Post by
jerryb1 on Jan 25, 2009 3:43pm
Eric Sprott - gold and deflation
Can Gold Prosper in Deflation ?
The CEO of Sprott Resource Corp ( SCP on Toronto ) backs the recent purchase of 40,000 ounces of gold with this analysis :
One of the beautiful things about gold is that it can show its relative value in both an inflationary and a deflationary environment. Some people argue that if they just keep printing, we’ll end up with some kind of hyperinflation anyway. However even in a deflationary environment, where people concern themselves with the banking system, lending and where they have assets, it is a very powerful force for people to own gold. We’ve seen that manifesting itself this year and it probably won’t take much more (particularly now that the interest rate is almost down to zero) for people see the wisdom of gold as an asset class.
It wasn’t too long ago that if you said people should have 5% gold in their portfolio, they thought you were a quack. Now people are certainly willing to go to 10% of their portfolio and they’re not seemingly crazy. In my portfolio I have 40% in gold and I think that’s the safest, and probably the most rewarding investment that I could have. If people come to that conclusion, even at 5%, the demand for gold would be outrageous and who knows where the price would go. I believe no matter what environment you’re in—deflation or inflation—people will run to gold. Gold is proving exactly what we all would have expected, that in almost any environment, it’s a go-to asset.
Other Canadian Juniors
1 ) Western Goldfields ( WGI ) now producing in Nevada.
The Company is ramping up production. It is two – thirds unhedged .
The executives are former Barrick management
this is from a longer article on the Millionaire's Investment Club on Facebook