TYHEE GOLD CORP

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Message: Re: Tyhee in a Depression. How Goes IT?

During THE Great Depression, gold had to be revalued to $35 per ounces from $20. This re-established dollar-gold parity. The banks failed (in part) because there were too many dollar claims relative to gold backing. So, in a deflationary environment, the gold stocks did well, because the price of all the inputs (fuel, labor, tires, steel, etc.) was falling while they had a guaranteed price of $35 per ounce. This is not what is happening today. All of these costs are going up, not down.

There are so many outstanding paper claims that gold would need to have a much higher value. Otherwise, it goes into hiding, which is what's happening right now.

However, the internet provides a free market for bullion dealers and for retail investors on places like eBay. This creates a premium for refined gold and silver in small increments. This creates an incentive for the holders of bullion to sell to a refiner or middle man who can milk that premium, rather than a central bank trying to batter the price or a silver user trying to get a better buy price closer to the rigged spot price.

Many of these mines can barely make money at these prices, which means we will be seeing less gold production. Remember, these gold production costs are not fixed - they are a moving target and will move higher. If the Crimex will not be a free market, so long as the internet is free, there will be a price squeeze upward on gold.

Both inflations and deflations cheat people of their money, but they do it in different ways. People will simply not trust banks if they default. All commerce ceases. People riot and tear down the political structure. Or, you cheat people through more gradual inflation. People still have jobs, mostly, but they are unhappy and have a declining standard of living. People sense things "aren't right" but don't really understand the nature of the problem. I would say we are still closer to the latter than the former.

If things start to get truly deflationary, they could always just add a zero to everyone's bank account. Call it a productivity premium.

More likely, we will see massive, massive government spending on projects of all kinds. Perhaps a stimulus check is coming. A bigger one.

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