As many of you who read my articles know, I call things like I see them. If this means going against the norm sometimes, so be it. What I see from your typical gold bulls is the same inflation mantra and the shouts to “buy gold because of all the inflation,” with inflation defined as an increase in the money supply. While I agree with the long term aspect to why there will be more inflation, there is still much unwinding to do of the credit created during the expansion era. This unwinding is actually deflationary as one has to ask themselves, why are treasuries acting so strong?
Gold, silver and treasuries have been strong because of this “flight to safety,” not as much from inflation although, as I said, there is reason to fear inflation. Yes, there are higher prices in some areas (food and energy), but treasuries haven’t grown weaker over the past few years, but stronger. If inflation is so rampant, then why are treasuries so strong? If inflation is not as rampant, then why has the price of gold moved so much higher? To understand where I am coming from on this, it would be beneficial if you first read Dollar vs. Gold In A Dual Inflation-Deflation Economy.
This article is continued at Seeking Alpha, a financial site I contribute to: http://seekingalpha.com/article/258722-if-inflation-is-so-rampant-why-are-treasuries-and-gold-both-so-strong#comment-1533346
Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
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