depends on what type of deflation
but let's consider the current deflation, among products emanating from the credit-based debt-ridden economy
rather than discussing theoretically, I prefer to mention in backdrop that the Commodity Research Bureau (CRB) index is up on all components
grains, metals, energy -- ALL
so what deflation are you referring to, Laddy?
the whole idea is to hunker into money (capital) which is NOT vulnerable to debt writedown, or to earnings disintegration
gold has none
what is laughable is comparison to USdollar valuation
since the dollar is itself a debt-backed instrument
the USdollar must be compared to gold, not the other way around
the dollar is NOT money, but rather recognized legal tender
if you hold gold when stocks continue to erode, you win from not losing as much
if you hold gold when savings accounts are offering 1.5%, then you win from gold probably rising more than that
if you hold gold when banks are threatened with bankruptcy, then you win since your savings accounts might be seized
if you hold gold when the dollar implodes during the deflationary period, then you win from holding the benchmark asset from which the dollar is declining, not to mention maintaining purchasing power relative to the other papershit currencies flooding the world's financial waters
sure, gold might drop in dollar terms during some deflation
but if it drops less than the trade-weighted dollar index, you win in world markets
if it drops less than stocks, you win versus stocks
if it drops less than corp bonds, you win also
if it drops less than Trez bonds, you win also
take Japan for instance from autumn2001 to spring2002
see Hamilton's appropriate article
zealllc.com
if Japanese held gold instead of Nikkei stocks, they made out at least 75% better
if they held gold instead of savings in yen accounts, they made out at least 60% better
if the world around you is sinking via deflation, then any strong buoyant liferaft (like gold) will float better than the bullshit paper assets that the investing public clings to
INCLUDING TREASURYS
wait until the dollar hits freefall
then the ultimate confusion will hit, as our prevailing rates rise while our economy continues to weaken !!!
I hope this helps
but read the Zeal article on Japan
its empirical evidence flies in the face of Prechter's thesis
/ jim |
