Larry -

You may have answered this before, so just point me to your previous answer if this question is redundant.

But it seems to me that if there is inflation coming, wouldn't that inflate the stock market as well as gold?

Wouldn't it be better to be in stocks rather than cash in a period of inflation?

I don't mean now, since the COT is short, but I mean in theory.

Thanks, Monty

P.S. Thanks for the email that my Cash Flow trial subscription is ending. I have really enjoyed your site and wish I had found it sooner. You have mature and unbiased views of trading the market. Your honesty in presenting them and educating us new guys is really appreciated.

Monty,

I don't think this subject has come up before, but it's a good one. My short answer would be that it depends on how much inflation you're talking about. A moderate amount of inflation is okay and can even help the stock market. But extreme inflation is not good. The stock market in the 70's and very early 80's (when we had very high inflation rates) was not a very good place to be. It wasn't as bad as bonds, but it wasn't very good. Did the stock market outperform cash during that period? It depends on what stocks you would have been in, but the indices didn't out perform cash. The big inflation rates started in 1973 and ended in about 1982 or 1983. The Dow closed above 1000 in January of 1973 and didn't exceed those highs until late 1982.

The main thing that a high rate of inflation helps is "stuff" - commodities, precious metals, real estate (land), collectables, fine art, etc. You generally want to be out of paper assets and into physical assets.

Larry

I was just wondering if you know where I could find charts in euros or yen. I thought it might be intersting to see if gold & silver are in bull markets if you own other currencies than the dollar.

Gary

Here is gold vs. the dollar...



And here is gold vs. the euro...



You could do the same thing with gold vs. yen, silver vs. euro or yen, etc.

Larry

Thanks, Larry. It is very sobering to see what the indexes did during that period of inflation.
Monty