Prices falling are not "inflation under control" It is a recessionary contraction of the economy.
From 1929 to 1933, most prices fell and gold price rose. It may be counter-intuitive, but that is what happened. If commodities fall in value, what is happening is that they are not being "chased" by money, so their prices shrink. (Commodities are chasing money, so they fall in price.) In other words, the reason commodities are not high in value, is because no one is buying them, partially because the money supply is shrinking. It is also true that money is acquiring more power, as its supply shrinks.
On the other hand, gold is perceived as value which can acquire dollars and commodities, by command, i.e. it is money. So it rises in value.In effect when prices are falling, money looks for somewhere to park itself that is stable. Who is going to put money on an item that will be worth less tomorrow? If gold retains its value by its ability to purchase money, then it commands attention. It is the preferred investment. It is hard for most people to see, but during the depression the record is there. Gold experienced a steady rise in price from 1929 to 1934. In 1933 it was 32.33 and in 1934 it was 35.00. Most people think that it got to 35.00 by government edict. That is not true. And if you think about it, it is a bit far fetched. Not even the word of mighty Washington has that much power. But once it was fixed at 1/35 of an ounce to a dollar, there was no point in paying any more for it! And nobody would sell for less.
There is a bit of circularity to the argument that the reason gold holds it value is that people wish to pay for it, or trust it, and the reason they trust to pay for it, is that it holds its value. But in all commodities there is that inherent circularity. The become valuable as people pay for them, and people chase them as they increase in value. In gold's case, however its use is as value, so it does not behave like things that have other end uses solely.
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