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Going for gold

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Seeking Alpha has an opinion piece on how gold’s purchasing power has remained either constant during inflationary periods and surprisingly even increased during deflationary episodes:

To summarize, Jastram performed a study of gold’s performance over a 416-year period in England’s history (from 1560 to 1976). He found that historically, gold has acted like a storehouse of value throughout wars, plagues, and the like. However, what’s most striking is that gold actually INCREASED its purchasing power during periods of DE-flation.

Deflationary Periods in England

Purchasing Power of Gold

1658–1669

+42%

1813–1851

+70%

1873–1896

+82%

1920–1933

+251%

This last point is absolutely extraordinary when you consider that the thought pattern “gold rises in inflation and falls during deflation” is one of the most commonly believed investing mantras out there. Indeed, gold has undergone a seismic shift in the last year, largely due to inflationary concerns.

Written by defennder

June 25, 2009 at 3:29 PM

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