the gold bears look at current low inflationary figures coming out because of the massive money destruction and commodity price falls of the past year.
can you expand your point? im not sure who mike shedlock is nor his views or what his logic behind them is.
Gold is not part of the commodity scene. Gold (and silver to a lesser degree) are seen as a store of wealth in times like these. In the last week postings have explained this in more detail.
His main point is that the US has been exporting inflation for decades, now they will export deflation for a long time, much longer than any of the gold bulls will be waiting for inflation, so buy gold, treasuries and save your cash!
im reading your links.
what do u mean that gold bulls will have to wait for inflation; but you then say buy gold?
Hey SN
Many Central Banks have generated a lot of cash to bailout Wall and Fleet Streets lately. Now these same banks (recipients of government dollars) are hoarding a lot of this newly generated cash. This is why people like miners, farmers, businesses cannot obtain loans to survive.
But once this money is released into the market, then we will witness an inflationary consequence. BUT until this money is in public circulation the inflation problem will not be apparent.
To give a layman's example....
i agree with what you said. hence i couldnt follow why sinner was saying deflation would continue but to buy gold. i found that confusing.
btw i have a honours degree in economics. not being pretentious, just wanted to let you know the level of discussion can be a bit above trading cards
The effect of this is that it punishes the savers. Any cash you had is now worth a lot less than before.
To me this outcome seems plausible. Punish the good/responsible and help the greedy/irresponsible...
The deflation alternative... those with cash will prosper.. no one else as banks will get raped with more mortgage losses... as well as commercial property etc...
do you think its unlikely that enough money can be pumped into the system to reflate the house prices? Cant say i am completely convinced its possible...
Will building materials become cheaper with all these small to mid cap miners going to the wall? Surely the question of available supply has to enter the equation at some point?
You have raised some great hypotheticals Kransky.
Lets imagine that the house prices were re-inflated. What about a re-inflated depreciating structure (ie. buildings, plant/equipment etc..) where the cost of the materials to replace them will be exponentially higher in the future? Does deflation apply to the land the structure is actually standing on?
A house can depreciate and delapidate, but land is always land, it has tangible value.
definitely interesting times. but not unprecedented. 1930 and 1974 bear many similarities.
haha it wasnt actually! but ill claim it
1934 the USdollar was devalued against gold?
Yes and its 34 years since 1974.
In 1974 two things happened: the Yom Kippur war and double digit inflation.
BTW I like gold but not the commodity. I am pro gold miners as they have followed the market where gold has stayed steady(ish). Therefore I sumise the miner have more to gain than gold does when it goes north.
sounds logical. if only markets were too.
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