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Alasdair Macleod: Deflation must be embraced

Section: Daily Dispatches

By Alasdair Macleod, Jersey, Channel Islands
Thursday, November 23, 2017

There are two problems with understanding deflation: it is ill-defined, and it has a bad name. This article puts deflation into its proper context. This is an important topic for advocates of gold as money, who will be aware that sound money, in theory, leads to lower prices over time and is often criticixed as an objective, because it is not an inflationary stimulation.

The simplest definition for deflation is that it is when the quantity of money contracts. This can come about in one or more of three ways. The central bank may reduce the quantity of base money, commercial banks may reduce the amount of bank credit, or foreigners, in possession of your currency from an imbalance of trade, sell it to the central bank.

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Gold Standard Ventures Infill Drilling Could Increase
Size and Grade of Pinion Oxide Gold Deposit in Carlin Trend

Company Announcement
Tuesday, November 21, 2017

VANCOUVER, British Columbia -- Gold Standard Ventures Corp. (TSX: GSV; NYSE:GSV) today announced results from 11 of 19 completed reverse-circulation and core holes at the Pinion oxide gold deposit on its ully owned and controlled Railroad Project in Nevada's Carlin Trend.

These drill holes are a portion of Gold Standard’s 2017 US$15.5 million program, which includes up to 48,800 meters of reverse-circulation and core drilling in 117 holes.

The Pinion drilling was designed to 1) upgrade and potentially add to resources by reducing drill spacing in critical portions of the deposit and 2) expand drill coverage near the margins of the current pit design for possible resource additions.

All 11 drill holes intersected oxidized and altered multi-lithic dissolution collapse breccia, the principal Pinion host rock, and seven of the holes returned significant, higher-grade intercepts greater than 1 gram of gold per tonne. Results include 56.4 meters of 1.68 gram per tonne in PIN17-02, 42.7 meters of 1.23 gram per tonne in PIN17-10, 15.2 meters of 1.66 gram per tonne in PIN17-04, and 32 meters of 0.89 grams per tonne in PIN17-05. In most instances the new results either confirm or outperform the expectations in the current resource estimate block model. ...

... For the remainder of the announcement:

The link with prices is far from mechanical, because the most important determinant of the general price level is the relative appetite for holding money, and not changes of the quantity in issue, as the monetarists would have it. All else being equal, a deflation of the money quantity can be offset by a decline in the public’s desire for cash and deposits in hand, so that the general level of prices is unaffected.

Alternatively, a fall in the general price level can occur without a corresponding monetary deflation. This happens if a general preference for holding money increases. A further consideration is a population might collectively decide, based on increased uncertainty about the future perhaps, to hoard cash instead of leaving their savings in a bank. The resulting mismatch between production on the one side, and consumption (both immediate and deferred) on the other, caused by changes in physical cash withheld from circulation, can have a noticeable effect on prices. ...

... For the remainder of the commentary:

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