The interchange here regarding inflation, deflation, bonds, gold, and mining stocks is a breath of fresh air for me. As you might expect I have some opinions.

1) I agree with dcan4 that the 30s is a much closer analogy to the present than the 70s. Those two eras are virtually mirror opposites IMO. I disagree with dcan4 that seniors are priced too richly. I think record-breaking earnings are ahead due to POG relative to cost of production.

2) I also agree with Baires that Norcini's gold/bond ratio chart is important. The fact that gold has outperformed bonds for a decade is clear; but don't forget that the chart would look somewhat similar if the gold/S&P chart were plotted instead. Gold is in a secular bull market, unlike any other major asset class like stocks, and real estate, and now bonds as well.

3) I agree with dcan4 that in the event of another 2008-like event, POG will drop. But I am of the opinion that it would recover quickly, not unlike post-2008.

4) I believe that in the event of another 2008-like dislocation, all miners will get whacked again, but not to the tune of the 70% drop in the HUI post-2008. Some investors will realize the producing miners are among the few companies who can make money in a contractionary environment. Circa the 1930s.

5) What I am not so certain of is whether another 2008 event is imminent. I think it is an eventual certainty, but maybe not for a year or so. In the lead up to such a dislocation I think miners will prosper. And I think they will do well afterward, not unlike Homestake did.

6) In this environment nonproducing juniors are undated call options at best, and lottery tickets at worst. That's why bullion and producers are an important compliment to a juniors portfolio.

Strike