1. Anonymous February 24, 2009 @ 4:40 pm

    As Francisco D’Aconia said, check your assumptions.

    • England, inflationary periods
    — the purchasing power of gold:
    1623–1658: –34%, 1675–1695:
    –21%, 1702–1723: –22%, 1752–
    1776: –21%, 1793–1813: –27%,
    1897–1920: –67%, 1933–1975:
    • England, deflationary periods
    — the purchasing power of gold:
    1658–1669: +42%, 1813–1851:
    +70%, 1873–1896: +82%, 1920–
    1933: +251%

  2. Franklin February 24, 2009 @ 5:44 pm

    You are talking about the purchasing power of gold. Not the price. Right now we saw the price of gold going up, and I was referring to that.
    The purchasing power of gold during deflationary periods only tells us that gold loses value slower than other goods and, above all, labor.

    Following your numbers, if the purchasing power of gold is up 42% during a deflationary period it means that the price of gold went down, or remained stable.

  3. Dale March 3, 2009 @ 5:45 pm

    Gold is just a hedge against hyperinflation which many people believe is coming. I know tons of people that are stocking up

  4. MPE March 4, 2009 @ 11:53 am


    Words right out of my mouth.

  5. Anonymous July 1, 2009 @ 1:45 pm

    “I know tons of people that are stocking up” – aren’t these the words bubbles are born from?

  6. Raju March 29, 2010 @ 8:31 pm

    Oh! gold.I have lot of fancy about gold. I like your post.

Gold retesting 1,000 and then…

Thoughts Comments (6)

Gold Key, weighing one kilogram is used to acc...
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Really exciting (yawn) move in gold. I mentioned a couple of weeks ago that gold was breaking up and was going to re-test the previous high.

I just guess there are plenty of articles “explaining” why gold is going up. I have no patience or interest in reading them as the only reason gold is going up is because it’s price is increasing (that’s an attempt at a joke).

There is no particular reason for gold traders not to have moved gold above 1,000 on this move.There are plenty of reasons for a double top. I would expect “profit taking” selling at this point. If the selling moves the price below 700, the next stop will be 600 to complete a head and shoulders pattern that will tell gold traders that the bubble is over taking the price back to around 400 within 4 years.

The explainers should explain why gold went up during a deflationary period (Oh, I know, because the expectation of inflation in the future due to current deficits, right? was I close?). If that’s the explanation, it contradicts the explanation for gold going up before.

This move shows once again that gold is not related in any way to inflation, that it is just a shiny metal which is fun to trade, and that has no inherent value as money, or as anything else (unless you are an electronics manufacturer, that’s it).

Franklin @ February 22, 2009

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