The Secret of Oz

   I just saw an informative and inspiring documentary about monetary reform called 'The Secret of Oz'. I'm sure many people have seen it or heard of it before. The guy who made it, Bill Still, also made 'The Money Masters'. Both films are available on YouTube.

   This blog, of course, advocates investing in gold and silver (among other things), but Bill Still makes the argument that we should not have a gold standard - rather we should have our money created and issued by the government, not borrowed from international bankers. Instead of being comprised of debt, it would be backed by the good faith and credit of the state.

   I've become convinced he is right, and the litany of historical luminaries (Jefferson, Lincoln, Jackson) who have argued for this monetary system makes it extremely compelling.

Other Things to 'Invest' In

   I think it's unwise to simply buy gold and nothing else to weather any coming economic storm (let alone the one we're currently in). In addition to insane money printing, a problem in our world that won't go away is how we are going to feed so many people. This is a huge challenge not only because there are going to be more people, but because we are so heavily dependent on oil to produce and distribute food. If oil slowly increases in price due to the creeping scarcity of Peak Oil than food prices must increase correspondingly. Another very long-term issue is that humans have historically destroyed their farmland, as all traditional agriculture does, so the environment will be increasingly strained by the industrial farming methods we depend on to feed so many.

   In addition, as mentioned above, our food not only requires oil for the production side, but also the distribution side. Food is transported over long distances due to the industrial, centralized nature of modern agriculture. An inevitable shift our children will perhaps take for granted is that food production should be more local.

   It is because of these considerations that I would make the somewhat unusual 'investing' recommendation that you should learn how to grow a garden.

Why I'm Bearish

   I have actually been bearish for over 10 years. I was pessimistic even back in the 90's and the reason is simple :

   Industrialized economies have below replacement birthrates. In Japan this simply means there will be fewer Japanese years from now then there are today (and that there will be insufficient workers to pay for the huge number of old people). But in the West, the insane solution to below replacement birthrates has been to bring in unskilled people from poor 3rd world countries. So the West not only has a problem with birthrates, but the 'solution' that has been pursued ensures that Western countries will be burdened by new populations which are either a) not sufficiently productive to keep the economy expanding, or b) are actually net consumers of resources. An added twist to this is that diverse societies are fraught with ethnic conflict so social/political stability in the West will be largely destroyed by this immigration and the political and intellectual charlatans that make a living off it.

   You don't need a spreadsheet for this stuff.

The American Dream (Film)

I just saw a fantastic film on the Federal Reserve which I must share :

The Herd Moveth Goldwards ...

For those of us who have been advocating gold and silver for some time now, one of the 'turning points' we wait for is when the general public starts to get interested in precious metals. The trouble, currently, is with the Euro. And no doubt, many Europeans are wondering if they should 'save' with Euro bucks at all anymore. Well, America is next.
I feel like I'm at the gold party, more people have just entered the hall, the music is a bit louder, and the revelers are dancing with a bit more energy. I'm still drinking my drink and enjoying the spectacle, but if it was possible to have a nice recognizable juncture where the party goes into a new phase - this is it.

America Wakes Up to Gold

Some Basic Investment Advice from Dr. Faber

If you follow Marc Faber in the news you quickly notice that he has the habit of repeating himself. That's what someone with a good point tends to do. One of the overriding themes in his commentary is that governments (namely the American one) are printing like there's no tomorrow (maybe there isn't).

It's not a complex concept to understand. Even the caveman economist can explain it : Print lots of green paper + economy not grow = inflation.

2 + 2 = 4.

Lots of inflation = gold good.

Forget US Stocks-Buy Gold Every Month 'Forever': Marc Faber - CNBC

The 'Great Depression' and It's Consequences

Below is a lengthy but worthwhile article on the troubled economic times we live in and the myriad negative effects we can expect it to have on society.

One troubling thing is that men are affected more than women. This is a bad sign for me because revolutions are always started by men - especially young men. Unemployment (and its accompanying anger and disillusionment) is perfect fodder for uprisings. Not that I'm saying America couldn't use a little 'change we can believe in', it's just that such change is unlikely to be frictionless.

From an investment perspective, such conditions would favor precious metals (among other things), while anything CNBC pushes should be regarded with extreme suspicion!

How a New Jobless Era Will Transform America

Interview on Banks, Gold, Inflation and More

Christopher K. Potter (of Northern Border Capital Management Inc.) gives his thoughts on the gold world and where he thinks the price might go.

