to bugs - - there must be a better way!, page-2

Hi,

What lrjones stated does make perfect sense when one looks at the effects of inflation to the value of all goods and services. i.e everything should go up in value at approximately the prescribed rate of inflation.

However! When looking at gold in monetary terms things are different.

Inflation was traditionally described as the increase in monetary supply, now it's regarded as the increase in a basket of goods. When money was backed by gold (eg 1/35 of an oz was worth $1) the money supply was limited to the amount of gold in the vaults. However since the leash was slipped the growth of money has far far FAR outstripped what is now regarded as inflation.

If each dollar was now worth 1/35 of an oz the $ value of gold would be in the stratosphere, far, far higher than CPI inflation.

I don't expect that we are going back to a gold standard any time soon but I do expect the vast amount of funds out there to start looking for a new home. When that happens all 'things' will rise but some things (gold and silver) will most likely rise more than others, far more in fact as they are still regarded as 'wealth'.