I’ve read articles saying that Gold is about to spike through the roof. I’ve also read that we are on the verge of a currency collapse. I’ve also read that we are on the verge of a massive deflation. I’ve also read that cataclysmic Armageddon is about to happen. I’ve also read that stability will be brought to the markets. I’ve also read that Gold is not a good investment right now because it’s peaked.
So which is it? Does everyone have a different take? Do the trillions of dollars in stimulus mean noting, or everything, or “some” thing?Does all this depend on who you read/subscribe to?
First thing’s first: it depends on what definition of “inflation” is being used.
A general rise in the price level (mainstream definition)
An increase in the money supply (neo-classical definition)
I try to always use the latter, although I can’t speak for everyone. If you’re reading articles elsewhere, it’s most likely the former. Governments the world over right now are printing money at a Zimbabwean pace, so make of that what you will; I call it inflation.
If gold spikes through the roof, it’s because currency is collapsing, which typically involves (hyper)inflation following the neo-classical definition of inflation.
We are on the verge of, or experiencing deflation in the amount of credit available, and since all money in the world is currently credit/fiat money, to speak of deflation in this sense is not entirely inaccurate.
As for the viability of gold, well, suffice to say it’s a good hedge (earning a long-term 0% return adjusted for increases in MS). On the other hand, if the economy collapses entirely, a stockpile of bullion in your basement will be of less use to you than a stockpile of Levi’s jeans, canned food, cartons of cigarettes, bottles of whiskey, etc. Eventually, gold as a medium of exchange should reassert its dominance, but in the short- to medium-run, you’d be better served to keep on hand a good quantity of durable/semi-durable goods that have non-monetary use value.