Quote from: jtimon on September 30, 2011, 09:51:50 AM

As hugolp pointed out, the increase in margin requirements is probably what had caused more damage. Remember the las silver sudden drop (April/may)? They did the same back then, precisely in the middle of a bull run.

The worse other moneys do, the better for gold.
It would also be extensively used in industry if it were as cheap as silver.

USD deflation won't hurt gold, because it is cash, not credit. At the bottom of the deflation you sell the gold and buy investments with yields on the cheap.

If NATO had not invaded Libya, gold would be even better and USD even worse. But if you suggest you're going to sell your oil for anything different than USD you get a bullet in your head. Gadaffi did it (he even proposed the golden dinar as a supra-national African currency) for gold. Saddam did it for EUR. That's what makes USD the world reserve and not the US economy, which is no longer the soundest in the world.

Anyway, QEn will stop it all. With each iteration they need to print much more to prevent deflation. And exponential functions don't last forever.
I don't plan to sell my silver until the USD has collapsed. And I'm completely certain that will happen sooner or later. The monetary value that the USD contains will move to other places, and precious metals will get a great part of that value.
On the other hand, if they allow deflation to happen, gold won't suffer a great loss, probably rises too.

Key points bolded. One note of disagreement - gold doesn't have many industrial uses at all. Even new uses won't be enough to have statistical significance. Gold remains primarily money.

Yes, the US is in the Middle East and hasn't left because of the USD as reserve currency issue. Wasn't it odd that the first act by the "rebels" in Libya was to set up a central bank? Who does that? As web developers, they'd upload a pretty mock-up image of a new site before starting to even examine what functional aspects are needed.

If major nations (especially those that produce what the US needs) kick the dollar habit, then the US has to provide another form of currency in exchange for critically-required oil. Cheap dollars for oil, or expensive real assets for oil - the US cannot afford the true price of oil, so the military is there to ensure that USD-based exchange is maintained. Any other reason is a cover.

Gold is not a promise, just as Bitcoin is not a promise. Both would rise in a deflation situation for the same reasons that the USD is rising against the Euro as the latter contracts.