Everyone knows that gold's a hedge against inflation; but now the widespread concern is about deflation--especially given the 1% fall in the U.S. CPI, the largest in 61 years. Moreover, rather than diluting the currency by printing more, the U.S. Treasury's direct injections into the financial system is not inflationary. Observers believe the price of gold will be held in check for at least a few months. Nevertheless there's potential for a rapid rise as public confidence returns.
