I'll PM you with some good links on the economics of deflation, as it is really caused more by an event more substantial than a normal recession and job loss is probably more a result of than a cause in a deflationary spiral. The unemployment rate was near zero when the Great Depression started and only rose once it had started. Likewise, the Crash of '29 was likely also a consequence and not a cause.

Interestingly, a credit collapse following a period of excess is the most frequently identified cause of significant deflation. It was the likely cause of the Japanese deflation and our Great Depression (although there are other important factors that worsen the cycle). Sound familiar, a credit collapse following a period of excess?

The really important point is that deflation is good for gold, not just in theory, but in all three major deflationary periods in the United States.

Deflation Gold Silver Commodities

1814-1830 100% 89% -50%

1864-1897 40% 27% -65%

1929-1933 44% -5% -31%

Sources: Roy Jastram," The Golden Constant" and "Silver, the Restless Metal", Erste Group Research

Deflation was also good for gold stocks in the Great Depression, perhaps due to the improved gold prices while all other prices and commodities dropped:

Price and dividends of Homestake Mining and Dome Mines 1929-1936

Source: Ian Gordon, Longwave Group, 19 October 2009