Yes, I think stockstradr is right about the panic aspect. Deflationary pressure is a real price killer. if you look at gold in most recessions, it goes down with everything else. And esmith as well about the valuation aspect. But Bob Hoye, the walking economic history encyclopedia, points out that after a massive credit bubble has burst like in 1873 and 1929, gold does very well in real terms. Well, it’s a little hard to tell in 1933 because FDR raised the price from $21 to $35 over night. And in a depression, no less!!
But he claims that central banks will become so crazy with currency creation in an effort to “solve” the problem that people will lose faith in the currencies and go back to gold as in a defacto standard of the market.
No one can predict the future, but I do see central bankers going nuts and I do see massive deflation as well. So, if gold gets in the $700’s I’ll probably increase my position. But in the meantime, the US$ is treating me ok. But it wasnt for 4 years! I guess timing really is everything.
