Sunday, August 17, 2008

Gold: "reculer pour mieux sauter"

A very interesting, concise post from Mish. He says deflation forces borrowed money out of speculation, so gold and silver will drop while this happens; but then - it could take some time yet - will come the rise: "The reason gold will reassert itself is that Gold Is Money."

Mish's line appears to be consistent (June 2007):"Typically gold is a counter-cyclical asset that does best in real terms when liquidity evaporates."

Gold seems unpredictable - the demand for it as jewellery is unrelated to price - but if his chart below is correct, there is an underlying trend of steadily increasing demand. New gold mined each year is only some 2% of the total still available above ground - gold generally doesn't get used up (though I have drunk Danziger Goldwasser) - so the supply cannot be easily boosted by the State in inflationary times.

Gold, or paper? Your choice.

5 comments:

  1. AntiCitizenOne17 August 2008 at 14:12

    "Gold is money", nope anything that is a proxy for peoples time can be money, see paper/electrons.

    ReplyDelete
  2. Sackerson17 August 2008 at 22:09

    Yes; but it's harder to multiply gold.

    ReplyDelete
  3. Alwyn ap Huw21 August 2008 at 16:26

    I'd never herad of vodka laced with gold before. Dose one still put cola or lemonade on top of it?

    ReplyDelete
  4. Sackerson22 August 2008 at 17:48

    Sacrilege! You drink the sweet, viscous, precious stuff on its own.

    ReplyDelete
  5. Anonymous22 August 2008 at 21:30

    Too much Bear Stearns and not enough bare sterns... sorry, my attention must have wandered.

    ReplyDelete

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