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There are many ways to invest in gold. Physical gold, in the forms of coins for instance, i.e. the Eagle, Maple or Kruger Rand, or through the gold ETF in the US (symbol GLD). If you want more leverage to gold then you can buy gold explorers / producers in the form of (in the money) options on the Philadelphia Gold & Silver Index (ticker: XAU) or the Amex Gold Bug Index (ticker: HUI). You could of course also invest in gold stocks or gold mutual funds. MONEY Eastern countries (who have seen their wealth massively increase due to high oil prices) have openly declared to diversify out of US dollar assets. China is using part of its large US dollar reserve to buy gold. At the time of writing this article the dollar index has started its seemingly unstoppable decline. The above factors have certainly driven the recent demand for gold and I do not see any reason to believe that these issues will abate or be resolved any time soon. Should you invest in gold? Many sceptics have been silenced by the recent strong run up in gold. The top has been called at 450, 500, 600 and now 700. How far can it run? No one can tell. I can only show you the facts, two of which I would like to specifically highlight: Dow / Gold ratio Over the past century, in periods of inflation, the Dow/gold ratio has averaged about 3-5. Currently the ratio is about 16, from a high of 40 at the peak of the technology boom in 2000. If history is a guide and if we were to revert to a ratio of 5 then there are various possibilities. Gold could move to, say, USD 1,000 with the Dow collapsing over 50% to 5,000. The Dow could consolidate around the current level with gold eventually at 2,000 or, as some stock market bulls believe, the Dow could rally to 25,000, which means that gold would be at 5,000. The main reasoning behind the last prediction is that high inflation, due to the continuous printing of money, will lead to strong asset inflation and create an illusion of wealth, as happened in Germany in 1923. If this last scenario happens, you can safely assume that the purchasing power of your wealth at Dow 30,000 will be less than today, with the Dow at 11,000, except if you had converted part of your wealth to gold. CPI adjusted Gold price Adjusted for inflation, the price of an ounce of gold was around USD 1,000 in the period 1720 to 1750. It then slowly declined (with significant volatility of course) to around USD 200 in 1920. Gold then rose to about USD 500 during the 1st world war, declined back to USD 200 in 1978 and rose to inflation adjusted USD 2,000 in 1981. The current issues, such as the geopolitical situation, debt problems, relentless money growth are a lot worse than in the 1980’s so it is not unreasonable to assume that gold could hit or exceed its CPI adjusted price of USD 2,000 over the next 5 years. To conclude, the case for gold is quite bullish, but you can rest assured that if the gold bull scenario plays out, it would be a gutwrenching ride. Certainly not for the faint hearted. Movements of USD 100 up and down within a very short period of time will be the norm. I believe that investing in gold is much more a wealth preservation strategy than an investment strategy (think hyperinflation), so a small part of your portfolio (say 10%) in physical gold or gold related investments could protect you in case inflation gets out of hand or if the geopolitical situation worsens. There are many ways to invest in gold. Physical gold, in the forms of coins for instance, i.e. the Eagle, Maple or Kruger Rand, or through the gold ETF in the US (symbol GLD). If you want more leverage to gold then you can buy gold explorers / producers in the form of (in the money) options on the Philadelphia Gold & Silver Index (ticker: XAU) or the Amex Gold Bug Index (ticker: HUI). You could of course also invest in gold stocks or gold mutual funds. Whatever your strategy, please ensure that you consult your financial adviser. Disclaimer: All statements and expressions are the opinion of the writer and are not meant to be investment advice or solicitation or recommendation to establish market positions. It is strongly advised that readers conduct their own thorough research relevant to decisions and verify facts from various independent sources. 14 Vol.16 • No. 5 • June 2006
Mao-suits have been replaced by business suits. The economy has been five-folded. Internet has taken the place of the red book. A few decades ago a closed dictatorship and today the highest number of mobile phones. China is catching up and is doing so in such a fast way that it already belongs to the worldwide frontrunners in some areas. Behind these unique and stunning changes are people. On eight of these people, the trendsetters of the new China, a book has been written. The book is in Dutch and titled “De Inhaalchinees, Portretten van trendsetters in China”. This new book portrays people in the prime of their lifes who shape the new China in the areas of literature, business, architecture, food, sex, music, technology or politics. China is ‘hot’ and this book is about the people who are ‘hot’ in China. The book is written by Serv Wiemers, a diplomat who served at the Royal Netherlands Embassy in Beijing, from 2000 till 2005. In this period he was invited to Singapore by the ADB to give a presentation on doing business in China. Now he is back at the Ministry of Economic Affairs in The Hague, serving in the management team of the Netherlands Foreign Investment Agency. On May 16, the book was presented to two people for whom China is a key country: Netherlands Foreign Trade Minister, ms. Karien van Gennip, BOOK REVIEW Who’s Hot in China and Bettine Vriesekoop, former table tennis champion, sinologist and new Beijing correspondent for NRC Handelsblad. The book got many positive reviews, some of which are published on the special website www.inhaalchinees.nl. During his years in China Serv Wiemers got fascinated by the dynamics of this country. “I met a lot of extremely interesting people. The book I have written is about these people. I have selected eight who personally contribute to the enormous changes China goes through at the moment. There are already a lot of books about China’s past and particularily the Cultural Revolution. Also there are many books describing “The Rise” or the “Coming Collapse” of China. There are few books however dealing with the new China. By showing the people behind the enormous changes, the reader will get a picture of what is going on in the reforming People’s Republic.” The people in the book are not just interesting people. They stand out. Take the richest woman in China, Zhang Xin, who received an award at the Biennale in Venice for combining art and architecture. As a teenager Zhang worked in Hong Kong’s sweat shops. Take former Tienanmen activist Edward Zeng, who set up China’s first internet cafe and saw Bill Clinton as one of his guests. Now Zeng is developing new standards in e-commerce. Take Cui Jian, the father of the Chinese rock music who recently performed with the Rolling Stones. “In this book, I do not only describe their lives and drives, but also the developments in the areas they are active in.” There is one non-Chinese pictured in the book. His name is Henk Bekedam, chief representative of the World Health Organisation in Beijing. Although Dutch, he is known by almost all Chinese. During the SARS crisis Bekedam daily appeared on Chinese television. By his personal drive he contributed to an open and more accountable Chinese government. He was consulted by premier Wen Jiabao and vice-premier Wu Yi. And he put a balanced development on the Chinese political agenda. “That is why Bekedam is a true trendsetter in China and fits very well in De Inhaalchinees,” says Serv Wiemers. De Inhaalchinees, Portretten van trendsetters in China (with pictures) ISBN 9086050034; €14,95; for sale in Dutch book stores or via www.inhaalchinees.nl 15 Vol.16 • No. 5 • June 2006 I met a lot of extremely interesting people. The book I have written is about these people. I have selected eight who personally contribute to the enormous changes China goes through at the moment. – Serv Wiemers
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Page 4 and 5: ADB BOARD Ivo Rutten President Fran
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Page 8 and 9: SINGAPORE What’s in a (street) na
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Page 22: New Members Tjalling van Asbeck, Ad

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