Replies to post #153247 on Zeev's Turnips Patch-No Politics (ZEEV)

[Elroy Jetson]

Elroy:: A stable money supply [by this I assume you mean a supply that neither increases nor decreases by much] by definition will not likely lead to deflation. Inflation is the creation of paper money, that a moment ago, did not exist; eventually it diminishes the purchasing power of the dollars prior to the "inflating." Deflation is the dimunition of paper money. Inflation is not rising prices; rising prices are the result of inflation. The more inflation, the more the desire for gold; because gold cannot be counterfeited.

A stable money supply will lead to stable prices, abscent growth in productivity.

During periods of growth in productivity goods become cheaper, which by definition is deflation. This is both normal and beneficial.

[schloss_1]

lee kramer-

The exact nature of inflation and deflation could be discussed forever. I think that if there is enough production for competition to curb prices, then inflation will not be a problem.

As far as gold, I have a personal history with gold that is both lengthy and serendipitous. I was first introduced to gold and silver in the early 1970s because I sold advertising for the newspaper in hartford and one of my accounts was a coin dealer. This man and his wife ran a small shop and it was through him that I began my study of precious metals.

In those days we used to buy bags of silver and go to bed praying that they would rise just 15% so we could cash out with a few bucks. We also used to invest in 2 1/2, 5, 10 and 20 gold pieces, along with Krugerrands, which were the only bullion coins available back then.

I was one of the few people I know who had both gold and silver in the run-up at the end of that decade and I sold and made a nice profit. However, I learned a valuable lesson, which is this: One invests in gold only to wind up with more paper money at some later date. Gold was useless as a vehicle for trade in the 20th century and morso in the 21st. I hope to God we never get to the point where the only people eating food today will the ones with Krugerrands or Maple Leafs!

One last lesson: Gold has always had a huge following of fanatics, who incessantly use phrases like "fiat money, cabal, confiscate, & c." I do not read their articles because I read them all back in the 70s. When I invest in gold shares today, I do so the same way that I invest in PD for copper. NEM, for example, produces a product that is used 75% for jewelry and the rest for dental work and hoarding. If I can see that they will be able to sell more of their product at higher prices because the worldwide price of gold is rising, then I buy the shares. If I doubt about whether the price of gold will hold in a certain area, I move to the sidelines, hoping to buy it cheaper later.

Hope this clarifies my stance on the gold shares issue.

schloss