Deflation,Inflation,Stagflation and PM's?

KUCH

How would a deflation and stagflation environment effect the price of PM's? Inflation is a given- Price moves up. I need to do more research.

roadrunner

A minimal to moderate inflationary environment (1980's and 1990's) can lead to no real gains in PM's. So unless inflation is strong, gold might not rise at all. The real key is whether net interest rates are zero or less. When net rates go positive gold doesn't perform. Problem is, with no real accurate inflationary measuring stick out there, it's not easy to tell when real interest rates are.

Deflation - it could go either way in price. The key would be is it holding its value better than most everything else? In the first round of the deflationary deleveraging the sheeple flocked to fiat and hence gold lost value in comparison. It may or may not happen the same way if another deflationary crisis pops up.

Stagflation - probably only up similar to the 1970's. The definition of stagflation to me means rising prices in things that count (like PM's) and lowering prices in durable and non-key goods/services that consumers are passing on.

roadrunner

derryb

<< <i>How would a deflation and stagflation environment effect the price of PM's? Inflation is a given- Price moves up. I need to do more research. >>


Start your research here

gsa1fan

Economy good PM's down-

Economy bad & getting worse=what we are seeing now! JMO


BUY GOLD! Physical

jmski52

derryb, here's a link to Matt Tabbi's 3rd Rolling Stone piece on the sham financial regs being passed in congress that I read while reading your link

Matt Tabbi's pieces have been some of the best I've read on the garbage that is going on in congress and in wall street. Read all of them if you want a good understanding.

Interestingly, the only financial derivatives that weren't exempted from actual scrutiny and more regulation were silver and gold instruments, according to the article. You can bet your bottom dollar that the big banks don't want honest money or any sort of accountability.

There will be more financial bubble explosions and taxpayer bailouts. The big banks are still being allowed to do whatever the h8ll they want with any type of bogus financial derivative that they want, and Schumer, Geithner, Obama, Dodd, Frank et all are still running interference for them.

Our gal "I can't be bought - to the highest bidder" Blanche Lincoln proposed a decent reform just long enough to win her Arkansas democratic primary before subsequently withdrawing the bill from consideration. It's all for show and then it gets buried in committee so that people stop paying attention after these bills get passed. We are screwed.

Be sure to leave enough time for a good shower after reading this stuff.

derryb

Gold and deflation

jmski52

Good article, derryb. Real negative interest rates have always been acknowledged as a driver of higher gold prices, but the article and the chart put things into good perspective. It appears that if/when real interest rates reach -3%, that gold really takes off (which probably is the tipping point of confidence in the dollar). Until that time, silver has a field day as long as real interest rates stay between -2% and +2%. It makes good sense to me. Thanks.

FistFullOfDollars

Is there an easy way to chart Real Interest Rates? or does one have to manipulate several different sources of data to get it?

jmski52

Easy enough, FistFull. Take the 90-Day T-Bill rate minus the rate of inflation and that's it.

Now, you have to decide whose inflaton rate is most representative of reality, Shadow Stats or the Govmint's.

pmcollectour

<< <i>How would a deflation and stagflation environment effect the price of PM's? Inflation is a given- Price moves up. I need to do more research. >>



The big boys who control the price of gold can move it any way they want, under any economic situation. They can make any excuse they want to explain the upward or downward movement in price. Wall street/banks are a bunch of cr**ks, and as long as they have the paper money to do what they want with the price of physical gold, then you the consumer are at their mercy.

roadrunner

The big boys who control the price of gold can move it any way they want, under any economic situation. They can make any excuse they want to explain the upward or downward movement in price. Wall street/banks are a bunch of cr**ks, and as long as they have the paper money to do what they want with the price of physical gold, then you the consumer are at their mercy.

Only to an extent, and for a limited period of time. The London Gold Pool (1961-1968) operated under the same assumption and eventually ran out of ammo (ie physical gold) to keep their price supression game alive. We all know what happened to PM's after 1968. The same general game has been happening with forward gold sales, derivatives, etc. for the past 15 yrs. It's only a matter of time before the paper game falls apart. Eventually, gold investors will not be satisified with paper substitutes. On that day the game ends.

roadrunner

pmcollectour

<< <i>

Only to an extent, and for a limited period of time. The London Gold Pool (1961-1968) operated under the same assumption and eventually ran out of ammo (ie physical gold) to keep their price supression game alive. We all know what happened to PM's after 1968. The same general game has been happening with forward gold sales, derivatives, etc. for the past 15 yrs. It's only a matter of time before the paper game falls apart. Eventually, gold investors will not be satisified with paper substitutes. On that day the game ends.

roadrunner >>




Agreed. That is the end game. How we get there is another topic of discussion.

derryb

<< <i>

<< <i>Only to an extent, and for a limited period of time. The London Gold Pool (1961-1968) operated under the same assumption and eventually ran out of ammo (ie physical gold) to keep their price supression game alive. We all know what happened to PM's after 1968. The same general game has been happening with forward gold sales, derivatives, etc. for the past 15 yrs. It's only a matter of time before the paper game falls apart. Eventually, gold investors will not be satisified with paper substitutes. On that day the game ends.
roadrunner >>



Agreed. That is the end game. How we get there is another topic of discussion. >>


I'll discuss it, it's simple: When physical gold delivery cannot be met, we have reached "end game" with gold.

roadrunner

I believe there have already been a number of instances where delivery could not be met and someone came to the rescue of a bullion bank/trader whether it was a central bank, sovereign nation, IMF, LMBA, GLD or some other source of physical. When the bullion banks get caught short someone will ante up and help them pay up rather than risk a default. If they have to swap out the entire 1300 tons of gold in GLD that's what they'll do. When multiple instances of these events get sufficiently publicized in the mainstream media then it will be time. For now, mums the word and the CB's still have lots of tons to go around.

roadrunner