Gold's Contradictions

[goodasgold]

Here is a review/commentary on Jastram's "Golden Constant":


http://seekingalpha.com/article/2292075 ... 58-present

The reviewers somewhat contradictory conclusions are:


"•Gold is a poor hedge against major inflations
•Gold appreciates in 'operational wealth' in major deflations
•Gold is an ineffective hedge against annual commodity price increases
•Gold does however maintain its purchasing power over long periods of time" [?!]

Do any of our resident gurus care to comment?

[Kshartle]

•Gold is a poor hedge against major inflations
•Gold appreciates in 'operational wealth' in major deflations
•Gold is an ineffective hedge against annual commodity price increases
•Gold does however maintain its purchasing power over long periods of time" [?!]

Do any of our resident gurus care to comment?

•Smart money would have bought ahead of the major price inflation. It would have bought when the money supply started expanding initially or it appeared the government was likely to inflate. Once the major inflation is well underway it's too late to keep pace since the gold price should already be bid up. Dumb money normally doesn't get a chance to save itself.
•Money becomes more valuable during deflation as paper promises are proving impossible to maintain and prices everywhere are falling. A drop in the paper price of gold should probably be less than other goods and services because the there is perceived safety in Gold as it doesn't default in and of itself. (ETFs notwithstanding)
•The gold supply is less dependant upon annual production than other commodities and this probably has more to do with the money supply fluctuations and anticipation of fluctuations in the paper money supply. Gold is bought for investment more than any other commodity. Others are bought primarily for consumption.
•I would think the purchasing power of gold is more likely to slowly rise over time as technology and trade lead to more goods and services available against a relatively static gold supply.

[goodasgold]

•Smart money would have bought ahead of the major price inflation. It would have bought when the money supply started expanding initially or it appeared the government was likely to inflate. Once the major inflation is well underway it's too late to keep pace since the gold price should already be bid up.

But is this strategy compatible with the PP's passive approach, which calls for adjusting assets only when a band is reached, such as 15/35?