Commercial Loans and Fun Blog

Economics:  Gold Prices Are Climbing Because DEFLATION is Coming

Posted by George Blackburne on Thu, Apr 23, 2020

Gold pricesGold prices are climbing due to DE-flation?  That makes no sense.  As you will see, it makes perfect sense.  Gold cannot default.

Gold is only a so-so hedge against inflation.  The reason why is because physical gold does not pay a dividend.  There are better hedges against inflation.  For example, real estate is a much better hedge against inflation because it produces net rental income, as well as appreciate in price.


Submit Your Loan to 750 Commercial   Lenders Using  It's Free!


Dog and Leaves Fail


Free Commercial Loan Placement Kit


But what about gold mining stocks during times of inflation?  They pay a dividend, don't they?  That's income.

Yes, they do; but gold mining stocks are investments in a company.  When companies compete, there are winners and losers.  You could have the right sector - gold mining stocks - and yet still take a loss, or at least lag the market, if you chose the wrong gold mining companies in which to invest.  Gold miners are not a pure play.

Okay, but what about a precious metals mutual fund or a precious metals index fund?  These might indeed be reasonable investments during a period of sustained inflation, but you would probably do much better in REIT's or commercial development companies.  Real estate offers a significantly higher cash flow.  


Free Commercial   Loan Software




Free List of 3,159 Commercial Lenders  Sort By Your Own Criteria


The bottom line is that gold is no better than a so-so investment during times of inflation.  

Where gold really shines is during times of DEFLATION.  What?  Huh?  "Why would anyone want to own gold when prices are falling?  I don't get it."  The reason why is because gold cannot default.

Most periods of deflation occur during financial crises, like the S&L Crisis, the Dot-Com Meltdown, the Great Recession, and now the Coronavirus Crisis.  A ton of companies fail during these financial crises, and these slumps seem to hit about once every twelve years or so.  


Nine-Hour Video Training Course  How to Broker Commercial Loans




Earn HUGE Loan Servicing Fees  Become a Hard Money Lender


Get Both Video Training   Programs For Just $849.


More than 1,000 savings and loan associations (S&L's) failed during the S&L Crisis.  Hundreds of highly-capitalized dot-coms, like and Webvan, failed during the Dot-Com Meltdown.  Hundreds of financial firms, like Lehman Brothers, and manufacturing companies, like General Motors, failed during the Great Recession.   While the factories and the name survived due to a government bailout, the shareholders in GM were essentially wiped out.

Before we are done, hundreds and hundreds of otherwise successful companies will unfortunately fail during this Coronavirus Crisis.  Already the Fed has had to buy up hundreds of billions of dollars worth of junk bonds to keep major U.S companies afloat.  Despite the help of the Fed, thousands of bondholders will lose most, if not all of their investments.

Much of the wealth in America is invested in bonds.  Bonds are the debt of another.  Most of the assets held by our banks are loans, which are the debts of another.  Mortgage funds, hedge funds, and REIT's have huge investments in mortgage loans, once again, the debts of another.


How To Market For Commercial Loans   Video Course 




List of Commercial Lenders  2,500 For Just $79.95


What happens when these borrowers simply cannot make their payments?  How valuable is a bond from a company that just got downgraded from investment grade to junk status because the company is on the verge of failure?  Imagine if you were a bondholder of Lehman Brothers in 2008.  You would have suffered a near-total loss.

In a deflationary economic collapse.  Gold is a supermodel.  Gold is one of the few financial assets that is not the debt of another.  Gold cannot default.

Therefore, whenever you see the price of gold rising, when the price of most other financial assets is falling, look for a dangerous financial storm cloud somewhere on the horizon.


Huge Referral Fees!  Free Insider's Guide




Commercial Mortgage Brokers You're Doing It All Wrong


That storm cloud is the deflationary tidal wave that is poised to crash on our shores in about four more weeks.  Please note that I am assuming that the President, the Fed, and Congress will continue to do everything possible to shore up the U.S. economy.

Unfortunately, this imminent financial calamity is not anything that American financial authorities can prevent.  You could build the most seaworthy and stable cruise ship on Earth, but it won't protect you from some huge, rogue tidal wave

This tidal wave is coming from China.  Chinese demand for raw materials and fine products will shrink so far that tens of thousands of companies worldwide will flounder, as their second largest market suddenly shrinks to just a fraction of its former size.


Banks and Credit Unions:  Get 200 Free SBA Loan Leads




Commercial Loan Size Calculator


If you have not read my article, A Huge Deflationary Tidal Wave is Coming Out of China, you simply must read it now.  You need to move to cash, if you don't want to lose half of your retirement savings.

In about four-and-a-half weeks, the new, hot story on Bloomberg, CNBC, and Fox Business will be about how far the demand for raw materials and goods by China has fallen.  By then it will be too late to save half of your savings.

The price of gold is rising.  Winter is coming.


Earn Up to 12% Interest


New call-to-action


Please Click After Viewing   Earn Up to 12% Interest Video


Commercial Mortgage Rates Today:

Here are today's commercial mortgage interest rates on permanent loans from banks, SBA 7a loans, CMBS permanent loans from conduits, and commercial construction loans.  

Be sure to bookmark our new Commercial Loan Resource Center, where you will always find the latest interest rates on commercial loans; a portal where you can apply to 750 different commercial lenders in just four minutes; four huge databanks of commercial real estate lenders; a Glossary of Commercial Loan Terms, including such advanced terms as defeasance, CTL Financing, this strange new Debt Yield Ratio (which is different from the Debt Service Coverage Ratio), mezzanine loans, preferred equity, and hundreds of other advanced terms; and a wonderful Frequently Asked Questions section, which is designed to train real estate investors and professionals in the advanced subject areas of commercial real estate finance ("CREF"). 

Did you bookmark it?


Today's Commercial Loan Rates  Four Databanks of Commercial Lenders


Puppy Cat Face


Subscribe To Blog


Hilarious video:  Archie Bunker gets a close shave.


Topics: Gold Cannot Default