Sunday, July 06, 2008

GOLD IN DEFLATIONARY ECONOMY

http://www.gold-eagle.com/editorials_99/ascani012699.html

Hope this helps.....will it be different this time?

Duratek
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2 comments:

Anonymous said...

Thanks for your comments and the link. Maybe it will be the same with gold this time around, maybe not, since history doesn't repeat but it often does rhyme. We are no longer on the gold standard - will that make a big difference? Perhaps it will. On the gold standard, gold IS money. When not on the gold standard, gold is NOT money. Yet people are creatures of habit and emotion, and old habits die hard, so many people will still think of gold as money so it's a tough call to be sure. Interestingly, the author states: "note that spot gold and spot silver prices bottomed in the midst of the Great Depression" so gold the commodity did fall before it rose (ie, the opportunity to buy gold may be later). The author also says "gold shares began to appreciate in value before the bottom in gold and commodity prices in 1933". So one needs to distinguish between the commodity and the shares, historically with the shares leading. What makes all this speculation treacherous is of course the potential for "double dips" (ie, back to back depressions which in fact have happened before). So it seems there are speculative opportunities in gold down the road as the deflationary progression ensues, but cash still seems like a viable way to ride out the whipsaws and potential for double dips without the need to get the turning points exactly right each time. History does show that many a brilliant trader survived the initial deflationary crashes only to go bankrupt on subsequent deflationary echoes. Do you feel lucky? jbr

2:00 AM
Anonymous said...

JBR,

I feel LUCKY because I am in Treasury MM 100% cash. Had we seen the inflationary FED for what it was back in 2001 with dollar near 120 on the index GOLD and OIL was place to be. Financials topped well short of the OCT highs, already many shares 20% off their highs....

Just finished reading a copy of the Harry Schultz Newsletter, interesting guy....has made some good calls on the golds, he seems to think the Juniors will not takes off until the "PUBLIC" LOVES GOLD, most are OBLIVIOUS to the metal.

When the sucking sound from financials intensifies wont the PPT pull our all stops to inflate?

The metal may not be a good investment, but it is a store house with NO debt attatched.

The HON company's lead x'z out to 9 weeks (office furn)they must be short handed and closed down some production beng stupid not figuring orders placed to beat A) July price increase and B) school orders...don't think will help profits, I LIKE the company LONG TERM stock looks interesting here, might fall to lower levels though..

Maybe we rally for a few weeks, bottom line each tradable bottom had certain buying power characteristics....and each BEAR MKT bottom had unmistakable selling panics to create a safer buying ZONE.....the little guy hasn't panicked yet....

D

5:00 AM

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