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To: KyrosL who wrote (60605)	1/23/2001 11:03:33 AM
From: pater tenebrarum	Read Replies (3) \| Respond to of 436258

KL, i didn't say gold is a deflation hedge (though it actually IS), i said gold STOCKS are a deflation hedge. in the last deflation , HM was by far the best performing stock on the NYSE, in spite of the gold price being fixed at an artificially low level by the government. when the run on the banks began in the early to mid thirties, demand for gold went through the roof. the Fed even had to raise rates in mid '31 in spite of the depression to stem the outflow of gold. remember, it's the only form of money that is not someone else's obligation! and in a deflation, claims on assets and debt get destroyed. at the very least one should therefore expect gold to remain STABLE in deflationary conditions. however, the miners input costs would fall dramatically, thus improving margins and profits. so holders of gold mining stocks should make out like bandits (HM went up 10-fold from 1929 to 1935, and its '35 dividend equaled its stock price of 6 years earlier - i don't have to tell you what the rest of the stock market did).