Antal E. Fekete

Mr. Fekete has an excellent article with an historical window on the depression on how bond markets were favoured over commodities.

"Friedman's analysis of the Great Depression couldn't be more wrong. In 1933 deflation was brought about not by the gold standard but, au contraire, by abolishing it. Here is what actually happened. Roosevelt has removed the only competition government bonds have, gold. The most conservative investors saw their gold confiscated and, willy-nilly, they were forced into the next most conservative instrument, Treasury bonds. Speculators became emboldened and bid bond prices sky high for risk free profits. Had gold been still available, bondholders would have severely punished the speculators for their daredevilry. They would have sold the overpriced bond and stayed invested in gold until bond prices came back to earth from outer space. Then they would have bought their bonds back at a profit."

We are seeing something very similar today, though I would add that the inflation in the system is going mostly into the bond price, and somewhat into commodities. But this article is as clear on the issue as you can get.

The salient detail about the depression for gold miners is that a gold mining investments made a terrible gamble, until the devaluation. Suddenly they all made so much sense as an investment. They could rely on a fixed gold price and low fixed costs. Their share prices were fixed at something called: 'par value.' They could all pay for their own development through cash flow and paid out their net and comprehensive earnings in dividends. They did so all the way through the depression, the war and well into the sixties.

What we have nowadays along with a modern day inflationary depression is an as-yet unrecognized monetary crisis.

http://www.safehaven.com/article/23738/mainstream-economists-monetary-insanity

You can read what the mines were like here:

http://www.geologyontario.mndmf.gov.on.ca/mndmfiles/pub/data/imaging/B105/B105.pdf

-F6