Timely article to look at.

topstuf

https://www.zerohedge.com/commodities/bond-worries-and-gold

"..........At the time of the Lehman crisis the price of gold declined from $1,000 in March 2008 to $700 the following October, before rising to $1,920 three years later. But this time is likely to be different, because the rate of monetary inflation before the Lehman crisis varied little in the preceding few years, compared with subsequently. Following Lehman, all major central banks expanded money quantities very rapidly, so the next crisis comes against a background of already inflated currencies before a further acceleration in supply. Depending how the next credit crisis evolves, there may not be a dip in the gold price at all.

Instead, gold and other commodity prices, precious or otherwise, will be bought and sold against a background of rapidly debasing currencies. We know this, because renewed monetary expansion in the form of quantitative easing is taking place even before any crisis materialises. And when we hear luminaries such as Christine Lagarde at the ECB talking about QE to finance eco-friendly infrastructure developments directly, we know that central bankers and their governments now view monetary inflation much as it was in the Weimar Republic: an infinite source of funds."

?????

rip_f

At least the "financing of eco-friendly infrastructure" is a worthwhile and productive use of money. As opposed to the continuing invention of complex financial instruments designed to deceive and defraud, which produce no societal good.

derryb

@topstuf said:
we know that central bankers and their governments now view monetary inflation much as it was in the Weimar Republic: an infinite source of funds.

They call it MMT (Modern Money Theory). Smarter heads correctly call it the Magic Money Tree. And, like negative interest rates it will be proven "good in theory, bad in reality."

Dollars have been debased heavily since 2008, yet they remain highly sought after. I attribute this to "what are the currency alternatives?" While there may very well not be a dip in gold with the next major crisis, historically all major financial crisis, as with the 2008 crisis, initially result into a rush to cash with a flash sell of of assets, including precious metals. As the smoke settles and cooler heads prevail, the stronger assets (such as gold in 2009) reverse course for newer highs.

I suspect next time will be no different. While I continue to stack at a slow pace with the dips, I will not rush to precious metals immediately following the crash in equities. Actually I will not be rushing to the gold market at all, I will be making my move with silver. I will let PMs takes their initial hit (as in 2008) and then back up the bigger truck at temporarily lower prices.

ricko

Buy low, sell high... and have a strong stomach for the ride.... Cheers, RickO