How are Gold and Satellite Phones Related?

Since 2001 the demand for Gold and Satellite phones has been tremendous. The spot price of Gold in 2001 was $250.00 an oz. which was a 20 year low. In January of 2006 Gold hit a 25 year high of $570.00 an oz. over doubling in 5 years. The young handheld satellite phone industry in 2001 was struggling with lower than projected sales and as a result some satellite phone service providers experienced forms of bankruptcy. The demand for satellite phones has increased an average of 30% a year since 2001. From 2004 to 2005 GlobalCom experienced a 40% increase in satellite phone sales. Why is there a relationship in the demand of Gold and Satellite phones? There are a number of reasons. The number on reason why Gold and Satellite phones have been so popular in the last five years is “worry”. When people don’t know what the future holds they “prepare”. The old saying goes “Failing to prepare is preparing to fail”.

With the case of Gold, people worry what their financial future holds when the normal financial markets experience change. Some people have lost their faith in paper money or fait money so they invest in the oldest form of money “Gold”. Since Biblical times Gold and other precious metals have been the world’s primary form of money until the last few hundred years. After Nixon took the U.S. off the Gold standard there was nothing to back up the paper dollar which is in direct conflict with the U.S. constitution that requires our form of money to be only in the form of precious metal coins. Paper money has worked for years without a problem and the U.S. dollar has been the standard currency of the world for many years. For the last few years the dollar printing presses have been running wide open to prop up the dollars value and the world has become a wash in the dollar. With the U.S. trade deficit and government running trillions in the red from financing its ever going consumption with foreign investment there is the risk of the dollar going down in value if the foreign investment ever falters. If Iran stops trading their oil for dollars and starts trading oil for the Euro and a few other OPEC nations follow their lead there could be a large drop in the dollar’s value. This in turn increases the value of Gold. Investing in Gold gives you the hedge against a falling dollar. There are many other reasons why the demand for Gold will increase, some experts expect Gold to reach $2000.00 an oz within the next eight years.

With the case of satellite phones the “worry” of the disruption of communications when the local landline and cellular terrestrial systems are disrupted is not an option for some people. When you misplace your cellular phone it is a very uncomfortable feeling because you may miss a call. In the event of a terrorist act, natural disaster or failure in our power grid where terrestrial systems are disrupted, satellite phones will be the only reliable means of communication. After 9/11 satellite phones have went from being a convenience to necessary emergency communications. In the event of a disaster resources must be deployed and managed in the area of the disaster without communication this could be very difficult. After each hurricane in 2003 and 2004 satellite phones were one of the few forms of communication available. There are many government agencies and businesses realizing they must have backup emergency communications. GlobalCom as seen a 50% increase in the demand of satellite phones in the first quarter of 2005 as compared to the first quarter of 2004 most of which has come from businesses “preparing” for a disruption in their normal communications.

Where will it go from here? I project the Gold and Satellite phone markets will both continue to see an increase in demand over the next number of years. Are you prepared? “Failing to prepare is preparing to fail”

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