Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Gold Won't Save You From Hyperinflation According To A New Study
TBI - American Enterprise Institute ^ | 1-24-2013 | James Pethokoukis

Posted on 01/24/2013 6:03:55 PM PST by blam

Gold Won't Save You From Hyperinflation According To A New Study

James Pethokoukis, American Enterprise Institute
January 24, 2013, 6:18 PM

A new NBER working paper, “The Golden Dilemma”, looks at the investment history — and possible investment future — of gold.

Many fascinating nuggets and charts in the research.

Especially interesting is its negative take on gold as a safe-haven hedge against hyperinflation (or even regular inflation, for that matter) or other crises:

We also parse the safe haven argument and come up empty-handed. We examine data on hyperinflations in both major and minor countries and find it is certainly possible for the purchasing power of gold to decline substantially during a highly inflationary period.

When the price of gold is high in one country it is probably high in other countries. Keynes pointed out “that the long run is a misleading guide to current affairs”. Even if gold is a “golden constant” in the long run, it does not have to be a “golden constant” in the short run. Conversely, current affairs are possibly a misleading guide to the long run.

The study offers three pieces of evidence:

1. Gold returns are surprisingly correlated with stock returns, suggesting gold may not be a reliable safe haven asset during periods of financial stress.The below chart shows shows the joint distribution of U.S. stock and gold returns.

Now look at Quadrant 3 where negative equity returns are matched with negative gold returns. “The simple safe haven test states that there should be very few observations in Quadrant 3. In fact, 17% of the monthly stock and gold return observations fall in Quadrant 3.”

(snip)

(Excerpt) Read more at businessinsider.com ...


TOPICS: News/Current Events
KEYWORDS: gold; hyperinflation; inflation

1 posted on 01/24/2013 6:04:06 PM PST by blam
[ Post Reply | Private Reply | View Replies]

To: blam

OK then, silver it is.

(and bullets and beans)


2 posted on 01/24/2013 6:07:13 PM PST by smoothsailing
[ Post Reply | Private Reply | To 1 | View Replies]

To: blam
What will save you from hyperinflation is weapons and ammo. And being able to create something--anything--that can be bartered.

Barter is a currency that is oblivious to inflation. Bartered goods are worth whatever they are worth...they are the currency.

3 posted on 01/24/2013 6:08:11 PM PST by RoosterRedux
[ Post Reply | Private Reply | To 1 | View Replies]

To: blam

Well, gold will always be worth something....fiat paper, not so much.


4 posted on 01/24/2013 6:12:42 PM PST by 45semi (A police state is always preceded by a nanny state...)
[ Post Reply | Private Reply | To 1 | View Replies]

To: blam

Gold and silver are not investments. They are hedges.


5 posted on 01/24/2013 6:13:22 PM PST by Lurker (Violence is rarely the answer. But when it is it is the only answer.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: RoosterRedux

And durable clothes and enough food to,get through the crisis.


6 posted on 01/24/2013 6:14:55 PM PST by Jonty30 (What Islam and secularism have in common is that they are both death cults.)
[ Post Reply | Private Reply | To 3 | View Replies]

To: blam

Look at be Y axis. Gold over CPI. The CPI is a politicized statistic, and it does not adequately assess the rise in staples such as food and energy.


7 posted on 01/24/2013 6:19:23 PM PST by grumpygresh (Democrats delenda est.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Jonty30
I have thousands of rounds of 22 LR...and an abundant supply of friendly squirrels (who I fed for five years). I can feed a small army. I also have fire and water.

Down to the basics...but ready for what is coming next.

If I only had enough toilet paper? Guess one can't have everything.;-)

8 posted on 01/24/2013 6:26:46 PM PST by RoosterRedux
[ Post Reply | Private Reply | To 6 | View Replies]

To: blam
someone was in a bit of a hurry and miss titled the top quadrants of their graph - the labels say '1nd Quadrant' and '2st Quadrant.'

What other errors have they committed in this? Are they hoping to slow the rush to gold, so there is more for them?

No matter what they say, when our dollar goes into the abyss, if you have a storehouse of gold that can be sold, someone will pay for it - with whatever currency (of greater value) is demanded.

9 posted on 01/24/2013 6:29:12 PM PST by Ron C.
[ Post Reply | Private Reply | To 1 | View Replies]

To: 45semi
Being physically fit is worth a huge amount...at any age. It can mean the difference between life and death...for many.

Get fit...start by walking...and then add some running into the mix. Lift some weights!

10 posted on 01/24/2013 6:30:12 PM PST by RoosterRedux
[ Post Reply | Private Reply | To 4 | View Replies]

To: RoosterRedux

Get yourself three sea shells. :)


11 posted on 01/24/2013 6:30:44 PM PST by Jonty30 (What Islam and secularism have in common is that they are both death cults.)
[ Post Reply | Private Reply | To 8 | View Replies]

To: blam

FMJ lead is worth so much more than gold or silver.


12 posted on 01/24/2013 6:32:11 PM PST by RoosterRedux
[ Post Reply | Private Reply | To 1 | View Replies]

To: blam

In a SHTF scenario these anti gold fools will be dancing like little circus dogs for a little piece of my gold.


13 posted on 01/24/2013 6:34:15 PM PST by central_va ( I won't be reconstructed and I do not give a damn.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Jonty30
Yow! Sounds scratchy.

But I'll try anything from a good source.;-)

14 posted on 01/24/2013 6:35:21 PM PST by RoosterRedux
[ Post Reply | Private Reply | To 11 | View Replies]

To: RoosterRedux
OMG! I didnt know you could see me thru the computer!
.
.
.
.
j/k!
15 posted on 01/24/2013 6:35:21 PM PST by 45semi (A police state is always preceded by a nanny state...)
[ Post Reply | Private Reply | To 10 | View Replies]

To: RoosterRedux

get a bidet or a bidet toilet seat. no toilet paper needed.


