Fund Manager David Einhorn commented briefly in an article titled ‘Buying Gold and Miners, Reluctantly’ (read here) on how gold will behave in inflationary and deflationary times.  Saying that he never thought his fund, Greenlight Capital, would ever buy gold or gold stocks, he then says:  “Our instinct is that gold will do good either way; deflation will lead to further steps to debase the currency, while inflation speaks for itself. We have bought gold, calls on gold, an index of gold mining stocks (GDX) and calls on higher long-term U.S. interest rates.”

I studied ‘Gold as an Investment’ from 20,000 feet last fall, and published an 11 post series on this Blog.  I found that gold commentators focus on gold prices rising in an inflation, and generally do not focus on ‘purchasing power’ – the thing I think they ought to focused on.  I concluded like Einhorn, and only time will tell if I am right, that gold will serve investors better in deflationary times than will fiat currencies.  You can find my reasoning here.

The views expressed in this Post are those of the author. They are offered to readers for information and general guidance only. They are neither intended to, nor should be taken to, constitute economic or investment advice. No check of data underlying articles or comments referenced herein has been made, and no responsibility is taken for them.  See Legal Disclaimer.

Email this Post to a Friend.

Trackback URI | Comments RSS