I've been meaning to post a thought or two on Viewpoint but other concerns have prevented me from doing so. However, I felt today was a special day of sorts so I determined to at least post this brief observation. It was just over three years ago that I posted A Gold Primer and at that time, gold was selling at about $400 per ounce. I suspect when, at the time, our readers saw that, they felt gold was way over-priced and certainly, there must be better investments. I suspect that when our readers see the price of gold today they may continue to believe that the price of gold is too high and...there are better investments. You see, gold just closed the trading session today at $805.00.
I thought it would be interesting to revisit some of those posts to see if they might still be relevant today and I was fascinated with the sense of timelessness I felt while reading A Gold Primer. The main threads of interest were gold, the dollar, and oil. This week oil hit record highs, the dollar hit record lows, and gold is closing in on its record high of $850 from 1980.
As I mentioned in A Gold Primer, the cost of gold hasn't really increased in the last three years, rather the purchasing power of the dollar has been diluted by the flood of "liquidity" from the Federal Reserve. Since the process of inflation tends to accelerate, as it is wont to do, it's becoming much easier to observe. In only three years, the Federal Reserve has caused the loss of a cool 50% of the dollar's purchasing power.
Ignore the representatives at the Fed who claim that inflation is "tame". Inflation is alive and well. Asia and the Middle East oil countries see it first hand. China holds $1 Trillion dollars in US government investments and in only three years they have realized a loss of $500 Billion. They can't feel very good about that. Oil is similar to gold. It's not that the price of oil has gone to record highs, the purchasing power of the dollar has gone to record lows so the oil-producers demand more dollars for a barrel of oil. That should'nt be a surprise.
The individual articles that make up A Gold Primer can easily be found using the Viewpoint Search facility but I have consolidated them into one document and shamelessly placed it in the Viewpoint Hall of Fame section.