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  • Is It Time to Buy Gold? [View article]
    Gold is considered a hedge against inflation primarily since it did well in the 1970s inflationary time and since it didn't do well in disinflationary (mind you not deflationary) 1980s people extrapolate that gold would not do well in deflationary times. I read a very interesting paper which talks about golds behaviour in deflationary times (there have been 7 of those since 1800s). The one in 1818 is not documented well, so omitting it, in the rest of the deflationary times gold mostly (5 out of 6 times) outperformed paper currency (irrespective of whether we were in a fixed or floating rate exchange regime). The critical factor in determining golds performance is the credit quality of the issuer of the paper currency, if that deteriorates people tend to choose gold as a hoarding vehicle over paper currency.

    Am not a gold bug, in fact have started studying the market recently but tell me something, even if inflation doesn't show up sometime soon, all the measures that the gov is taking to tackle the deflation are directly/indirectly going to cause the devaluation of the dollar (even the gov would like a gradual devaluation since that would work against deflation) and hence will be good for gold. Hence I think the conventional wisdom that gold would do well 'only' in an inflationary environment is flawed, a deflationary environment has been really good for gold.
    Dec 05 15:32 pm |Rating: +2 -2 |Link to Comment
  • Is It Time to Buy Gold? [View article]
    CLH, could you please go back to 1930s and see what happend to the dollar, it was devalued against gold to tackle deflation.


    On Dec 05 08:27 AM CLH wrote:

    > The best article I have read on "should I buy gold". We are in the
    > worst deflation since 1930s and the dollar is soaring, however most
    > think gold will save them. Dumb dumb. Keep your money in dollars
    > not gold.
    Dec 05 15:28 pm |Rating: +3 -3 |Link to Comment
  • Gold: The Next Reserve Currency Player [View article]
    Why is GLD an end game scam ? And why do you think gold stocks will outperform gold? I agree they are supposed to be a leveraged play to gold but compare GDM (gold miners index) vs GLD (gold etf) on google finance or bloomberg and you willl see gold has clearily outperformed the stocks.


    On Nov 30 09:37 AM relmor wrote:

    > Dont buy the GLD. Its an end game scam. When a rush of investors
    > ever demand there gold, they will be in for quite a surprise. Also
    > could crash any day because of that. Physical gold cant crash. Gold
    > stocks will outperform gold for a while anyway, as the charts are
    > dipicting.
    Nov 30 23:45 pm |Rating: +3 0 |Link to Comment
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