THINKING ABOUT GOLD
There has been a lot of "sloganeering" on deflation versus inflation because most people don't understand inflation. I was shocked out of my wits by inflation in the 60's and 70's. So I learned what I could as a private investor.
Normal inflation is demand driven due largely to the growth of the consumer population, the co-existence of fiat currency in most countries which cannot control inflation and which come come to accept and even desire this inflation, and, lastly, a supply and demand long wave cycle. This "normal inflation" is long term cyclical and is what Kondratieff wrote about. This cycle was due to bottom by 2003-2004 with a probable earlier first bottom, so dollar cost averaging in equal monthly amounts from 1997-1999 made sense to me.
Hyperinflation also develops in a fiat currency system but not in a cyclical manner but because of severe financial stress that can be seen by some as probably leading to eventual official currency devaluation. Hyperinflation thus is due to the decision of "enough" investors with the foresight to flee the legal currency which is headed for devaluation. This is what gold, diamonds, and fine art respond to by jumping very high as the currency in question is shunned. (Gold only imperfectly protects against "normal inflation" and only over very long term periods.)
I did not invest in gold in the late 1990's for protection from hyperinflation, but only as a long term cyclical probability. But as (ill) luck would have it, we are seemingly on the road to significant devaluation of the US and perhaps most other major currencies.
A few analysts have described quite well this process we are in which leads to formal devaluation and quantum style hyperinflation. It's happening.
So when do we sell our gold? Should we take profits now of more than $1000 per ounce since the late 1990's? Personally I don't think so. The time to sell gold may be exactly when a sufficiently huge devaluation occurs which seems likely to "stick" and allow real growth to re-emerge. We aren't there yet, but the path is clear out to nearly the edge of a high cliff from which currency and debt will suddenly fall off "unexpectedly" one day. Gold is our guide for avoiding our taking our assets over the cliff.