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Gold/Mining/Energy : Gold & Gold Stock Analysis
GLD 383.15+0.8%4:00 PM EST
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To: Horgad who wrote (15808)10/25/2008 5:18:02 PM
From: GST5 Recommendations  Read Replies (1) of 29622
 
Inflation and deflation refer to persistent changes in trend. We have had hundreds of millions of price movements up and down in the past fifty years -- but only one trend, inflation. What would be required to validate deflation is a change in long term trend. You don't have deflation on Monday and inflation on Friday. If you are calling this a change in trend to deflation it can only be validated as a multi-year trend. If you think that fluctuations are persistent trends then you would be calling inflation and deflation every six months. It does not work that way. A person calling for deflation is by definition making a statement about prices several years from now -- and same with inflation. It is the same for stock trading -- you don't have a bull market at the open and a bear market at the close. These terms also apply to persistent trends -- despite massive movements in the short term. Nor do you have deflation every time you have a bear market for stocks, or real estate. Ditto for recession -- recessions are commonplace, deflation is so rare that it is very, very hard to find. Asset price fluctuations, bear markets, recession -- none of these is deflation and none of these has proven to be an accurate predictor of deflation.
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