bullpasture

The End of Gold, Part Two

The author of this article provides an alternative view that should be considered by all the Goldbugs (myself included!). I believe Bailey's premise (deflation) should be carefully considered as the reason that gold hasn't gone hyperbolic as everyone thought it should this fall when the dollar was expected to collapse. Frankly, the future really is unpredictable as there as way too many variables involved for someone to actually predict outcome. The best we can do is recognize, as the author does, that we live in interesting times. We probably are at a "cusp" that can go either way for gold in the USA while the rest of the world will experience (in their respective currencies) the massive bull market for gold as a secure store of value. The American economy is so large and vast relative to the rest of the world (including Europe and China) that any deflationary collapse in pricing assets might overwhelm anything the Fed can accomplish with a printing press and issurance of treasuries. I myself have most of my investments stored in physical gold yet I'm not sure that while living in the USA it will make me wealthier in the future. The best I can hope for is to preserve some manner of buying power. Perhaps if I chose to emigrate to another country dragging my gold with me I could experience a sense of real wealth increase in the future.

Btw, I really liked the comments that Mr Freddo made and perhaps the best understanding we can obtain from the paradox that gold seems to exist simultaneously in both a bull and a bear market is his comment that "In time of crisis, gold may be the best investment for the individual but the worst investment for the economy".