According to Gordon in the Gold Report interview "The indication of the season change from autumn to winter is the bull stock market peak. We say that peak was effectively reached in 2000, not 2007, because NASDAQ obtained the real speculative peak in the market in March 2000. When that peak is reached, as it was in September 1929, it signals the onset of winter and the deflation/depression stage of the cycle. That whole winter period is really where debt is expunged from the economy and that process is extremely difficult for creditors and debtors alike. The last depression, for instance, following the 1929 stock market peak, brought the entire U.S. banking system to its knees. In fact, between 1929 and 1933 about 10,000 banks failed. That kind of process is bullish for gold because people move to gold as money of last resort."
Gordon points to the performance of gold and the few gold stocks around at the time of the 1929 crash and the Depression of the ‘30s as a guide to the likely performance of gold stocks under this scenario. At the time Homestake Mining was perhaps the key North American gold stock and after initial falls as everything crashed (a phenomenon seen again 2008), Homestake then soared in value while nearly everything else remained depressed overall, despite occasional upturns. The gold price was fixed at the time - and then revalued - so one cannot plot the performance of bullion on that occasion, but Gordon is among the more bullish predictors of the gold price suggesting it will rise to $4,000 - or perhaps higher....
The forecast of gold going higher during deflation is dependent upon a crucial assumption: the Roosevelt Administration's devaluation of the U.S. dollar was not an outside intervention but an endorsement of what market forces would have done had gold's price not been fixed. Homestake is the "talk stock" for this scenario. The stock stayed largely flat in 1930 and began rising in 1931, as a chart on this Webpage shows. Its big run was delayed a year; it didn't start rolling again until late 1932. Earning actually jumped 63.3% in 1931 from 1930; 1930's earnings were higher than those of 1928.
Supporter of the endorsement theory have Homestake's 1931 performance to point to, although plummeting costs had a lot to do with its earnings increase.