ask a zimbabwe merchant whose assets are in zimbabwe currency how it worked out for him. i bet he wishes he had gold.
Skeeter.. I think he would have been happy to have Dollars or Euros.
i'm kind of like you in that i don't "get" gold intuitively*. my problem is that i do "get" the idea the dollar is going to zero much faster than before and i'm looking for plan B outside of trusting the dollar or any other weakened fiat currency.
If the Dollar goes to zero, you're going to have more concerns than the POG vs USD to deal with.
One of the "canaries" of inflation is savings. We haven't had it in recent years. Now, all of a sudden, we have everyone afraid to borrow more money. Not only that, they are saving ALREADY at 5% rates for fear of the future. Those banks (primarily the small ones) which got TARP money are sitting on it paying interest to the Treasury, but can't get any QUALIFIED borrowers to take it.
When people hunker down, don't purchase discretionary items, stop going to restaurants (except Mickey D's), decide to fix their old car rather than purchase a new one, and engage in "staycations", I just have a hard time making the argument for gold.
Maybe I'm just crazy, and I know how you all feel. I just don't understand WHY you feel that way, except that you have some apocalyptic streak running down your backs... ;0) What we're seeing is money being destroyed via debt default faster than the Treasury can print it. We're also seeing monetary velocity continuing to decrease. The destruction of money doesn't result in inflation, it results in DEFLATION, at least until the BOTTOM of assets prices are reached.
When I see monetary destruction and debt defaults abating, THEN I CAN SEE a case for inflationary hedges.
Any other scenario than that just kinda reeks of emotional "end of the world" overtures.
Hawk |
