<<<Gold ... simply too tiny an amount of it for everyone to use as an anti-inflation hedge>>
... uh, yes, like the single parachute on board the doomed 20-passenger aeroplane ;0)>
As usual, when I really dig into first principles of things and really try to pin reality down to basics, I come up in a pool of my own ignorance and bewilderment at which time I go with my intuition [which is a fancy word for WAG].
I have no idea how many actual US$ exist. I suppose that's the M1 figure. Or is it M2 or M3? How many US$ have actually been given birth by Uncle Al and predecessors? How many actual serial numbers and what is the value of all those serial numbers, many of which I suppose are pixelated with only electronic serial numbers to identify them?
I have some in a filing cabinet and some on loan from me to ASBBank Limited, which they have loaned to somebody else.
If these are all to be converted to confetti over, say, the next 10 years, what would happen to the price of other assets denominated in the US$? I would empty out my filing cabinet and go shopping for something. As the US$ is passed from person to person, prices would rise as nobody wants to be the one holding the dollar when it finally becomes of no value and is replaced by a new currency.
I wonder how much prices would rise. I should really figure that out since I am taking a position on the matter [albeit a relatively small bet compared with my total nausages]. I have no idea how much prices would rise. At a guess, I suppose there would be something like a 10x price rise. Which would put gold at $4000, Californian ordinary houses at $3 million, copper, iron, pork belly futures, land, ships, aircraft, intellectual property and all global assets combined up by an order of magnitude.
Those prices need to be discounted by the possibility that the US$ will not in fact turn to zero but will actually regain lost ground and become the world's currency, all others being subsumed by the PNAC and the Federal Reserve.
I have got it as one of life's imponderables, but one in which I don't wish to take much of a position. I'll stick mostly with other non-fiat assets.
People in the aircraft don't have to have a gold parachute. They can buy one made of land, iron, silver, buildings, clothes, cars, pipelines, intellectual property, rice, furniture, facelifts, electronic equipment, machine tools, aircraft, steel, platinum, boats, ships, trucks, railways, satellites, oil wells, coal fields, nuclear power reactors, gas fields, insulation manufacturing, Coca Cola, KFC, IBM and a myriad of other things.
The only reason to go for gold, silver, platinum, land and other limited properties is if one expects an economic implosion along with the gradual whittling away of the US$. Since the US$ has been whittling away for a century, as per the graph conveniently provided here a week or two ago, we can reasonably expect more of the same. A nice, cushy, soft landing. As has been happening for a long, long time.
No need for options and a zero-sum trading game to make money from QCOM. At $50 billion market capitalisation, that's only $10 per person to get the money back [or $20 to allow for net present value calculations, or $40 to allow for even longer NPV]. So, $100 per human would be not only payback, but profit. Or, $200 for half the humans. Or $400 for quarter of them. Okay, so I agree it's not far off fully-valued or maybe even fully-valued, given the current state of US$ values versus other assets.
But holding US$ instead of Q in a time of rapid inflation and devaluation would mean $200 from QCOM could be as easy as collecting a farthing or halfpenny these days from everyone. 50 years ago, a halfpenny was real money. Now, the smallest currency unit we have in circulation is a "silver" 5c, which used to be sixpence, or 12 halfpennies.
QCOM share prices and incomes from ASIC sales will inflate along with everything else.
Stuff like that. There's no need to play a zero-sum game, less brokerage costs, to make money on QCOM.
Mqurice |