16 posted on 01/24/2013 6:37:16 PM PST by 1malumprohibitum
[ Post Reply | Private Reply | To 8 | View Replies]

To: 45semi
Hey, I have been goofing off for the last six months. Just started running again...and using the weights (and push ups and struggling pull-ups).

I hope the revolution is at least six month away.

I hope you can't see me thru the computer.;-)

That said, I just got a new Glock 26 and have a Windham Weaponry AR-15 on order.

I was a sorry Boy Scout...but this time I am going to "be prepared."

FUBO and God bless our Constitution! And God bless America!

17 posted on 01/24/2013 6:44:10 PM PST by RoosterRedux
[ Post Reply | Private Reply | To 15 | View Replies]

To: 1malumprohibitum

Heheh...or just down-stream a ways.


18 posted on 01/24/2013 6:45:26 PM PST by RoosterRedux
[ Post Reply | Private Reply | To 16 | View Replies]

To: 45semi

Ha, an ounce of Gold from 100 years ago is worth an ounce of Gold today.

A paper dollar from 100 years ago is worth at least 20 times what a current paper dollar is worth.

This country should dump the Federal Reserve and go back to a gold or commodity based standard, it would solve so many problems.


19 posted on 01/24/2013 7:02:16 PM PST by desertfreedom765
[ Post Reply | Private Reply | To 4 | View Replies]

To: blam
These types of studies are useless. Gold is simply meant to replace paper as the main asset in your holdings. Converting paper to gold allows one to "buy back in" after the Greenback is a distant memory.

Gold can't protect you from hyper inflation because it is meant to...when used properly. At some point, gold is replaced by whatever paper money replaces the US dollar. It's asset protection. Not inflation protection.

20 posted on 01/24/2013 7:10:40 PM PST by Bloody Sam Roberts (Here once the embattled farmers stood... And fired the shot heard round the world.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: blam

LOL. I’ve already saved hundreds of dollars investing in peanut butter when it was cheap.

I’m down to my last 20 jars, sorry I didn’t invest another hundred dollars.


21 posted on 01/24/2013 7:11:31 PM PST by I still care (I miss my friends, bagels, and the NYC skyline - but not the taxes. I love the South.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: desertfreedom765

A dollar from 100 years ago is worth only 3 or 4 cents today. The rest has been silently stolen through central bank (Fed) caused inflation that has benefitted big banks (that own the Federal Reserve) and their friends.


22 posted on 01/24/2013 7:13:51 PM PST by JustTheTruth
[ Post Reply | Private Reply | To 19 | View Replies]

To: RoosterRedux
Being physically fit is worth a huge amount...at any age. It can mean the difference between life and death...for many.

Spot on ... which is why I'm dieting like crazy these days (I'm on track to lose my 100th pound within the next 10 weeks).

23 posted on 01/24/2013 7:16:23 PM PST by The Duke
[ Post Reply | Private Reply | To 10 | View Replies]

To: RoosterRedux
Our Boy Scout troop was, as a whole, so sorry it was disbanded!
That was in the 70's about when Ray Steven's recorded 'The Streak'.....
A camporee later, the council decided we were a bad example!

http://www.youtube.com/watch?v=XtzoUu7w-YM
24 posted on 01/24/2013 7:45:28 PM PST by 45semi (A police state is always preceded by a nanny state...)
[ Post Reply | Private Reply | To 17 | View Replies]

To: blam

Usually when an article like this is published it’s a veiled signal to do just the opposite - in other words, it’s time for people to get gold.


25 posted on 01/24/2013 8:08:24 PM PST by BobL
[ Post Reply | Private Reply | To 1 | View Replies]

To: Jet Jaguar
A controversial theory explains why gold is no longer rising
26 posted on 01/24/2013 8:28:50 PM PST by blam
[ Post Reply | Private Reply | To 1 | View Replies]

To: jiggyboy; PA Engineer; blam; TigerLikesRooster; Cheap_Hessian; CJinVA; Jet Jaguar; ...

Goldbug ping.


27 posted on 01/24/2013 8:35:20 PM PST by Jet Jaguar
[ Post Reply | Private Reply | To 1 | View Replies]

To: blam

Maybe gold won’t save you, but God can. That’s where we should all have our faith.


28 posted on 01/24/2013 8:49:19 PM PST by Dogbert41
[ Post Reply | Private Reply | To 1 | View Replies]

To: blam

bflr


29 posted on 01/24/2013 9:15:20 PM PST by sauropod (I will not comply)
[ Post Reply | Private Reply | To 1 | View Replies]

To: 45semi
"Well, gold will always be worth something....fiat paper, not so much."

Tobacco, whiskey and feminine hygiene product will have the best bartering potential.

30 posted on 01/24/2013 11:18:09 PM PST by Buffalo Head (Illigitimi non carborundum)
[ Post Reply | Private Reply | To 4 | View Replies]

To: RoosterRedux

Which may be why lead sales (ammo) are so high. You can use it or trade it. And more easily exchanged than pounds of freeze dried food.


31 posted on 01/25/2013 5:32:01 AM PST by tbw2
[ Post Reply | Private Reply | To 3 | View Replies]

BOOKMARK


32 posted on 02/06/2013 10:56:51 AM PST by RebelTex (Soli Deo Gloria, "To God alone the glory")
[ Post Reply | Private Reply | To 1 | View Replies]

bookmark2


33 posted on 02/06/2013 11:34:35 AM PST by RebelTex (Soli Deo Gloria, "To God alone the glory")
[ Post Reply | Private Reply | To 32 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson