GOLD 0.51% $1,391.7 gold futures

There are many who debate whether deflation is good or bad for...

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    There are many who debate whether deflation is good or bad for gold. On it's own in theory it should not have an impact on gold. That is, should there be an out pour of money from American assets say for instance into Europe to join a European rally. The investors left holding American assets would lose money. Theoretically, this act itself would have little effect on gold. However, when one couples deflation with the raising of interest rates then the deflationary force effects consumer spending at a grass roots level. Currently, debt is at 65% of GDP. There can be no doubting that the act of raising interest rates would cause a contraction of GDP. It is just simple ratio distribution or fractions that when GDP gets smaller the percentage of debt to GDP gets larger. Ultimately, this calls into question the US's ability to repay their debts, attracting the bears to the dollar.
 
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