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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: glenn_a who wrote (49795)	1/15/2006 1:56:49 PM
From: kris b	Read Replies (1) \| Respond to of 110194

Was it not the case in the last global deflationary collapse - i.e. the 1930's - that the price of gold held up well during the decade? Here is the explanation of this fenomenon: Robert R. Prechter "Conquer the crash" "The fact the people "rushed into gold" in the early 1930s has been a mainstay of the gold advocates' argument. They rarely tell the whole story. I suspect that the reason that people bought gold then is that the U.S. government had fixed the price, at $ 20.67 per ounce. While everything else collapsed, gold was soaring in relative value, AND IT VALUE GAINS WERE GUARANTEED. Who wouldn't buy it? If the goverment had fixed the price of any other substance, people would have invested in that instead. Today, gold, like silver in the 1930s, is free to trade at the market price, which means that it can go down during a dollar deflation. I cannot guarantee that it will. I can only state that there is no good case to be made that history indicated otherwise." Everybody would be buying tulips in deflation if government fixed its price. Right? Silver, which price's wasn't fixed, dropped from 60 cents/ounce to 25 cents/ounce, between 1929-1934. I would like to add that gold miners' shares in 1929-1934 were doing very well because on one hand State fixed the price of their product, but on the other hand all their expenses were deflating with general collapse. Corporate nirvana.

To: glenn_a who wrote (49795)	1/15/2006 2:01:35 PM
From: kris b	Respond to of 110194

Was it not the case in the last global deflationary collapse - i.e. the 1930's - that the price of gold held up well during the decade? Here is the explanation of this phenomenon: Robert R. Prechter "Conquer the crash" "The fact the people "rushed into gold" in the early 1930s has been a mainstay of the gold advocates' argument. They rarely tell the whole story. I suspect that the reason that people bought gold then is that the U.S. government had fixed the price, at $ 20.67 per ounce. While everything else collapsed, gold was soaring in relative value, AND IT VALUE GAINS WERE GUARANTEED. Who wouldn't buy it? If the government had fixed the price of any other substance, people would have invested in that instead. Today, gold, like silver in the 1930s, is free to trade at the market price, which means that it can go down during a dollar deflation. I cannot guarantee that it will. I can only state that there is no good case to be made that history indicated otherwise." Everybody would be buying tulips in deflation if government fixed its price. Right? Silver, which price wasn't fixed, dropped from 60 cents/ounce to 25 cents/ounce, between 1929-1934. I would like to add that gold miners' shares in 1929-1934 were doing very well because on one hand State fixed the price of their product, but on the other hand all their expenses were deflating with general collapse. Corporate nirvana.

To: glenn_a who wrote (49795)	1/15/2006 4:36:58 PM
From: glenn_a	Read Replies (2) \| Respond to of 110194

Here's the link to Sam Hewitt's "The Behavior of Gold under Deflation": rds.yahoo.com**http%3a//www.people.frisk-software.com/%7ebontchev/charts/gold.pdf%23search='behavior%2520of%2520gold%2520under%2520deflation' A couple quotes: "It is the impact of deteriorating economic activity on credit quality - not whether we operate under a fixed or floating rate exchange system - which is the operative factor driving gold’s behavior under deflation." and, "In historic US deflations, individuals had the choice between paper currency or gold as hoarding vehicles. The historical record demonstrates that loss of confidence in the issuer of paper currency is often a sufficient reason for individuals to choose gold over paper currency. We attach a detailed review of the behavior of gold under each US deflationary period since the Post-Jacksonian deflation of 1837-1843." and, "Our historical review clearly shows that whenever deteriorating credit conditions undermined the credit quality of issuers of paper currency, gold was preferred to paper currency as a hoarding vehicle." g