Eric Basmajian has much to say about the dominant deflationary forces of the past 40 years and how the recent monetary and fiscal policies are more likely to add to that problem by suppressing the velocity of money. Most of us, more or less, understand that argument. He then, surprisingly, includes gold in his recommended portfolio because of falling real interest rates in either deflation or inflation. All very difficult for average investors to comprehend. Your view would be appreciated.
Thank you for this question which may be of interest to subscribers. It’s a common misconception that gold only does well during bouts of inflation or deflation. Instead, it’s really all about negative real interest rates.
Real interest rates are nominal interest rates adjusted for inflation.Click HERE to subscribe to Fuller Treacy Money Back to top