[e-gold-list] Re: Curious new thing

[John Kyle]

Paul Davis wrote:
> ... All that's left would seem to be
> cash, and that leads to the question, "Why are investors now deciding that
> fiat money is a better safe haven than gold?"  And, futhermore, "Why did
> gold investors decide that the decline of the stock market was a signal to
> dump their gold -- and the resurgence of the stock market a signal to buy it
> back again?"  That seems totally counterintuitive to me!
> 
> No matter how I turn this over in my mind, I can't come up with a logical
> explanation for it, so I'm turning to this list to see what wisdom can be
> pulled out of the woodwork here.  I have a feeling that if we could
> understand this change, we could all profit nicely -- both in the stock and
> the gold markets.
> 
> Anybody?


One thing that might explain it is an overall crunch to repay debts. If
money is needed to pay off debts, then all markets of any kind could
trend down as people try to get the ready cash.
That, and as people pay off debts it tends to shrink the money supply,
which would exacerbate the situation. A shrinking money supply can lead
to asset deflation and a stronger fiat token, whether from private debts
being extinguished or FED actions.

So in that way, the rise and fall of all markets (stocks, gold, etc.)
could just be riding on the same ebb and flow of the fiat money tide.

No idea if anything like that is happening, but it could be one explanation.



- John








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