If that headline seems to suffer from an internal contradiction, then to that degree it is a good mental exercise in the service of understanding credit deflation.
Gold priced in dollars is falling in price. And so are many other commodities also falling in price. Now, some people do not realize gold is not only money, but a commodity as well, since it has a vast array of industrial applications, just as say copper, another commodity. (Copper also often serves as money, usually a penny).
(And to make things more intriguing, only metals that are antiviral, antibiotic, etc. become money. When the physicists discover new elements, like palladium, if it is also anti-viral, etc, it ends up being offered in coin form. Non-anti-viral do not. Odd, no?)
Two asset classes are inflating right now, equities and real estate. Most others are in deflation. The two that are inflating are bubbles being blown by means easily seen, FED policies.
When the bust (correction) comes, all prices will come tumbling down, denominated in dollars. So will gold. But gold will still buy what it did when you bought the gold, wherever along the price continuum more or less.
To round out the exercise, let's look at the reverse. Before inflation kicked in for 50 years, back in the sixties, a gallon of gas was about 30 cents, or three dimes, which were silver up until 1964 (because they stopped using silver, inflation kicked in, not the other way around.)
So three silver dimes got you a gallon of gas. Could you get a gallon of gas for 30 cents today? Yes, if they were three silver dimes:
Now, three 1963 silver dimes, 30 cents, which would get you a gallon of gas in the 1960s, today would still get you a gallon of gas, even premium (in fact, gas was richer back then, not this corn-syrup engine destroyer stuff today) at $3.54 a gallon.
So you see, real money, silver and gold, preserves buying power during inflation, as it will during deflation.
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Gold priced in dollars is falling in price. And so are many other commodities also falling in price. Now, some people do not realize gold is not only money, but a commodity as well, since it has a vast array of industrial applications, just as say copper, another commodity. (Copper also often serves as money, usually a penny).
(And to make things more intriguing, only metals that are antiviral, antibiotic, etc. become money. When the physicists discover new elements, like palladium, if it is also anti-viral, etc, it ends up being offered in coin form. Non-anti-viral do not. Odd, no?)
Two asset classes are inflating right now, equities and real estate. Most others are in deflation. The two that are inflating are bubbles being blown by means easily seen, FED policies.
When the bust (correction) comes, all prices will come tumbling down, denominated in dollars. So will gold. But gold will still buy what it did when you bought the gold, wherever along the price continuum more or less.
To round out the exercise, let's look at the reverse. Before inflation kicked in for 50 years, back in the sixties, a gallon of gas was about 30 cents, or three dimes, which were silver up until 1964 (because they stopped using silver, inflation kicked in, not the other way around.)
So three silver dimes got you a gallon of gas. Could you get a gallon of gas for 30 cents today? Yes, if they were three silver dimes:
Todays melt price on a dime: http://www.coinflation.com/coins/1946-1964-Silver-Roosevelt-Dime-Value.htmlLet's call each dime $1.18, or $3.54 for three of them.
$1.1791910479 is the total melt value for the 1946-1964 silver dime on April 17, 2015.
Now, three 1963 silver dimes, 30 cents, which would get you a gallon of gas in the 1960s, today would still get you a gallon of gas, even premium (in fact, gas was richer back then, not this corn-syrup engine destroyer stuff today) at $3.54 a gallon.
So you see, real money, silver and gold, preserves buying power during inflation, as it will during deflation.
So if you are holding gold or silver, don't worry as the price drops, it will be a great hedge. That will be the case for the next 50 years.
My criticism would be, though, why hedge? Better you start a business and become part of the solution, instead of living the life of the adventure of the bystander. Get in, get some...
This idea is not new...
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| Ashland Oregon https://www.lewrockwell.com/lrc-blog/gasoline-at-20-cents-a-gallon/ |
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