What Kasriel said about gold is very mild and indirect. He says that it may begin to take on the quality of a currency of last resort if the ECU countries mismanage money and credit so as to make the euro uselsss as currency. I certainly agree with that. But so far, it hasn't happened.
I think I will stick with the simple perception: "Is the dollar overpriced? Will it decline? As measured by what?"
The measure is other, better-managed currencies.
Of course I hold gold and gold mining stocks, just as I have fire insurance and liability insurance. But I don't expect my house to burn down or to be sued for $2,000,000. But I recognize that it could happen. To buy more gold than I own would be like buying multiple insurance policies that I don't need.
Or worse: like buying multiple health insurance policies and hoping to get sick and get rich. In that case, the insurance companies would collaborate and refuse to pay more than the actual costs.
To deal with hypothetical circumstances, consider this: the United State government confiscated all gold money from its citizens in the 1930s and in the 1960s made it illegal for American citizens to own gold anywhere. Seems strange now, but true.
Bonds denominated in euros, and other currencies, pay interest and appreciate as the dollar declines. I feel quite comfortbale recommending BEGBX, the euro bond mutual fund. I would also recommend owning some gold, but no more than 20% of one's net worth, probably less, and in an easily tradeable form like the Central Fund of Canada. |
