tides, cities and countries as international financial centers rise and fall. for the most part, this rise and fall seems to reflect dynamic criteria such as transportation infrastructure, political stability and regulatory patterns. 1 since the 1970s, the competition amongst international financial centers has of course become genuinely global with diverse places such as luxembourg, singapore, hong kong, dubai and, most recently, shanghai joining the race. switzerland has good reasons to be confident about its ability to defend its status. most importantly, it sets out from a position of strength. particularly in the area of wealth management which comprises over half of the total added value of the banks, switzerland is clearly one of the world ’ s leading provider of services. the value of total assets managed in customer accounts in domestic banks as of the end of the year 2003 amounts to chf 3 ’ 300 billion, of which nearly 60 % is held by foreigners. according to various estimates, this corresponds to approximately one third of the world ’ s total private wealth managed abroad. much has been said and written about the various strengths of the swiss financial center which account for the dominant global position in wealth management. political, economic and monetary stability, know - how, traditional high quality of services provided, guaranteed protection of privacy and strict conditions ensuring the prevention of abuse are all key ingredients to switzerland ’ s past and future success. in the current global market place, some of these strengths represent structural competitive advantages. the swiss authorities and the swiss financial sector representatives rightly charles p kindleberger ( 1974 ) : “ the formation of financial centers : a study in comparative economic history ”, princeton studies in international finance, no 36, princeton : princeton university, november. make great efforts to defend these structural competitive advantages as much as other sovereign countries defend theirs. nonetheless, in a fierce global competitive environment, defense is a necessary but not a sufficient condition for sustained success. the offensive component of a comprehensive swiss strategy must be an unequivocal commitment from politicians, regulators and financial sector representatives to competition and free markets. such a commitment will foster innovation which will ensure the long - term viability of switzerland as a leading global financial center. a commitment to competition includes a firm commitment to an effective regulatory system based on transparency, proportionality, predictability and an uncompromising fight against abuse. such a regulatory framework does not stand in opposition to a commitment to free markets. to the contrary, it strengthens free markets by upholding the integrity of markets. regulatory authorities must not loose sight

metals and oil prices gold - metals ( gsci ) gold - oil ( brent ) 0. 8 0. 6 0. 4 0. 2 - 0. 2 correlation of weekly price changes over a 1 - year period - 0. 4 01. 01. 1983 01. 01. 1988 01. 01. 1993 01. 01. 1998 01. 01. 2003 despite similarities in price movements, the gold market has a number of distinct features relative to other commodity markets. arguably, the most important distinction is the fact that the ratio of available supply to annual production is much higher for gold than for other commodities. a significant proportion of the estimated 160, 000 tonnes of all gold worldwide available in the form of jewellery, bars, coins, etc. ( sixty times the annual mine production ) could be brought to market at relatively low cost. thus, in contrast to other commodities, gold prices are not only dependent on the current mine production and processing demand but are also influenced to a great extent by the supply and demand behaviour of existing and potential owners of gold. in other words, the investment motive is a much more important driver in the gold market than in the market for other commodities. of course, mining and processing demand have an important role in the long term, but the medium term price equilibrium depends heavily on the investment or disinvestment decisions of the private and public sectors. second argument : commodity supply cannot catch up with demand a common argument in commodity markets relies on a kind of malthusian logic : due to limited supply, prices must rise in the long run in order to match increasing demand. this argument has been invoked for centuries. however, secular trends show the contrary : in almost all commodity markets, prices have decreased relative to other goods and services. this secular relative price decline does in no way imply that bottlenecks in production or increased demand cannot trigger a commodity price cycle. these cycles are often caused by the delayed reaction of supply to an increase in demand, which tends to push up prices temporarily. but in due time, higher prices tend to trigger new mining investments and foster technological progress. this raises the question of whether we are currently witnessing a commoditity cycle like any other or whether things might be different this time? on the demand side, there can be little doubt that the increased demand caused by the integration of china and india in the world economy is a once in a century historical event. on the supply side, there has been a significant increase in exploration investment since