Hi Searle: I know we have had this discussion many times, and your experience and caution is well intentioned and very well worth considering.
I would not be interested in gold, as a metal, for any practical use, even jewelery (I don't wear any personally), except for its anti dollar, anti debt hedge.
Who knows, maybe the dollar will rise, but what about the growing debt which will simply grow quicker for every uptick of the dollar. If the dollar falls instead, commodities rise. It seems to me that the US must choose between a strong dollar and ever increasing trade deficit & debt or a weaker dollar and diminishing trade deficit but increased economic activity and employment.
You can't have it both ways. It would be nice to contemplate a rising currency, increased economic activity, increased global competitiveness and jobs all at the same time. Every country in the world is now complaining about the weak dollar. If it is advantageous for these currencies to have a weak national currency, would that idea not extend to the US dollar as well? What we have is the US trying to absorb the world's export production, partly because of its over-valuation And if the US decides it cannot continue, and wishes to encourage a weaker dollar, why wouldn't the rest of the world work on debasing their currencies? The picture becomes much darker when one considers that an orderly planned repositioning may not occur.
How does this relate to gold? It is just a standard against the falling dollar and world wide competitive currency devaluations.
I know you are entirely familiar with the above scenario, and for the life of me, I can't see any way out for the US. So, as a hedge, having some gold is probably a good idea.
But then again, maybe we will wake up tomorrow and everything will be rosy, gold will be $35./oz, and pigs will fly.
The above may be a bit simplistic, and I know there are many variables left out, but when I focus on the big picture, the solution will result in world wide pain. I think there are opportunities between now and then.
We have all collectively indebted out children to maintain our excessive standard of living today. Our children don't complain because they don't realize that they have been sold as
indentured slaves. They are, after all, just children. And their loving parents can't see the yoke being hitched to the burden they will have to bear. |
