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 ...
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.
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.
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).
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.
Goldbug ping.
Maybe gold won’t save you, but God can. That’s where we should all have our faith.
bflr
Tobacco, whiskey and feminine hygiene product will have the best bartering potential.
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.
BOOKMARK
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