debt deflation gold

Copyright © 2020 by Sunshine Profits And we saw that developing, we saw the way the currencies were acting, that gold had broken away from the dollar, gold was rallying with the dollar. It's like a deflationary wrecking ball and it creates more of that debt deflation dynamic that we so fear.” So that might have traditional gold buyers nervous. Gary North states, “There are a few contrarians who think that deflation is coming: both monetary deflation and price deflation. Readers might recall I wrote an article titled Silver Arbitrage, back in August. Gold is neither a perfect inflation nor deflation hedge. Every measure of growth is grim. Confused? Alas, this is the case when looking at the retail market versus the commercial market. A recession now means a vicious debt deflation: a collapse in new lending, refusals to roll over debt, an inability of borrowers to pay higher rates, soaring bankruptcies and much higher unemployment. It is neither a commercial commodity, nor a title to any such commodity, so it is irredeemable paper money without any intrinsic value. For example, fixed rate bonds are a poor hedge against inflation. In all four deflations, operational wealth in the form of gold appreciated handsomely. A stronger dollar also typically means weaker gold prices. The deflation and depression is right here, right now, and if you don't believe that, try asking some of the 30 million people who just lost their jobs in the U.S., or those who (used to) work in the catering and tourism industries. A recession now means a vicious debt deflation: a collapse in new lending, refusals to roll over debt, an inability of borrowers to pay higher rates, soaring bankruptcies and much higher unemployment. explicitly consider, leaving open the possibility that debt deflation was impor-tant. Deflation is the market call of the establishment. Section 2.2 briefly recapitu-lates the basic case against the interwar gold standard, showing it to have been a source of deflation and depression, and provides some new evidence con-sistent with this view. The shiny metal is considered an inflation hedge, not a deflation hedge. In a period of global deflation investors and the public increase their demand for gold as a hedge against paper currency debasement, a hedge against financial counterparty failure and the rising risk of private and public sector default. Further, Bob goes on and states that neither gold nor silver will do well in the deflation he had predicted for so long. With the USD outperforming fiat currencies and commodities—the WTI Oil futures prices just sunk to negative prices, gold will stand as a main beneficiary as a safe haven asset. Yet, from its March 17 record peak, GOLD prices have plummeted more than 20%.” It was the largest economic downturn since the Great Depression. The fact that gold and cash were officially linked during the 1930s meant the deflation caused the purchasing power of gold to increase along with the purchasing power of cash. When it is used as part of the hard-money system, it reduces the volatility of currencies. The real yield is inverted so the graph shows that when the real yield is declining, the gold price is going up, and vice versa. And third, with gold having fallen from a 30% premium to paper to only 3%, it appeared eminently possible, if gradually done. The Golden Constant which looked at gold during both inflations and deflations, and Silver the Restless Metal which was a similar study for silver. link http://silverstockreport.com/2008/auction-3-update-5.html link http://www.silver-investor.com/davidmorgancommentary/articles/8-21-08_ibtimes26_SilverArbitrage.html We’re at the Silver Bull Market’s Most Powerful Leg, Once in a Lifetime Profits by Investing in Silver with David Morgan, To Print, or Not To Print, That Is The Question, Investors Should Take Heed of the Inflation Chatter, Quantitative Easing Our Way to Currency Destruction, Silver Bull Market Will Crush Gold As Financial System Collapses, http://silverstockreport.com/2008/auction-3-update-5.html, http://www.silver-investor.com/davidmorgancommentary/articles/8-21-08_ibtimes26_SilverArbitrage.html, http://www.financialsensearchive.com/fsu/editorials/2004/0420.html, http://www.lewrockwell.com/north/north436.html. Two most known periods of deflation are the Great Depression in the U.S. and the Japanese deflation which started in the 1990s. This was precisely the price deflation which occurred when the gold standard was in place. It may be considered negative inflation, i.e. One of my favorites is from Dan Ascani, who wrote essentially about Professor Jastram’s very long-term study on gold, and he essentially states that Jastram studied four pronounced price deflations taking place. Let us venture in the past when it looked like deflation was going to reign at the bottom of the financial crisis in late 2008. See article here. Deflation Hedge: Gold & silver's profitable performance under so many past deflations strongly argues that they will perform well in future deflations. Dr. Marc Faber one of the most respected and best followed in the industry has stated his opinion on the deflation