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The rheological properties of magnetic oxide dispersions have been studied, varying dispersing agent, magnetic oxide, milling time and oxide loading level. Magnetic properties of handcoats as well as mechanical and magnetic properties of free films prepared from these dispersions have also been studied. The results show a good correlation between rheological, magnetic and physical properties. As a result, rheological measurements can be a convenient and powerful tool for evaluating the dispersibility of a magnetic oxide and the efficiencies of formulation components such as dispersing agents. Rheological measurements can also determine optimum oxide loading, optimum dispersant level, and optimum milling time. Results show that for a given oxide, there exists an oxide-binder ratio where mechanical, rheological and magnetic properties are optimized. This optimum suggests the existence of a well-defined oxide-binder structure. Results at oxide loadings lower and higher than the optimum can be explained, respectively, on the basis of individual particles with no long range structure formation and on the basis of possible clustering of particles.