richard5za wrote:RDRUNR wrote:I noticed silver and gold tumbled in price yesterday
I suspect that the Dow is going to tumble between now and the end of the year; the global financial situation is now very serious.
Gold is starting to show genuine 'safe haven' properties and considerable increases can be expected unless there is a defalionery implosion.
Your arguement seems to be based upon a repetition of the 1981 situation but the economic fundamentals are completely different today. Remember that gold was only traded from the early 70's; before that it was fixed at $ 35 per ounce. And ten years later it was still being understood from many points of view. It now has about 40 years of trading.
Actually, no, my debate is based on after the 1970's when gold was traded actively and created a massive bubble in the early 80's before crashing more then 300% in less than 1 year.
My debate is also based on the fact we ARE in a deflationary sprial today and have been since the collapse of the credit bubble a few years ago.
Deflation = Lower commodity prices.
If you are expecting inflation, get in line with the "experts" on CNBC. Also read John's post today:
The credit bubble of the mid-2000s decade created huge amounts of liquidity. With the collapse of that bubble, there is less money in the world every day, because of deleveraging. As liquidity becomes more scarce, meaning that the supply of liquidity goes down, the "price" of liquidity, as measured in interest rates (bond yields) goes up, particularly in Europe, by the law of supply and demand. This is causing a deflationary spiral that cannot be stopped by any politicians.
I have to be up front, John is the smartest man I've ever read in today's era.