Hi Don,
But that won't happen..
It happened this past winter several times.
Something else to think about...The Dollar could weaken and due to deflation factor Gold could still fall...
In theory, deflation (or at least disinflation) strengthens a currency, inflation weakens a currency. What deflation does do is destroy debt bubbles. Mass debt repudiation destroys an over-leveraged financial sector. A faltering financial sector hamstrings the economy. A faltering financial system and hamstrung economy call into question the reliability of, and confidence in, the surviving debt instruments, both public and private. Fiat currency is a public debt instrument. This is why gold can quickly rise when there is anything more than a trivial amount of deflation on the horizon.
Under inflation, gold acts mainly as a commodity. Under deflation, gold assumes its role as the true currency of last resort -- an ounce of gold is ALWAYS worth an ounce of gold, no matter what any government on Earth says or does. Meanwhile, currencies wax and wane and come and go.
The Yen is actually thought as a "flight to safety" these days.. Remember Japan is the world's largest creditor nation..
Japan's banking system is insolvent. A substantial portion of their debtors have defaulted or soon will, either directly or through devaluation. Large parts of the entire complex would have been closed by now had they been operating under US banking statutes. |
