Dmastercard, we are entring a world of deflation and not likely hyperinflation like everybody claims. Credit is being destroyed everywhere, while we speak. The Fed is trying to slow the process by bailing out banks with huge amounts of newly printed money. Banks that are left with worthless mortgages and real estate that has lost it's value. Helicopter Ben is not crazy as he sometimes seems, if he wouldn't do this we would see a catastrophy at a much larger scale and definitely sooner.

Real estate prices are the key to the whole situation. The US consumer is shopped out, which should've happpend at least a decade ago already. As real estate falls further in price, people have less money to spend, that means less money to buy products. Demand will be lower, prices will eventually be lower.

But don't think that gold only or always does well during inflationary times. If that was the case gold would've been a great investment during the 80's and 90's. Was there no inflation then? Gold does well during double digit inflationary times and most likely also during deflation.

Sounds strange? During deflationary times you will see many banks go bust. This is when the fear factor sets in and people will start to hoard old safe havens like gold and silver. It is hard to understand or grasp this because we never really were around in a deflationary time period ourselves.

Next to that I do want to note though that things are different now than during the last deflationary period in the 30's (when gold also moved up higher in value):

- Gold is no longer linked to paper money as it was back then

- People used gold and silver daily and thus were familiar with it(coins)

- Banks were allowed to go bankrupt before 1933, that is not the case now, the FDIC insures deposits up to $100.000,-

- People weren't alllowed to own gold after the 1932/1933 ban (so who knows what would've happened to demand after the ban if it was still allowed, this ofcourse strengthens my case that gold will go up during deflation)

So it is not completely certain to say what will happen now that this deflationary period is about to set in. All i know is that we are about to witness the most bankrupties for businesses and banks and the most geo-politically challenging environment in the years ahead of us.

Then next to that we can add that gold and silver mining production have past their peak. Diminishing supply is always good for price appreciation ofcourse . Then add that it will be more and more difficult for the manipulative powers (and believe me they are planning something new) to keep power structures the way they are now and my guess is that gold, silver and related shares will still do well in the future. Other commodities will do less well i think.

My guess is that physical bullion is best now, mining will become more and more interesting year after year because of diminishing production and increased demand. That is my opinion so:

Feel free to add or disagree! Love to learn some more!

GLTA