scotty1560

The End of Gold

For me inflation is caused in two or three primary ways.
Supply and demand...commodities like food should always go higher.
Taxation...governments want to always spend taxpayer's money so
they directly or indirectly create an inflation in cost of living.

The third cause is where I think why I see more deflation in upcoming years.
Leverage...if a bank is lending at 30 to 1 reserves than they are creating a massive inflation. But right now that's not in the cards. Tighter leverage and
regulations should rule for a long period of time.

So items like real estate, yachts, luxury items, credit cards and lines of
credit...all things that I see continuing to retract for a few more years.
Contraction should mean lower earnings and lower P/E ratios.

Government stimulus is a short term (6-9 month) boost only...then back to
more deflation. Our economy is leveraged based...cash buyers do not create
inflation. Without leverage our economy will continue to adjust to much lower
cash buyer based levels. I'm not a gold bug but might be proven wrong..
consider it an asset and subject to leverage like any asset.