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Gold as a universal inflation-deflation hedge

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November 09, 2010 – Comments (0)

It's a great time to prepare for inflation. Or for deflation. Doesn't matter, really. Because the outcome is the same. You buy gold to prepare for inflation. What about deflation? That's too is OK, gold does well in deflationary times.  Or so the goldbug's party line goes.

The opposites often converge in dialectics, but in the commodity markets too much dialectics can sometimes lead to disappointing returns.

Excepting a very brief deflationary episode in 2008-9, we in fact have only one data point to estimate gold's performance as a deflationary hedge: the Great Depression. Here is hope the data point of Apr 3, 1933 will instill hope in every goldbug's heart. 

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