- the end of gold - , page-11

Hey DUB,

Your articles continue to cheer me up.

Gee, I still think that you really need some gold exposure to cover scenarios other than inflation. For me, with out doubt, inflation is the number one reason for having gold. But the chance of fair dinkum financial chaos is another one and there are other reasons.

I have vacillated between deflation and inflation. But the reason that I thought that hyperinflation was the end point was because these 'new' politicians think that they can beat what is likely to occur (deflation). And they have the means to do so (the printing press), but not the finesse to get it right.

Above all, I have no doubt that the pollies will get it wrong (simply because the situation that we are faced with is so dire). So my problem was: will they get it wrong by splashing too much cash and implementing too many inflationary policies, or would they get it wrong because they simply would not recognise the enormity of the problems until it was too late.

Well, it looks like they are too slow and too late. Private business is out pacing the govt by miles with their hoarding of cash and cutting jobs. I think that things are crumbly too quickly for the politicians now. I have changed my view - sort of. I think that we are now a long, long way from hyper-inflation.

- pug

ps: Caterpillar getting rid of 20,000 jobs is a real portent of where Australia is heading. And it takes a lot longer to get jobs back then to get rid of them. Just on ABC news radio now thay are talking about Holden's Adelaide plant shutting down for periods of time. For mine, that is just the start, I can't see demand for Commodores picking up real soon. Toyota have cut world production by 20%.
Grim!

Oh, and last week's The Economist had inflation figures for last year; well, there weren't not inflation. This has gone beyond deleveraging, we are into fair dinkum deflation.

But perhaps I am overcome with emmotion. I reckon if I have a job by the end of the Feb, then I will be either a very lucky boy or I would've found a new job.