21st Century Alchemy

Jim Rogers Calls It

It's freaky how he can be so dead on. I have no idea why anyone listens to CNBC anymore - all they tell you is 'BOO-YEA'!

Global Equities are Vulnerable to Correction

Inflation

Here is a great article outlining the basics of inflation, how it works, who benefits, and who is responsible for it.

Another effect of inflation that the article didn't mention is that many people feel they have little choice but to invest in the stock market because they cannot depend on their savings to retain value over the years. This would benefit the Wall Street gang.

One thing I get from this article is that one cannot hope to invest intelligently unless one has a good understanding of how out society works, and that it is always in the interests of the powerful to lie to you. The standard condition of a society is to be run not for the general good but for the benefit of some elite group.

They want your money, they want your dependence and they want your continued ignorance. Let us all strive to leave them disappointed.

http://www.financialsense.com/editorials/saxena/2010/0115.html

Pig Slaughter

Dr. Faber lowers the boom, gloom and doom!

Here Swiss investor Marc Faber expresses concern that the PIIGS (Portugal, Ireland, Italy, Greece, Spain) might default and that the Euro could be hit hard by such an occurrence. He points out that before a country defaults they often print a lot of money and this results in hyperinflation.

He also mentions how one way for a government to distract attention from the destruction of the country's economy is to go to war. I guess there comes a time when even the Super Bowl halftime show cannot keep them all in awe. Unfortunately the United States has a penchant for invading certain countries these days. If I lived in the Middle East, I'd get ready to duck. If I lived in the PIIGS, I'd buy a little gold and silver.

The Winds of Change ...

... they are a blowin'.

Bill Bonner summarizes many of the problems facing the world economic system today in this foreboding article. These 'we don't know what's around the corner but it might have big pointy teeth' articles are getting to be routine. Not that folks don't need to hear them.

"A rising power acquires gold. A fading gives it up." Here he is referring to other countries (primarily the BRIC boys) buying gold and western countries selling. I think it's true of people as well. Someone who owns some gold or silver (or other things like land) has more power than someone with a bank account. If you own some tangible assets than you are not 100% dependent on the monetary system and you are somewhat protected from its convulsions.

A Warning

More on Food ...

Here is a lengthy article detailing the case for food shortages in the near future. This guy seems convinced that it will come in 2010. I don't want to get into the business of making concrete, time-specific predictions but I think the main thing to remember is that whether it comes this year, next year or 5 years from now, it is a real problem that would have a huge impact on our lives.

2010 Food Crisis for Dummies

Other Things to Store (Besides Gold)

Gold is a sensible part of any investment portfolio but I encourage people to look at other alternative investments that will work commensurate with gold in securing and safeguarding your life and wealth.

One of these is food. There are various reasons why it makes sense to store a reasonable supply of food in your home.

1. Your going to eat it anyways. It is simply practical to have 20 cans of tomato sauce if you make pizza often. Storing it means you don't have to go to the shop as often.

2. The price of food has consistently risen over time, and many think it will continue to rise. If you buy a can of beans in January and come August when you actually eat it, the price of beans has risen, you saved yourself money.

3. Buying opportunities. When you have to buy some canned corn for the dinner your planning, you have to buy at whatever price it's selling at in the store you go to. When you have corn stored up, you don't have to buy at random times; you can hold off until you see a really low price at some store that is trying to unload a bunch of extra stock (this happens with regularity). Storing foods allows you to take advantage of these opportunities.

4. Food shortages. History is replete with cases of food shortages and (just like with the story in the previous post) it is hubris to think that it can never happen to you, your community and your nation. Having food stored up means you have a cushion against any such 'disruption' in the food supply. Remember, food production and harvest is subject to all sorts of variables and changes in weather and can cause many people to go hungry.

"Food Crisis" Warning in India

A Short Story About Gold

Sometimes I think the dismissive attitude many people have towards gold is due to an arrogant attitude that bad things only happen to people in other countries, and that they are somehow invulnerable.

Asset Preservation : Why Americans Need Gold

Dr. Faber Discusses US Dollar

Marc Faber is back in the guest chair at Bloomberg Asia and talking about the economic state of affairs. I always find it interesting how much his comments on the future diverge from the slick BS of CNBC. He has made some pretty harsh comments on the US dollar in the past - such as saying there will be Zimbabwe-like inflation.

