Many folks in the gold and silver community write to me, voicing their distaste in the economic and monetary policies of the Obama administration, and in particular, the “monetary easing” conducted by the US Federal Reserve. At surface, I understand—printing money (much like the printing of shares) is like watering down your milk in order to make a cup for Fat Albert, who sits at home all day and watches TV.
However, when you’re a beneficiary of this paper asset dilution process–why spend all your time anguishing over it?
Inflation and monetary expansion isn’t just a fiscal disciplinary problem—it’s a human problem. Wherever there are humans, there will be inflation. Period.
The inflation may occur within a paper money system, or the inflation will occur in the production of fake coconut-shell currency units, or gold-dipped tungsten bars. The act of becoming emotionally bothered by a human phenomenon such as inflation, is my opinion, is to be ignorant of history. It happens all the time, and it’s completely normal—get used to it.
The idea in protecting yourself, is to own physical assets which offer a multitude of advantages. A producing farm for example, may offer you income, and the agricultural products will rise in value at the rate of (and sometimes much higher than) the rate of inflation. Additionally, you can eat your farm production, which offers you security, saves you time, money, and tax dollars. Lastly—you can have fun in your farm. You can learn to milk cows, slaughter chickens, ride horses, and even roll around in the hay if you wish.
Owning a producing gold mine or oil well offers similar advantages (minus the “rolling around-in” option of course), in that you will have ownership of physical assets, and an income which rises with inflation. Owning assets in the ground held within an exploration company may also offer highly leveraged upside against inflation if the company is managed properly, however, there are a myriad of risks when considering publicly traded companies.
If you’re a fiscal conservative, gritting your teeth at another “4 more years”—I suggest relaxing the tension in your body, taking in a deep breathe, and allowing a pleasant smile to grace your face. Know that by building a fortress of hard assets, the Obama/Bernanke duo represent “good time Charlie’s”—with their hands deep in the cherry jar. They’re tossing out cherries one by one, and your job is to catch as many as you can during this time.
Consider this reelection as a victory for your “hard asset team”, and make plans to become sharper, wealthier, more skilled, and more adaptive than ever before.
Cheers to four more years.