Starting in 1929, the world is one of the most significant economic downturns. It comes from the United States, the big crisis began in late October with an unprecedented stock market collapse. How can a twenty-century economy disappear? The Great Depression is an example of declining markets and widespread poverty. However, one of the major exit on the market at the time: gold industry. Looking at the brief analysis of Homestake Mining, the gold industry has achieved extraordinary gains on share prices and dividend payments.
In the 1920s, the US experienced an extremely bullish stock market. However, gold stocks were generally not participants; instead they showed a downward trend. Gold companies have been recorded in a bearish market since the end of the 1880s. All this changes during the sunset of the Great Depression. During the global economic downturn gold stocks may prove to grow. Our central representation focuses on the Homestake Mining Society, one of the world's largest gold producers, at the beginning of the early twentieth century.
Homestake's main activity was in the heart of the United States and covered gold in the hills of South Dakota. Most of the gold sector historians agree that Homestake serves the fair representation of the gold mining industry at that time. It should be noted that the United States Government adopted the Gold Standard in 1900, which placed the entire country on the gold standard and created a fixed exchange rate with all other countries whose currency was fixed on gold. With fixed gold prices, gold stock fluctuated around levels of production, growth rate, cash expenditures and net asset value. Changes in the gold price could not influence the share price when the country entered the Great Depression.
The Homestake inventory sold in about $ 65 in 1929. By 1933, Homestake's average stock was $ 370. This means more than 450% profits over four years. The industrial average of Dow Jones fell by 89% in the peak of 1929 and in the three years at the bottom of 1932. Not only stock prices rose for Homestake, but dividends rose. In 1929 Homestake paid dividends of $ 7 per share. By 1935 the dividend rose to $ 56, the sixth year at an astonishing 800%. In these deflation times gold stocks not only maintained their value but also made a significant return on investors.
Deflation, the underrepresented crisis results in higher gold prices during the Great Depression. The reason why this deflation diluted the value of the US dollar, while gold prices were fixed by the government. While some would argue that this fixed gold price has ensured the rise of gold prices, this delusion can easily be offset by examining the positive effects of the gold stock in 1971 after removing the gold standard. Although the price of gold was no longer fixed, gold stocks normally. Interestingly, the Congress accepted the 1948 Gold Reserve Act and held the government's permanent ownership of all gold instruments. Most importantly, it has increased the price of gold for $ 35, and further devalued the dollar. This certainly contributed to the Homestake share price from 1934 to 1935.
Looking ahead, gold stocks are very promising in the current market as deflation is likely. If deflation enters the 2009 economic crisis, gold stocks will be set to record peaks. Gold prices would exceed the $ 1,000 margin and increase the gold company's shares. The size may be much greater than at a time of great crisis when Homestake achieved more than 100% annual profits. Gold can no longer be regarded as a value investor of value, but as an investment for an uncertain future.
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