Companies that BENEFIT from a recession Message Board

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Non-Tech : Companies that BENEFIT from a recession

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To: zebraspot who wrote (31)	4/3/2008 11:39:55 PM
From: zebraspot	of 34

A follow-on from Turk: Gold will still be a good place to be. If the US gets a deflation (very unlikely given how many dollars the Fed is creating), the gold price may not rise, but it's purchasing power will. That's what happened in the 1930s deflation. If you owned gold, you were happy. 1st, it rose when the dollar was devalued from $20.67 to $35 per ounce. 2nd, it's purchasing power continued to rise even when its price remain unchanged at $35 because the price of nearly everything was falling in the 1930s deflation. However, that reality changed by 1939-1940 when the Roosevelt inflationary policies finally kicked in. The dollar started losing purchasing power, and one ounce was worth more than $35. So gold began disappearing worldwide, going into private hoards. Bad money (national currency) was driving out good money (gold) at the fixed price of $35. By 1960 the free market price occasionally exceeded $35, and regularly did after March 1968 when the London gold pool finally broke apart. I use several models to determine when gold is over-valued, which measure its value regardless whether we get inflation or deflation. And in my reckoning, gold is still good value. Regards James

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