Real Inflation – Another Reason to Own Gold
gold nugget
Deflation is another case of how to lie with statistics, a scheme that this government and the Fed has been particularly adept. One should understand that the inflation statistics include the cost of housing which last month was down .7 of 1%. For most of the home owners and renters whose out of pocket costs did not decrease, this had no effect. On the other hand, the cost of food, gas, medical, education and taxes were up. This represents real inflation to most Americans. If the cost of housing were left out of the calculation, inflation would be on the order of 5 to 6% a year.
Why Invest in GOLD
gold nugget
You and your family are going broke right now and you don’t even know it. When the gold standard was set in place the price of gold remained a constant $20.65 per ounce and fluctuated only one penny over the years 1833 to 1890. This means that for 57 years the US dollar was literally as good as gold. This is the way the US currency was designed to be, from the very beginning. Read more 
Gold Investing and The Central Banks
Because high unemployment and collapsed home prices foster deflation, the continued debasement of the US currency through balance-sheet leverage makes it unattractive as a reserve asset. But what alternatives are available? The euro is in danger, and Japan’s government is warning that its national debt at 227% of GDP threatens an eventual sovereign crisis for the yen. There’s talk of Russia buying Canadian loonies and Aussie dollars, but those are tiny markets.
So the central banks appear to be accumulating gold, slowly and steadily, buying on declines, and nudging the price up as gradually as they can in order to reduce their average cost. That might be why we observe so little volatility in the gold price. The prospective buyers, namely the central banks, are so much larger than the gold market that they avoid actions which might cause price spikes.
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Gold vs Fiat Currencies
Herkimer diamond
I like the analogy of fiat currencies as unsecured debt. I have often made the analogy that fiat currencies are like the stock of issuing nation. The US, in addition to having horrendous management and fundamentals, is also committing the cardinal sin of dilution, and seems PROUD of it. As such, I would never voluntarily by stock in the US. I would much rather invest in the currency of God and humanity (gold). Only God can print it, and it is backed by the industrial capacity of the Earth. Hard to beat, eh?
