Weekend Edition

On Wednesday, before Congress, Federal Reserve Chairman Ben Bernanke warned, "The federal budget appears to be on an unsustainable path." Then, he said we can't cut spending yet because the economy's still fragile.  

Bernanke seems to be perplexed by the economy, particularly the gold price. He said inflation-indexed bonds (mostly a government contrivance) and commodity prices forecast low or no inflation. Meanwhile, he says, "Gold is out there doing something different from the rest of the commodity group." At least he admitted he doesn't "fully understand the movements in the gold price."

 

Bernanke continued, "I do think there's a great deal of uncertainty and anxiety in financial markets right now. And some people believe that holding gold will be a hedge against the fact that they view many other investments as being risky and hard to predict at this point."

 

Helicopter Ben uttered nary a word about his own culpability. He simply muses quietly before the microphone, like a sedated serial killer describing the dismemberment of his victims with kitchen utensils. Or perhaps he's more like a child who is scared because he doesn't understand why the sky is so big. He just tells you what he sees and wonders aloud what it all means...

 

Bernanke and his colleague, former professor Obama, strike me as deeply superficial men possessing an encyclopedic ignorance of the myriad horrendous unintended consequences of their actions. They think they can fix anything, but they break everything they touch.

 

That, Professor H. Ben Bernanke, is why gold prices are up. That's why gold is "doing something different" from the assets you find it so difficult to inflate back to life.

 

And that's why, after I finish writing this, I'll be making my monthly sojourn over to my coin dealer to buy some more Krugerrands.

 

The folks at the Pragmatic Capitalist blog listened to Bernanke's testimony, looked into the future, and predicted we'll soon see "an irrational bubble in gold."

 

I wonder, though... Is it irrational to believe paper money will revert to its intrinsic value (whatever the paper is worth, maybe a penny or two)? It might not be imminent, but you have to believe it's inevitable, don't you?

 

The worst part of paper money systems is they force everyone to become a speculator. You have no choice. Low-risk assets, like bank deposits or Treasury bills, aren't going to pay you anything. Meanwhile, inflation will destroy your purchasing power if you can't make at least 10% a year.

 

Whether you like it or not, to survive with your wealth intact over the next decade you're going to have to take smart risks when a crisis presents good opportunities. That's what we did in late 2008 and early 2009 by selling puts on high-quality stocks at the market bottom. We averaged about 50% returns on the puts we sold, typically holding each position for only two or three months. In addition to owning high-quality equities (like Dan's World Dominators), you should keep some of your portfolio hedged via short-selling obsolete or highly indebted firms likely to fail. And finally, you're going to have to suffer the volatility of owning precious metals (gold, silver).

 

Now... you might be saying, "I can't do all that stuff..." But, really, you don't have a choice. You'll have to do these things over the next decade, if only to preserve your wealth.

 

If you'd like to know the absolute best ways to invest in gold, we recommend you pick up a copy of our latest book... The Stansberry & Associates Gold Investor's Bible. No, we don't usually publish books. But we think S&A collectively knows more about gold investing (be it bullion, ETFs, coins, or certificates) than anyone else on the planet. And we think gold is one of the most important investments you can make right now. That's why we're giving this book away for free.

 

We've been covering gold since 2003, when it was trading around $300 an ounce. Since then, we've become friends with the best gold analysts, gold dealers, and gold traders in the country. And they've all shared their best secrets with us. We wanted to pass those secrets along to you.

 

In our new gold book, we show you how to collect dividends of 20% a year on your gold and how to save hundreds, even thousands of dollars when buying gold bullion. We also explain how to avoid paying tax on your ETF sales and how to legally take as much gold as you want out of the country. In short, we tell you every trick and gold investing strategy we've discovered over the past decade. To learn how you can receive your free copy of The Stansberry & Associates Gold Investor's Bible (you just pay $5 shipping and handling), click here.

 

Regards,

 

S&A Investment Research

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