Gold’s Post-Bubble Performance In The UK, US And Japan.

I still think that we will see deflation in the US and other parts of the world but in the end i think the report from Dresdner is spot on....... Needless to say that i call myself a goldbug and have "little" faith in any fiat currency...... It´s probably helpful ( often overlooked ) to note that Gold in reaching new highs in almost every other world currency besides the $ ( see Goldchart in €, British Pound, Swiss Franc, Yen etc ) . Would be nice to see a goldchart vs the Icelandic Krona or the Forint......

Ich bin nach wie vor der Meinung das es in naher Zukunft eine Deflation in weiten Teilen der Welt geben wird. Im Endeffekt wird es aber zu dem im Dresdner Report geschilderten Ergebnis kommen...... Wohl überflüssig zu erwähnen das ich ein Goldbug bin und mein Misstrauen hinsichtlich Währungen nicht nur auf den $ ( obwohl dort extrem ausgeprägt ...) beschränkt ist.....Werde zumindest nicht mehr ganz so offen belächelt wie noch vor einigen Jahren..... PS: Bei der Qualität der heimischen Wirtschaftspresse ist es wenig überraschend das oftmals lediglich der Goldpreis in $ behandelt wird. Dabei wird wie nicht anders zu erwarten in schöner Regelmäßigkeit ausser Acht gelassen das Gold in den anderen Leitwährungen momentan nahe historischen Hochs notiert ( siehe Goldchart in €, British Pound, Swiss Franc, Yen etc ) . Habe leider keinen Goldchart vs islänsiche Krone oder ungarischen Forint auftreiben können......

Thanks again to Wall Street Follies

FT Alphaville

One way to combat the mess of a bubble popping is, as Dresdner puts it,“reducing confidence in the value of money” — i.e. creating inflation.

What the rise in the US and UK gold price tells us is that those two countries (assuming gold is in fact acting as an inflationary hedge here) are not shying away from their inflationary task.

They are, unlike Japan, really going for it.

Back to Dresdner:

Japan had no Japanese precedent to study. The last experience of deflation was buried so far in the past that anyone predicting a recurrence could be safely dismissed as a crank. The BoJ was dominated by inflation vigilantes who bitterly rued inflating the bubble and were determined at all costs to avoid a repeat. They remained far behind the curve and allowed growth in the monetary base to collapse. The contrast with the United States could not be clearer. Ben Bernanke is an authority on the historical experiences of deflation, and in his famous speech of 2002 laid out his playbook for all to see.

And to conclude:

No policy response to a post-bubble bust can ever be free of unintended consequences. The speed and scale of the current economic fiasco as good as ensures that the mistakes will be serious. The key question for investors is whether over the long haul their bias will be deflationary (too little, too late) or inflationary (too much, too fast). Given the different pressures that policymakers are working under, we find it hard to believe that the world as a whole will choose the Japanese path.

UPDATE: Prefect timing.....

If you still have some doubts make sure you read the latest (desperate) Fed effort via Naked Capitalism Fed Ponders Issuing Debt to Finance Its Mushrooming Balance Sheet

Sollte immer noch leichte Zweifel bestehen dem empfehle ich einen Blick auf den neuesten (verzweifelten) Versuch der Fed zu werfen Fed Ponders Issuing Debt to Finance Its Mushrooming Balance Sheet Via Naked Capitalism