| Certainly Not Paper Money |
James R. Thompson, Executive Editor
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 Now comes forth a company named "Gold to Go" from Germany installing gold dispensing vending machines in Florida. Apparently they tried the idea out last spring in Abu Dhabi, and are now going international with it. You put in your cash and out comes gold bars. The world may be going on a gold standard with or without the cooperation of governments.Here at PaperMoney we are often confused by numismatics as being part of the currency industry, which of course, we are not. However, gold vending machines are certainly something for us to ponder for a moment as we think about wise investments in the pulp and paper industry. For what does this tell us about the state of the economy, worldwide, if gold is now purveyed alongside Juicy Fruit chewing gum?Some pundits are saying this certainly signifies a peak in gold prices; others applaud the modern merchandising. However, we take a more conservative view, that this indicates a lack of faith in sovereign currencies propped up by only their states, not backed by gold. This may lead one to conclude, if they believe in the solid future of their own business, to use today's currency to buy fixed assets, before inflation swallows up their value. We have been of this mindset for quite awhile, believing strong, tangible assets manufacturing products in markets with obvious future demand make a lot of sense today. One only has to look back a bit to see what inflation has done in the past. I once worked at an integrated pulp and paper mill that had been built for the grand sum of USD 25 million in the late 1960s. By 1984, when we rebuilt the papermachine, we spent USD 40 million on this rebuild alone, without touching the pulp mill, recovery boiler or, indeed, any other part of the facility. It was considered a great bargain at this price. This is what inflation can do to prices, and, the last time I checked, inflation tendencies, or the prospects of it, are alive and well. |
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