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Sunday, September 25, 2011

Gold During A Crisis

Really, the basic steps are straightforward:
  • Economic/financial crisis leads to asset liquidation and dollar shortage
  • Dollar shortage leads to dollar appreciation and gold depreciation (in dollar terms)
  • One form of asset liquidation – forced gold selling – leads to gold depreciation (in all currencies)
  • Eventual monetary response creates surplus of dollars
  • Surplus of dollars causes dollar depreciation and gold appreciation

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