The problem is, this guy Vronsky is full of sh8t. He writes :
<<There are rationale leading to a logical conclusion that DELATION is indeed bullish for gold mining stocks. The effects of the 1929
CRASH caused a sustained contraction of credit and money supply, which resulted in a growing universal suspicion of institutional
credit-worthiness. that eventually extended to governments and to their fiat currencies. As institutional credit-worthiness evaporated,
investors fled paper currencies (even US Treasuries), and ran to the only money which was (and remains) NOT a liability of anyone, and
therefore not subject to default: GOLD>>
All this is pure BS and verbal garbage. Reality was, the government (FDR) raised price of gold from under $21 to $35, trying to induce inflation, so that gold miners sold their output to the government (US citizens were prohibited to hold gold after 1933), while mining expenses in $ terms went down, due to general deflation and high unemployment. Thus, miners' profit margins went to the sky because of the government action, not because demand for gold increased. Again, it was illegal to hold gold for citizens, and they even had to surrender whatever they had before 1932. |
