Was Your Grandpa so Unlucky to Sell Gold at only 270 Million/oz?

Tuesday, July 06, 2010

Will the time come again where we will cry for selling a troy ounce of gold for "only" 85 billion currency units?
Such things happened in the Weimar Republic in the 1920s when six weeks later the same ounce fetched 87 TRILLION Reichsmarks or more than 1,000 times of that at the climax of Germany's hyper inflation.
The table below shows the skyrocketing price of gold from 1919 to 1923.

TABLE: As American Federal Reserve Notes (FRN) were still backed by gold at that time, the gold price moved in tandem with the exchange rate. 1 FRN would cost 48 Reichsmarks in 1919, but 4.2 trillion in 1923.
Although economic discussion centers on deflation fears, the opposite may come true. Both the Federal Reserve and the European Central Bank (ECB) will continue to monetize the debt while Western governments will be unable to find a balance between consolidation of public finances and stimulating the economy.
DISCLOSURE: Long gold bullion.
Further reading:
Lessons of the Weimar Republic: the history of Weimar Germany illustrates how the social, political, and cultural destruction caused by hyperinflation ... An article from: The New American


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