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from Bill Bonner at The Daily Reckoning.
The trouble with being a contrarian is that you can never be quite contrarian enough.
We began having doubts about the ‘feds inflate…gold soars’ hypothesis last year. It was too easy…too obvious. And if it were that easy to inflate a nation’s currency, how come the Japanese couldn’t get the hang of it in the ’90s?
So, we moved towards a contrarian position – inflation, yes…but not for a while. And gold? Well, we are in it for the long run. In the short run, anything could happen.
To clarify our view on gold, The Daily Reckoning is not bearish on the metal. It is not bullish on the metal either. It is buggish. We are gold bugs. In the long run, gold will retain its value. Since that’s all we ask of it, we are always satisfied. Even if it is down in the short run – and it went through an 18-year downcycle from 1980 to 1998 – it will come back in the long run.
Gold is not a speculation for us; it is a means of saving money. As Richard Russell says, a man should count his wealth neither in dollars nor in euros; he should count it in ounces.
[snip]
But let us not get sidetracked by hyperinflation. It is nowhere in sight. Nor is its more civilized cousin – normal, polite inflation. The money supply in America – as measured by M2 – is contracting. The banks get money from the feds, but they don’t pass it along. The chain of reflation is broken – or at least temporarily stretched. Currently, it takes a long time for money to get from one end to the other. The cash tends to get waylaid –either by the bankers…or by consumers themselves. It stays in bank vaults…or in bank accounts. Money is not being multiplied by the speed by which it changes hands. Instead, it is divided by immobility. It sits. It shrinks. It waits for a real boom.
http://dailyreckoning.com/buggish-on-gold/
The trouble with being a contrarian is that you can never be quite contrarian enough.
We began having doubts about the ‘feds inflate…gold soars’ hypothesis last year. It was too easy…too obvious. And if it were that easy to inflate a nation’s currency, how come the Japanese couldn’t get the hang of it in the ’90s?
So, we moved towards a contrarian position – inflation, yes…but not for a while. And gold? Well, we are in it for the long run. In the short run, anything could happen.
To clarify our view on gold, The Daily Reckoning is not bearish on the metal. It is not bullish on the metal either. It is buggish. We are gold bugs. In the long run, gold will retain its value. Since that’s all we ask of it, we are always satisfied. Even if it is down in the short run – and it went through an 18-year downcycle from 1980 to 1998 – it will come back in the long run.
Gold is not a speculation for us; it is a means of saving money. As Richard Russell says, a man should count his wealth neither in dollars nor in euros; he should count it in ounces.
[snip]
But let us not get sidetracked by hyperinflation. It is nowhere in sight. Nor is its more civilized cousin – normal, polite inflation. The money supply in America – as measured by M2 – is contracting. The banks get money from the feds, but they don’t pass it along. The chain of reflation is broken – or at least temporarily stretched. Currently, it takes a long time for money to get from one end to the other. The cash tends to get waylaid –either by the bankers…or by consumers themselves. It stays in bank vaults…or in bank accounts. Money is not being multiplied by the speed by which it changes hands. Instead, it is divided by immobility. It sits. It shrinks. It waits for a real boom.
http://dailyreckoning.com/buggish-on-gold/
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