you cannot have deflation and inflation at the same time... here is my understanding of these terms.

AMS - actual money supply (notes, coins, deposits etc..)

Deflation - decrease in the AMS. In a deflation period the value of money goes up.

Inflation - increase in AMS. In an inflation period the value of money goes down.

Depression - referes to a slow down of economic growth

We are headed (or are in) an inflationary depression.

Currently, there is an enormous disconnect between inflation and interest rates. Either interest rates must rise OR inflation must fall. I think it is just a matter of time before we see interest rates rise because clearly the US $ printing presses are not slowing down.

By definition... the value of the US $ must also drop in an inflationary period which is GOOD for gold. The only question is when these basic economic principles play out. How long can the Fed keep the lid on the pressure cooker?

BTW... you can't buy gold here in Canada either. Each dealer I talked to has at least a 4 month waiting list. Take a look at Kitco.com. Their inventory of coins and bars have been cut in half and their delivery time is 4 - 5 weeks last time I checked. One year ago, Kitco would have your order filled and delivered in 1 week.

I thought it was interesting that on a day of record breaking stock rallies around the world... gold held its own (after Friday's drop which seems to be attributed to a HUGE short position by some large US banks a.k.a manipulation, go figure!). On a normal day in normal times... gold would go down when stocks rally.

I think this was a suckers rally and a lot of institutions were selling the rally and moving at least part of their positions into gold. There is always someone on the other side of the trade... think about who they were today? When you consider some of the other facts discussed here on the board I think it becomes more clear.

BTW... those of us in Canada - will miss this rally. I expect the TSX to rally briefly in the morning and then flatten out. I expect most exchanges will see profit taking tomorrow.

Just as I'm about to post this... this headline rolls across my screen.

"US government plans to invest about $250 billion" The U.S. government plans to invest about $250 billion in possibly thousands of banks as part of a far-reaching effort to shore up the U.S. financial sector, and an announcement of the plans could come as soon as Tuesday, sources have told CNBC.

Where is this money coming from? Was it not last week they announced the $700 billion plan?

Hmmm.... and I thought we already had the solution this weekend or was it last week... or the week before?

Just my rambling thoughts.

GLTA

m.z.