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Excerpt below from interview which references price of HM during the great
depression. I wanted to know Pretcher's logic for expecting the opposite
in the event of a deflation this time around.
chas
==========================================================
TAYLOR: Well, I have had some experience in analyzing gold shares in
all sorts of markets. Homestake Mining shared with me their daily share prices
dating all the way back to 1888 through 1998. During the depression, Homestake
Shares appreciated very greatly despite the fact that we experienced deflation
rather than inflation.
BATRA: Did the price of Homestake rise right from the beginning
or...
TAYLOR: No, actually Homestake's share price initially fell too from
$83.50 just before the crash to $65 about two weeks after the crash. So perhaps
the law of substitution did initially apply. But from November 15th and
thereafter, Homestake's shares rose dramatically, to a high of over $500 by
1936. And during 1932, when the DJIA had lost 90%, Homestake's shares had
reached $162. So investors who diversified their portfolios with a little
Homestake were able to travel through the Great Depression relatively unscathed,
while those who owned only the Dow Jones Industrials, were devastated.
BATRA: Ok, what I am saying is that timing is
important. Gold stocks are also going to do very well. <FONT
color=#990000>However, at this stage, my advice is to start preparing yourself
by buying gold bullion. Then begin buying gold shares the moment there is
a whiff of inflation or when the market begins to favor
them.
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