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Hyperinflation, A Chinese Depression, Gold Mining Stocks and ETF’s

Listeners’ Questions, Peter’s Answers – March 1, 2012

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Ronny from New York City, NY
Has the hyperinflation been avoided, so far, in the U.S. because the banks are holding all the printed money as “excess reserves” at the Fed?

Ken from Westchester, IL
In the book, “America’s Great Depression,” Rothbard states that during the 20s the Fed, via inflation, subsidized foreign borrowing in order to encourage foreign purchases of America’s exports. Rothbard partially blames this particular policy for creating the inflation that ultimately resulted in the necessity of the Depression. This sounds awfully similar to what China is doing today by subsidizing America’s borrowing so we can continue to purchase Chinese exports. Essentially China is subsidizing their exports much like we did in the 20s. Are you at all worried about a Chinese depression when they eventually figure out these inflationary policies cannot be sustained indefinitely?

Tomas from Schaumburg, IL
If Ron Paul wins the presidential election in 2012, what happens to the precious metal prices during his time in office?

Matt from Fairport, NY
I wonder what your thoughts are on the causes for the underperformance of gold mining stocks relative to the price of gold and silver. It seems mining stocks, as a class, are more closely correlated to the S&P 500 price than gold price. Do you think it’s the advent of precious metal ETFs that have hurt mining stock performance, or are there other factors at play?

Piazza from Watervliet, NY
If I invest in gold mining stocks and ETF’s, would they stay strong if gold’s price shoots up but the stock market tanks?