debate as follows–“Therefore, under both scenarios — stagflation or deflationary recession — gold, gold equities, and other precious metals should continue to perform better than financial assets.” See article here. What we can take from this past history is that those that were savvy enough to see an opportunity and took advantage of it. As rapid growth in the supply of goods outpaced the gradual growth in the money supply, there was a mild deflationary trend in the 19th century. Copyright © 2019 The Morgan Report. Unlike any other financial assets, gold and silver are not backed by debt. The Great Depression was the longest and most severe economic depression ever experienced by the global economy. The price manipulation at the COMEX has been so  severe in the past, that it has created a profit incentive to create a free market in silver, through an arbitrage between the physical silver market and the paper price as set by the Comex a profit opportunity exists by buying in one, and selling to the other.” A recession now means a vicious debt deflation: a collapse in new lending, refusals to roll over debt, an inability of borrowers to pay higher rates, soaring bankruptcies and much higher unemployment. Those who have saved in real assets, like gold, just saw their wealth double in real terms over the past few days. A recession now means a vicious debt deflation: a collapse in new lending, refusals to roll over debt, an inability of borrowers to pay higher rates, soaring bankruptcies and much higher unemployment. Hence, a safe-haven asset is expected to retain its value or even increase in value during times of market turbulence when most asset prices decline. an important deflationary event in the U.S. financial markets. In addition, the ratio of public debt to gross domestic product (GDP) ... "Good Versus Bad Deflation: Lessons from the Gold Standard Era," Pages 1-2. Unlike national currencies, the yellow metal is not tied to any particular country. A safe-haven asset is an asset that is uncorrelated (weak safe-haven) or negatively correlated (strong safe haven) with another asset or portfolio in times of market stress or turmoil. He pointed out that gold prices have confused traders and asset allocators. The monetary base roughly matches the size of the Federal Reserve balance sheet, which indicates the level of new money creation required to prevent debt deflation. Castrese Tipaldi wrote on SafeHaven.com, “I don’t know if in the last week we saw the last gasp of those usual subjects trying to cap gold, and I don’t know if we now have the very last possibility to get silver at a price so cheap.” What makes this quote so interesting to me is he wrote this on April 20, 2004. National money including bank deposits and bank notes is convertible to gold at a fixed price. Silver actually traded below $9.00 for a brief time. Chart 2: Price of gold (yellow line, left axis, London P.M. As one can see in the chart below, the stock market declined from October 2007 to March 2008, while the price of gold continued to rally. In connection with this underlying cause, you can also hear terms such as wage inflation and cost inflation. "Assume gold is $1200 at the start of a year and there is 5% deflation that year. Contrary to commodity money, which is money that is at the same time a commercial commodity, fiat money is a legal claim, which derives all its properties from the law. Steve Saville of the Speculative Investor writes, “The most important difference between then (the 1930s) and now is that gold and cash US Dollars were interchangeable during the early 1930s (the deflationary period) by virtue of the fact that the Dollar was defined as a fixed weight of gold. The views on this topic vary. link http://www.ameinfo.com/134334.html The question again for you is… In 2007, for instance, world debt was $142 trillion. As far as I know, there are only about a dozen of them who write newsletters or run websites. With deflation, debt gets more expensive over time, taking a bigger and bigger bite out of your real income. Our read always has been that the wave of debt-deflation dynamics building last year would provoke a massive policy response. The quantity of money is probably the most important concept in economic theory, since it affects the price level. Sign up today. Did you enjoy the article? Has all the stimulus and government/political interventions worked or not? In the preface, I stated that the results "seem largely new," I spoke thus cautiously because of my unfamiliarity with the vast Furthermore, under such a system the purchasing power of gold would decrease during periods of inflation; that is, when the dollar was defined in terms of gold, it would have made sense to shift investment away from gold during periods of inflation.” Some insist that both metals will do well under almost any economic conditions; some, like Bob Prechter, think neither gold nor silver will do well; and others, believe gold and gold alone will be the only thing left standing. That is, it behaves more like a currency that a government has declared to be legal tender but. 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