The Unique Investment Characteristic Of Gold

May 29, 2011 12:48 pm

We spotted this today:

“Gold also has a unique investment property. Along with its characteristics as a precious metal, gold can do well in periods of inflation OR deflation.

When market conditions are inflationary, gold rises along with other commodities. This is why gold has been doing well for nearly 10 years now — conditions have been inflation-prone since the early 2000s.

But gold is unique because it can also shine in times of deflation — when general prices, including commodity prices, are falling. Why does that happen? Because of gold’s role as a “neutral currency.”

In times of deflation, the central banks of the world tend to panic and pump out more liquidity. It doesn’t do much good — the “pushing on a string” effect — but gold outperforms anyway as the one form of currency not being actively debased.”

Statistics Source: CountingPips

We have written about Gold Statistics including total gold stock in the world, and Gold Investment before. We had also spotted the twin properties of Gold.

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