oldgoldbug

Why I Got Gold Wrong

One additional point regarding gold as money. Back in 1993 I purchased my house for the equivalent of 300 ounces of gold. Today my house is worth: yep, 300 ounces of gold. That is money, not the fantasy that somehow the value of my home has tripled as I have used up over 15 more years of its useful life. My house has tripled in dollar terms because the dollar is worth substantially less than it was 15 years ago.

Why I Got Gold Wrong

Massive inflation is the only weapon the FED/Treasury has to try to keep the system from crashing. But the FED/Treasury can't force the banks to loan money. Money velocity slows as fear takes hold at all levels and a crash becomes possible in spite of inflationary actions. The markets evidently aren't sure how this will play out so we see the gold and bond markets both moving up as bets are placed. This does happen from time to time - witness early 80's when the stock and gold market moved up together before gold dropped and stocks moved into a long term bull market.