Gold

Do you own any gold? It's a very hot investment now that the United States dollar, as printed by the Federal Reserve Bank, seems to be losing value on a daily basis.

I suggest you own gold. Furthermore, you ought to take physical possession of it. Put it in a safety deposit box, offshore if you can. ETF's, gold futures, and other claims on gold are subject to the risk that some counter party will fail to come up with the gold at some point.

Also, you need to recognize that gold is NOT an investment. Sure, there are some industrial uses for gold in some electronics and perhaps someone will discover more industrial uses which might justify gold as an investment of sorts, but I wouldn't count on it. There is no interest rate, reinvestment of capital, or dividend associated with gold, thus, gold is simply best thought of as a way to protect your wealth from being stolen by the government's central bank, the Federal Reserve Bank.

Gold is a bet against the Federal Reserve and its counterfeiting activities. What the Federal Reserve Bank does is mostly kept secret, so we don't know how much they have counterfeited in the recent past and we certainly can't know for certain how much they will counterfeit in the future. Eventually, we can find out how much money Bernanke and his gang have counterfeited, though they try very hard to hide which of their gangster pals they give the counterfeited money to. Think Goldman Saks, other Wall Street firms, banks, big corporations like GE, and other people and firms with pull. That's how it works in America these days.

Ignore, mostly, M2 and other government propaganda when trying to determine what the counterfeiting activities have been. Instead, look at True Money Supply Statistics, currently showing criminal counterfeiting at about 12% annualized.

The price of gold is affected by the market assumption of past and future counterfeiting activities. If it ever becomes evident that the Federal Reserve is counterfeiting at a rate significantly below that at which the market had assumed they would, then gold prices will fall to reflect a lower expectation of future counterfeiting. That's what happened back in the early 1980's when then Federal Reserve Chairman Voekler decreased the amount of counterfeiting.

I don't expect Federal Reserve Chairman Bernanke to decrease his counterfeiting. To do so, he would have to stop buying Treasury debt, which would allow Treasury yields to increase dramatically, but would strain government finances and cause a default.

Therefore, the value of the dollar will continue to fall and gold prices will continue to rise, other than for very short term trading reasons. The Federal Reserve can create as many dollars as it wants. Its political bosses wants lots and lots of dollars to pay off their cronies and to fund their re-election campaigns. On the other hand, no one can simply create gold.