tag:blogger.com,1999:blog-3758330678390419129.post5052419039267577713..comments2024-02-13T02:39:22.756-05:00Comments on EconomicPolicyJournal.com: The Dumbest Investment Observation of All TimeRobert Wenzelhttp://www.blogger.com/profile/14296920597416905488noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-3758330678390419129.post-91236848465818425062009-09-03T17:29:31.393-04:002009-09-03T17:29:31.393-04:00It is a great fallacy to think gold rises during a...It is a great fallacy to think gold rises during a deflationary period. This belief comes about because of the performance of gold during the Great Depression. But few realize the gold market was propped up by FDR at the instigation of Baruch and Keynes.<br /><br />The Japaneese example, during their deflation, is the more common response to gold during a deflation--it falls in value.<br /><br />Robert Wenzelhttps://www.blogger.com/profile/12653378186315529211noreply@blogger.comtag:blogger.com,1999:blog-3758330678390419129.post-30395321165533451852009-09-03T16:38:28.657-04:002009-09-03T16:38:28.657-04:00Gold is a general crisis hedge be it deflationary ...Gold is a general crisis hedge be it deflationary or (hyper)inflationary. It does not even need to be a direct monetary crisis. War or a general distrust in the government is sufficient - gold is an anonymous store of wealth that unlike paper money is not in direct control of the authorities. It is no hedge against moderate inflation, at least no more than other assets.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3758330678390419129.post-12772746094525318212009-09-03T16:29:51.425-04:002009-09-03T16:29:51.425-04:00Wenzel,
I didn't say anything about the GD or...Wenzel,<br /><br />I didn't say anything about the GD or the fixed price of gold back then. Regardless, I am open to understanding the situation better so I welcome your instruction.<br /><br />I argued that gold is not an inflation/deflation hedge but a confidence hedge. Regardless of whether inflation or deflation is occurring, gold is money. Gold's demand as money should rise during Taylor Conanthttps://www.blogger.com/profile/18270678440957992085noreply@blogger.comtag:blogger.com,1999:blog-3758330678390419129.post-86903903422973542512009-09-03T15:41:49.378-04:002009-09-03T15:41:49.378-04:00First, gold is not a deflation hedge. The only rea...First, gold is not a deflation hedge. The only reason gold went up during the depression was becasue FDR propped up the price at the urging of Keynes and Baruch--who both made fortunes owning gold stocks while giving FDR "prop up gold" advice.<br /><br />In part, it is a fiat standard versus gold battle. But if you generally stay out of gold during tight money periods (as I note in my Robert Wenzelhttps://www.blogger.com/profile/12653378186315529211noreply@blogger.comtag:blogger.com,1999:blog-3758330678390419129.post-6441622474117950632009-09-03T14:46:40.619-04:002009-09-03T14:46:40.619-04:00Wenzel,
Wouldn't that make gold a confidence-...Wenzel,<br /><br />Wouldn't that make gold a confidence-hedge, not an inflation/deflation-hedge?<br /><br />Gold will perform during periods of monetary inflation or deflation so long as there is severe doubt about the viability of the monetary system during that period. Otherwise, if people are confident about the monetary system throughout that period, gold should underperform.<br /><br />Taylor Conanthttps://www.blogger.com/profile/18270678440957992085noreply@blogger.comtag:blogger.com,1999:blog-3758330678390419129.post-64509690955854610702009-09-03T14:10:08.206-04:002009-09-03T14:10:08.206-04:00The inflation rate for the 1980-2000 period was ro...The inflation rate for the 1980-2000 period was roughly half the rate of the inflation rate during the 1970 to 1980 period.<br /><br />Gold climbed by more than 2,500% during the 1970 to 1980 period of great inflationary fears. <br /><br />What dropped the gold price after 1980 was the major slowdown in inflation as a result of Paul Volcker's actions in his early years at the Fed. If Volcker Robert Wenzelhttps://www.blogger.com/profile/12653378186315529211noreply@blogger.comtag:blogger.com,1999:blog-3758330678390419129.post-82489792629066430272009-09-03T13:09:48.988-04:002009-09-03T13:09:48.988-04:00From 1980 to 2000 gold collapsed in price.
There ...From 1980 to 2000 gold collapsed in price. <br />There was significant inflation between 1980 and 2000. <br />Clearly, Gold did not "hedge" well against inflation during this time.Anonymousnoreply@blogger.com