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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: regli who wrote (27759)3/4/2005 4:58:18 PM
From: Tommaso  Read Replies (1) of 110194
 
>>>Check the behavior of Homestake Mining during the Great Depression; it went from $40 in 1926 to $544 in 1935. Not exactly getting creamed!<<<

The reason that happened was that Roosevelt raised the price the government paid for gold from $20.50 an ounce to $35 an ounce overnight. Homestake stock was legal to own and was a proxy for gold.

>>>Now you could say that the U.S. was still on a gold standard and that might have contributed to Homestake’s success as it had a ready buyer in the government.<<

Actually it had been made illegal to own gold, and the government took most gold away from private citizens. Citizens could no longer exchange dollars for gold. It remained illegal to own until the 1970s.

>>> I doubt that the dollar will hold up during deflation in the U.S. <<,

If the dollar does not hold up, what you have is inflation, not deflation. A decline in the value of the dollar is inflation. It takes more dollars to buy things.

>>>Free trading gold would very likely benefit even more than under a gold standard.<<

Gold does trade freely.

>>>Therefore, where do you invest your money when you seek purchasing power protection,<<<

Commodities other than gold. Jim Rogers thinks lead is better than gold. Oil has been better than gold.

Even the euro has been almost as good as gold.
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