Hi Craig,
Good point!
Well, since u asked, let me include some links from some well established authors. I will include quotes & cite the URL for your inspection. I will not comment, since u will obviously want a quote from GOLD oops... sorry, I meant GOD...
So let me educate u...
believe this, and don't forget it: Neither Alan Greenspan nor Robert Rubin nor any other finance minister nor central banker sweats inflation. Inflation is manageable, but deflation is fatal. Like AIDS, once it attacks the financial system, there is no cure... ... Not very many writers seem to know that gold performs much better during deflations than inflations.
Nevertheless, gold does maintain its purchasing power over long periods of time. The intriguing aspect of this conclusion is that it is not because gold eventually moves toward commodity prices, but because commodity prices return to Gold ie:... If Jastram's "retrieval phenomenon" means anything, it is that the price of gold versus a basket of commodities tends to return to the same level over time, i.e., gold preserves purchasing power over long periods of time home.hiwaay.net
This table lays out Jastram's periods with the change in commodity prices, as well as the change in purchasing power of gold and silver.
Inflation Deflation Commodities Silver Gold
1808-1814 +58% -33% -37%
1814-1830 -50% +89% +100%
1843-1857 +48% -30% -33%
1861-1864 +117% -53% -6%
1864-1897 -65% +27% +40% (remember 'railroads')LOL
1897-1920 +232% -49% -70%
1929-1933 -31% -5% +44% need I say more
1933-1951 +168% -4% -37%
1951-1979 +158% +380% +240% (who know's what happened )
Deflation Hedge: Gold & silver's profitable performance under so many past deflations strongly argues that they will perform well in future deflations. Under a regime of debt money a deflation means a collapse (implosion) of debt. Unlike any other financial assets, gold and silver are not backed by debt. Whenever creditworthiness is called into question, demand for gold and silver will rise
On Robert Mundell...When the US disconnected the dollar from gold in the late 1960s, Mundell was a lone voice warning of the danger of floating exchange rates. He predicted, in the face of considerable ridicule, that the world would eventually shift back to a gold standard by 1980. He was dead wrong on that account, but his work on gold as an independent monetary marker is remarkably prescient. For example, the change in the gold price from $35 in 1950 to $350 an ounce into the 80s matched precisely a tenfold increase in US national debt. Similarly, homes that cost $10,000 in 1950 increased to $100,000 over the same period. Gold's decline to less than $300 an ounce since 1996 has been matched by rising US budget surpluses.
Wanniski warns that if the US government tolerates gold drifting below $270 an ounce, then we can expect: "a series of declines in corporate earnings, bankruptcies, layoffs, unemployment, until the whole economy is adjusted to the lower gold price. Unless the problem is fixed, it could drag the administration down with it. Bush junior??
(kinda of sound like the Kemp article from a week or so ago...note the date on this article). & ""The contraction part can be overcome by lowering short-term interest rates or cutting marginal income-tax rates and capital-gains taxation. The deflation part of the problem can only be rectified by having the Fed add sufficient liquidity to cause gold to climb back over $300. Otherwise, there will be an slow, grinding, downward adjustment of all dollar prices -- the mirror image of the slow, grinding upward adjustment of all dollar prices that we knew as the inflation of the 1970s."
mips1.net
& any comments about this...Gold was at $385 when the deflationary process began. In our classical framework, inflation begins with a rise in the price of gold and deflation begins with a decline in the price? Believe it or not I think we are in a major deflationary enviroment... just look @ the commodity prices...
Interesting... White House connection . The White
House instead had Deputy Treasury Secretary Larry Summers call me. I met with him in April 1997, but while he treated me with respect, said he could not buy my gold argument. I'd told him we could expect a decline in the oil price, then farm prices, just as we had been warned in January 1972 by the 1999 Nobel Prize Winner Professor Robert Mundell to expect a rise in oil prices and other commodities. You know what happened.
mips1.net
Fasinating speach by Kemp IMO... way back in 1982 polyconomics.com
polyconomics.com. are most definitely in a monetary deflation, although prices are higher for the moment because of the disturbances in oil caused by that deflation... freerepublic.com
Very interesting quote "Not Just Another Commodity
Recent studies give support to Mobius's new monetary proposal. According to these studies, gold has three unique features: First, gold provides a stable numeraire for the world's monetary system, one that closely matches the "monetarist rule." Second, gold has had an amazing capacity to maintain its purchasing power throughout history, what the late Roy Jastram called "The Golden Constant." And third, the yellow metal has a curious ability to predict future inflation and interest rates"
Luskin on Gold http://www.thestandard.com/article/0,1902,24553,00.html
tscpro.thestreet.com
& finally... I'm too tired to continue on...
gold-eagle.com
You may accuse me of being a "gold-bug", but that is not
true...
I try to emulate G. LOEB. By darting here & there like a rabbit. I, of course, have a long, long, way to travel before I reach his plane... FWIW
Regards,
Peter |
