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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: glenn_a who wrote (49795)	1/15/2006 4:36:58 PM
From: glenn_a	Read Replies (2) of 110194

Here's the link to Sam Hewitt's "The Behavior of Gold under Deflation": rds.yahoo.com**http%3a//www.people.frisk-software.com/%7ebontchev/charts/gold.pdf%23search='behavior%2520of%2520gold%2520under%2520deflation' A couple quotes: "It is the impact of deteriorating economic activity on credit quality - not whether we operate under a fixed or floating rate exchange system - which is the operative factor driving gold’s behavior under deflation." and, "In historic US deflations, individuals had the choice between paper currency or gold as hoarding vehicles. The historical record demonstrates that loss of confidence in the issuer of paper currency is often a sufficient reason for individuals to choose gold over paper currency. We attach a detailed review of the behavior of gold under each US deflationary period since the Post-Jacksonian deflation of 1837-1843." and, "Our historical review clearly shows that whenever deteriorating credit conditions undermined the credit quality of issuers of paper currency, gold was preferred to paper currency as a hoarding vehicle." g

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