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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: E. Charters who wrote (91061)	11/11/2002 10:53:59 AM
From: E. Charters	Read Replies (1) \| Respond to of 116912

What happens if gold goes up slightly in present terms during a deflationary period? yr infl. fed oil-97$ gold$ gold 2001$ 1929 0.00 4.75 12.02 20.67 213.52 1930 -2.44 4.25 11.55 20.67 218.90 1931 -9.00 3.5 6.92 20.67 240.60 1932 -10.44 3.5 10.33 20.67 268.50 1933 -4.91 3.5 8.38 32.32 441.81 This means that its buying power increases as the constant dollar figures increase (last column). In other words, Gold's price relative to other goods is increasing if it stays price-fixed in a deflationary environment. What is instructive, is that gold increases in "present price" (second last column) during this period of price erosion of general goods. When gold stays more or less fixed in contemporary dollars, as it was between 1934 and 1972, and inflation strikes, -- gold's constant dollar price (here represented in 2001 dollars) -- dives. It's buying power of course, is eroding in a fixed environment during inflationary times. Buying power can be seen as the relative value of the last column -- 2001$. 1941 4.76 1.5 12.55 35.50 427.07 1942 10.80 1.25 11.84 35.50 385.53 1943 6.15 1.0 11.25 36.50 373.39 1944 1.45 1.0 11.15 36.25 365.76 1945 2.38 1.0 10.99 37.25 366.91 1946 8.37 1.0 11.70 38.25 347.69 1947 14.59 1.0 14.01 43.00 340.99 1948 7.87 1.3 17.51 42.00 308.70 1949 -1.04 1.5 17.27 40.50 300.92 So we see that gold is a haven during deflation paradoxically, as its price in real dollars rarely declines that much if at all! And in addition during times of inflation where is it NOT fixed in price, it keeps pace with inflation. Therefore its value is not as an investment, but a protection against catastrophic loss. EC<:-}