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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: silvertoad who wrote (111940)	5/23/2010 7:03:30 PM
From: Hawkmoon	Read Replies (1) \| Respond to of 116555

a currency needs a safeguard -- such as that provided by gold -- which prevents the changing circus of authority figures from succumbing to the temptation to debase it And what happens when the production of gold can't keep up with the economic demand for currency, as driven by human productivity? There is a limited supply of gold, and there are economic costs to extract, process, and store the metal. Presumably the economic potential of mankind depends upon population. The more people there are, the more demand for meeting their basic human needs, then ultimately their discretionary wants and desires. So if not one more ounce of gold was mined, but the demographic trend increased by 100%, then you effectively have created a deflationary cycle that fails to meet human economic potential. But there's something to be said for having gold as a back-up. But don't believe it's a panacea. Governments have confiscated it in the past and can do so again. Since a good portion of the current physical gold supply is now owned by GLD gold ETF, it's all be put in a very convenient place where it can, once again, be confiscated. And even if you hold physical gold, governments can ban its use as legal tender, thereby restricting it to black-market and barter transactions. It we ever arrive at such a terrible state of affairs, I would much rather have bullets and beans over a shiny metal... ;0) Hawk