I keep hearing about the price of gold going up. Yet, I don’t hear about mine collapses, surging demand in jewlery or electronic connectors and the like.
One cannot help but note gold rose 25% in the last year, did your 401k?, your house, your stock portfolio?
You are looking at this from the wrong direction. Perhaps the price of gold did not actually go up at all. After all gold is gold and we keep mining more of it.
I submit that in fact what changed is the amount of dollars required to buy that same old ounce of gold went up. That means the sellers wanted 25% more of those pieces of paper for their ounce of gold. Doesn’t that mean that in reality the value of your paper went down.?
What could possibly cause your paper or fiat (it is worth a dollar cause they said so by fiat) money to be worth that much less?. Perhaps it is because more and more people are rejecting the government as credible source of determining the value of fiat money and are seeking an alternative.
So, you must ask what has to happen for me to believe a dollar is worth a dollar again?
For me it is about the government behaving like it is worth something and treating it so. That means saving it, or at least being frugal with your spending decisions.
If you think a dollar is going to be worth less tomorrow than today, what do you do?. You spend it! Isn’t that what our governement is doing, they are spending it as fast as they can. So aren’t they in fact sending us a signal to buy gold or even silver?
Obama keeps challenging Tea Party candidates to specifically name a spending program they would like to cut. IT IS A TRICK QUESTION! This is because no matter what you name, you will alienate a block of voters he has bought with the program. The answer needs to be I want to cut everything 33%. After that I will reevaluate our priorities.
Be afraid, be very afraid.