Saturday July 23, 2011

Inflation, Investing and Everything

Days like what we've been having recently remind me of why I started this blog in the first place. Looking back at the historical gold prices, in 2004 when I got seriously concerned and started blogging about inflation, gold prices were around the $400 level then.

And now, this week, gold prices have hit record highs above $1600 per troy ounce. That is a 4x increase from the $400 level. It equally reflects the rise in precious metals as it does the corresponding fall in the US dollar, the currency it is benchmarked against. It is a barometer that tells us that all is not right with our financial world. It tells us that, compared to a steady, unchanging store of value with a history of over 6,000 years, the so-called money we have in our wallets and in our bank accounts is decaying steadily. Plus, like most people I know, I don't think I have received a raise of 4 times my monthly salary in my day job in the past few years. If you have, good for you.

On the flip side of all this, with gold prices above $1600, silver prices above $40, and just as well oil prices again flirting with the $100 level, I am once again reminded of the central theme behind what I have been trying to communicate to you, the readers, of what has been coming down the road, and what is yet to come. Inflation. Inflation like nothing most of us have ever seen before.

Since 2004, I have been talking, and blogging, about the coming inflation, how what had seemed to be an unlikely but ultimately potent combination of the fiat money system, debt creation, resource depletion, peak oil, population growth, and climate change would combine to create an inflation monster that would bear down on us all. I tried to convey some measures of what we would need to do to combat inflation in our own manner. From investing in commodities ranging anywhere from gold and silver to oil and uranium, to food and water. From the base metals of iron and copper to the rare earth metals of lanthanum and neodymium and 15 other elements I'm not quite sure I know how to spell. On matters of asset allocation and how we should sub-divide our portfolios. On trying, or not trying to time the markets.

Yes, here we are. It would be prudent, now, I think, to prepare for the coming global hyperinflation. That is if the systems, and the structures that are currently in place continue to run as they have. And all indications point to the same conclusion. We still have not seen anything yet.

Inflation, Investing and Everything. Indeed.

(2011-07-23 01:04:28 SGT) [Musings] Permalink

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