adopt a two two- tier price system On the one hand the official pegged price for gold of 35 33 per ounce j and andon andon andon on the other the fluctuating free market pi pt ice for gold which has been hovering around 40 per ounce I Fears Of of Further Monetary Storms Despite tl the e recent successful rescue of the franc at least on onan onan onan an interim basis the world monetary scene is marked by pronounced fear of additional upheavals Many experts feel that the International monetary system and specifically the therole therole therole role of gold within that framework framework frame frame- work must be reviewed and revised revised revised re re- re- re if financial stability is to tobe tobe tobe be achieved that failure to do doso doso doso so could result in chaotic monetary conditions and andor ander or orthe the world could again be faced with a restrictive international trade climate which could lead to economic depression Despite de austerity austerity auster ity program to salvage the franc it is questionable whether er the people of France will endure endure en en- dure its rigors for long Now there is also the specter of possible trouble for the Italian lira Trouble for either or or both bothof bothof bothof of these currencies could spell problems for the British pound which is still very much on shaky ground The dollar could also be engulfed Disagreement Amidst Unanimity While there is agreement on the necessity of revising the monetary system of the world there is little accord on the future future fut fut- ure role of gold It is left In some quarters that the only solution solution sol sol- ution is a boost in the official price of gold and thus thus' thusa a devaluation of the dollar In n nother other circles there ther are pleas for a of gold for withdrawing gold permanently from the monetary system Both sch schools of thought can be be rationally argued and both are ripen open to criticism But the basic fact is that most member member mem memo ber nations of the International Monetary Fund including the USA U.S.A. are not yet ready to to adopt either course as a remedy for the worlds world's money ills The Th Amerl American an View On Gold This nations nation's policy under the Johnson Administration has been aimed at the longer range while striving to maintain maintain main main- tain continuity with the past It is based on four major pre noises 1 That gold will be retained as a monetary reserve reserve reserve re re- serve 2 that Its official price will continue to be 35 per ounce 3 that the world must not be dependent upon gold alone as a monetary reserve and 4 that Special Drawing Rights or paper gold will be created under the International Monetary Fund to augment gold reserves that provide added added add add- ed liquidity It appears that the International Interns Monetary Fund is moving toward a policy which will encompass encompass encompass en en- compass these four fourpoints points However opponents decry the plan as a stopgap measure which can only delay the adoption of a more permanent solution Actually the future fut ure course of world events may maywell maywell maywell well dictate the remedy Hedge Investments Investment Despite the complexity of the problem Babson's Baboons Report believes be be- leves the the overall assessment points to higher gold prices eventually But this should not be construed as a carte blanche recommendation to buy gold stocks While odds favor higher gold prices some day the tim tim timing ing hag is obscure Adoption of stopgap measures could long delay a hike in gold Nevertheless some some feel the need to maintain a hedge in the form of investments on ort gold stocks There is nothing wrong with this provided the investor does not go overboard and provided provided provided pro pro- vided he is willing to sit patiently patiently pat pat- with his gold stocks Babson's Babson's Babson's Bab- Bab would sons son's Reports' Reports strategy be to go with either Homestake Homestake Home Home- stake Mining the leading US U.S. gold producer or American American- South African Investment Trust a closed end closed end trust with a large portfolio of gold mining gold mining stocks Both are traded on the New York Stock Exchange so convenient to foll follow w. w |