Here he speaks about the dollar and the future of the US. He points out that the US can be expected to continue to devalue the dollar in order to pay for all their imperial excursions in the mid-east. It is important to note that just about every empire has devalued their currency as they decline into insignificance. Simply chanting "USA, USA" at the sight of the star spangled banner, like the proverbial Pavlovian dog, could cause one to be fleeced - whether they are in dollars or the DOW.

Dr. Faber also talks about how the dollar shouldn't be seen as a store of value, but perhaps something like property or other tangible things could be used to save - a point that has been made on this humble blog and many other websites.

He also mentioned the concept of a currency 'based on discipline'. If only there were such a thing! Many have argued for a currency that is printed and issued by the government, rather than one issued by a cartel of private banks (The Fed). That would certainly be better than the current system, but I don't really trust government to exercise much discipline in any field, especially not in the greedy realm of money. I think things like precious metals and land should always be seen as stores of value above money.

Poor Mr. Buck

I and many other gold/silver folks believe there is a long term, concerted move away from the dollar - by the Chinese, the Russians and even regular investors that don't think it will be a good vehicle for saving. These two articles are just a couple of examples of the bearish outlook for the dollar.

The first is just a general prognostication by some investment folks at PIMCO and the second is about how Russia is looking to get away from exposure to the dollar, just like the Chinese. In this case, they are shorting the dollar in a kind of indirect way that would not be quite as obvious as if they were to alter their central bank reserves.

I hope more people begin to see the US dollar as only a medium of exchange for goods and services but not a way of saving. People ought to save with things that will retain their value, like precious metals (in sensible quantities) and land, which is real wealth.

Dollar to Extend Slide as Global Economy Recovers, Pimco Says

Russia Prepares to Short $18 Billion USD

Retirement

This is a link to a podcast I am fond of called The Survival Podcast, hosted by Jack Spirko. He does a great show on retirement here and makes some good points. Namely, that the advertisements you see on TV give you a picture of retirement that is often not realistic. Strolling down a beach with your wife and living life to the fullest.

Often people who are 65 or more have health problems and may have to deal with loneliness. The idea of waiting for most of your life to finally get out of the rat race seems stupid and Jack offers some suggestions on how you can go about planning for retirement (and rethinking what retirement is) so that you can achieve freedom and independence earlier.

I think a reexamination of what retirement is and what it should be for YOU is long overdue. With the problems we have with Social Security (a generation put its faith in that and it looks like Uncle Sam may have trouble paying out), I think people will become more and more receptive to this message.

Preparedness as a Retirement Plan

Work, Taxes and Death

I know this is not really connected with precious metals investing but I want to occasionally post articles and commentary that I think are important for an overall understanding of finances and the world we live in.

This article talks about something I myself think about : Should I try to earn as much money as possible? If I work extremely long hours in a 5 or 6 day week, miss time with my family and friends and neglect projects and interests that I enjoy, is it worth it? It's not just a mathematical calculation for me, it's a question of what is really important in life and what makes one truly happy and fulfilled.

I generally don't like the government and I don't like paying taxes to finance its often stupid and occasionally evil initiatives (I recently saw a commercial for some government organization called the National Fatherhood Institute or something - do we need government to tell us to spend time with our kids?). Maybe if we weren't taxed so much to pay for the National Fatherhood Institute we could spend more time being fathers!

But I digress. I think that one does not need a lot of junk and extravagant expenditures in order to be happy and if we did not chase after money and prestige we might have a better chance at achieving freedom and independence. We need to think outside the box not only when it comes to investing, but also to work, retirement and life.

When Work Doesn't Pay for the Middle Class

Currencies and Rumours of Currencies

There has been a lot of talk about a new currency for the world, something to act as an alternative to the dollar. The article I am linking to today is just one out of countless articles now swirling around the net where some official person or bureaucracy calls for a new currency.

The one thing I can say on all this is that we should not get ahead of ourselves. By that I mean : Yes the US dollar is and will continue to decline into insignificance, but that is a long process. The world has been using the greenback for oil and other things for quite some time now and you don't just switch over to something else in one fell swoop. Moreover, China and others have significant dollar holdings and though they would like to get out of them, that too cannot happen instantaneously.

I'm sure many gold bugs are pleased as punch to see gold now well over 1000$ but this process we have been predicting will happen over years.

UN calls for new reserve currency