Gold and Deflation in the Greater Depression
By Delwyn Lounsbury - THE DEFLATION GURU
The history of gold and deflation is not good. The history of gold mining stocks and deflation is excellent as prices of mining stocks shares and the dividends they paid soared all during the 1930's depression. Why? They were mining your money!
Gold may have peaked August 22, 2011 at $1,912.70. If you look at a price chart you will see it looks like a hockey stick. This is a hyperbolic price chart. It is sign of a definite interim topping action. As they say "a tree can't grow to the sky." Gold should now do an Elliott wave/Fibonnaci retracement if .618% or to about $730 per ounce in the next few years. Then you should load up on presciou metals and their mining stocks. Central banks of the world owned by the Anglo American financial elite who want a formal one world government and new world order with you and I as their slaves are printing money like mad out of thin air. Here in 2012 the money supply has been balooned by 300% since 2008 with FED quantitative easing a.k.a money printing. You will see most other assets will crash 90% or more including stocks, corporate bonds, real estate, art and collectibles.
Note - high gold price prima facie proof politicians world wide are not doing a good job economically. The gold price graph went hyperbolic recently to $1,912 per ounce, which is a sure sign of a top. "No tree can grow to the sky." Remarkably, the total asset value of the Gold SPDR ETF (symbol GLD)reached $77.9 billion eclipsing the asset value of the S & P 500 ETF. Now, gold should do a 61.8% retracement to around $750 per ounce.
Helping put a cap on people herding into gold were two margin hikes on futures by CME (Chicago Mercantile Exchange) in August of 2011 of a whopping 55.6 percent from $6,075 to $9,450 per 100 ounce contract. Likewise, silver's historic rise was ended by an 84 percent rise in margin between April 26th and May 5, 2011.
We recently had a worldwide banking crisis and gold and silver have recently ramped up in price due to monetary stimulus, fear and uncertainty. I am a big fan of gold, but gold and deflation could mean a drop of 61.8 percent in its price peak of $1,912. It is still catastrophe insurance and will probably not drop the 90 percent some other assets may. Gold is money. Gold mining stocks after a deep pullback could soar again as they did in the 1930's depression. After all, they will be mining money.
What the world needs is private gold backed money or we are doomed to repeat this whole inflation inflicted infection mess again. Only gold is not someone else's debt. Only gold should back only private enterprise free market money. Don't trust any government sponsored and controlled fiat money. They always play financial repression to ruin the value of paper money and inflate the daylights out of it. They insidiously and fraudulently figure on paying pack their debts with money that has lost value. It's a hidden tax. Neo-Keynesian governments and their central banks are pure counterfeiters.