Well then, you sure came up with a first class quote. I'll have to steal it. <g>
But I stand by my opinion that $100 current dollars is way too low for a historical average POG. Food, shelter, transportation and clothing are essential and consume the lions share of most peoples income. Clothing is unnaturally depressed since it is now mostly made in countries which use slave labor and/or have currencies crushed by the bloated dollar. When the days of slave labor and the super-dollar end, what will happen to the price of clothing? or electronics? Cars are expensive too. 30 years ago, a Japanese car cost my dad $2000. Five years later, his next one was $3600. I just bought one (better, but not by much) for $26000. Yet the Japanese are famous for their work ethic, efficiency and automation. And the yen has depreciated significantly in the last 10 years. So for cars, inflation overpowered all those deflationary pressures. But things we don't import much of, such as shelter and food, are the best inflation tells. The industrial revolution, the electical revolution, and the computer revolution kept some things cheap. E.g. wheat is not much more than its price 100 years ago in nominal dollars. But the nominal price of bread is over 100 times greater after 100 years of improvements and automation. That is the very essence of inflation to me, when it can overwhelm 100 years of technological improvements while the price of the raw materials merely eeked up. The dollar is simultaneously strong compared to other currencies, and yet a mere shadow of its former self inside the US.
I disagree with the idea that the average person has no use for gold. They most certainly do in the form of jewelry. I myself have given my wife a few nice pieces of gold jewelry.
I must agree with you about bullion though. Only people who fear the worst buy bullion. I own no bullion now, but I'm thinking of it because I'm beginning to believe the worst is true about the state of the dollar.
I started investing in gold stocks 6 years ago simply because I saw the charts and believe even bear markets like gold's eventually end. I was way early. It hurt bad being that early. But I stuck with it and have made up my losses and more. If this is a new gold bull market, we are only 1 year into it. If it isn't, it sure is a long bear market rally. And it is an odd bear market rally indeed that lets a little guy like me recoup all the losses of the prior 5 years and then some.
Arguing in favor of hedgers long term in today's market reminds me of those arguing in favor of long term tech investmest circa October 2000. All the signs of a sea change are there in the market right now. The only thing that argues in favor of hedgers is bygone years of mild relative outperformance.
Disclaimer: One must reevaluate one's positions every few weeks or so. What I write is what I truly believe today. But I would not hesitate to change my mind if the facts as I see them warrant it. |
