Buy Gold

If you want to profit from the current economic crisis or simply hedge against inflation, buying gold (and silver) is your best bet. Sure, if you like you can listen to the detractors who argue that the price of gold has skyrocketed, that at more than $1,200 an ounce it's a sucker's bet, etc. It's your money. But you will listen at your peril.

What many people don't seem to understand is that paper is largely worthless, while gold has a superior tendency to hold its value. Whether gold is $200 an ounce or $1,200, its price is merely an indication of the amount of paper currency it takes to purchase it. The price of everything increases when the government increases the money supply. So whether you're spending $1,200 on a new laptop or a one-ounce pure gold coin to sock away in a home vault, those paper bills are gone, traded for either a laptop or a gold coin. Which one do you suppose will last longer?

What I'm getting at is that it doesn't matter how much gold "costs" today, tomorrow, or next Friday. It's price is driven by worthless paper, but its value will remain -- unlike that of almost anything else you could otherwise purchase with that paper.

If you don't believe me, here's some food for thought: statistics from a recent newsletter published by Casey Research:

According to the Minneapolis Federal Reserve, since 1935, the dollar has lost 93.5% of its purchasing power. But take a look at how well gold has held up:

In 1935, when an ounce of gold was worth $35, you could buy:

• a top-quality tailored suit for $19.75 – or 0.56 ounces of gold
• a family car for $500 – or 14.3 ounces of gold
• a house for $7,150 – or 204.2 ounces of gold

Today, with gold at $1,060 an ounce:

• that same top-quality, tailored suit costs $600 – or 0.56 ounces of gold
• the family car now costs $15,000 – or 14.2 ounces of gold
• the house averages $181,100* – or 204.6 ounces of gold* 
    *average house price from 2008 / gold at 2008 price of $880/ounce

Or, don't buy gold. That'll leave more for me and the price won't rise quite as fast as if you were contributing to an increase in demand. Your call.

Comments

[Cal]

Holding onto your paper money will provide you with one advantage over gold: you will have something handy to dry your tears and mop up the blood, both of which will be flowing heavily when the shit hits the fan.

And as long as we're throwing out suggestions for hot commodities to invest in, I suggest you stock up on cold steel and hot lead.

[buy coins]

I agree with this. As for me, I have an old coin collection that I can sell anytime. I am also thinking of some ways on how to buy coins such as in online auctions to add to my collection.