Blue Scorpion

Is Gold A Sucker's Bet?

The author is a rank amateur who has no business tossing out opinions on gold. It is a myth that gold does well in inflation. In fact, hisotry shows us it does only so-so. Where gold shines brilliantly is during deflation. Think about it for a second. During high inflation, the owner of any currency spends it as fast as he receives it because he knows the object to be purchased, whether a can of soup or a new auto, will be more expensive next month than it is today. So people spend money to lock in today's lower price. Since gold is a form of money, it is no excpetion.

The opposite is true in deflation. If prices next month will be lower than they are today, then currenct will be dearer down the road. So no one spends, believing goods will be cheaper next month than they are today. Cash is hoarded, since prices of goods are falling and next month that same unit of currency will buy more cans of soup than it can today. Since gold is money, it too is hoarded. With less on the open market for coin dealers and jewelry, the price skyrockets.

The author, in his ignorance, has it azz-backwards. But I'm not surprised...not here at SA. One of these days you ppl are going to shock me and actually do your homework.