The strategy of buying gold redux.

I know why people buy gold.  I am not sure the people who are buying gold know why they are buying gold.  They think, I believe, that they are hedging against inflation. They are certainly not hedging against DEFLATION.  In fact, I can find a lot of articles which explain why gold is the only commodity which is absolutely without risk - and every one of those articles was written by someone who sells gold.

The price of gold may very well go over $1,300 an ounce.  In order for you to buy it, someone else has to sell it.  If it is the only safe investment, why are they selling it?  I'll tell you why.  They are making a large enough profit to allow them to continue to buy gold and sell it at a profit.  And that profit represents the hedge you think you are buying but which has already been skimmed.

Some things...almost ALL things rise in value in proportion to the rise in population.  As long as the global population continues to increase, and as long as global trading partners are able to maintain a parity between imports and exports, everything is fine.  Now scale that global view down to the perspective of an individual.  As long as you can make more than you spend, you can spend more.  But you have to continue to do that and so do your trading partners.  As soon as you take a portion of your trade out of the game, you have limited what your trading partners can trade for. 

If, instead of increasing trade, you take it out of circulation by putting it into equities or gold, you are merely financing someone you don't know to do the very same thing with your money that you were already doing with it.  Except now you no longer have any control over how they spend it - and you can be damn sure they don't give a shit about you as long as they have your money.

I can give examples; I can rattle on Ad infinitum about why you should spend all the money you make, or nearly so, in your community, as you earn it;  buy things which increase your capacity to trade, and hire people and create jobs, thus keeping your equity under your own control.  I will convince exactly no one.  But I will give two examples anyway. Any 'outside' investment you have depends completely upon an increasing demand. Period.

If a nuclear war or pandemic or even a natural disaster - like global warming -  happens to occur on a global scale in this day and age, the value of almost everything will plummet. The supply will instantly, and for a generation, exceed demand.  If you have a farm, you can still do well.  If you have a factory, it depends.  If your money is in equities, it's gone and your gold is worth $35 an ounce again. 

Stock markets are not for casual investors except, during good times, for people who are too lazy to manage their own money - and in bad times, a sinkhole into which you threw your grubstake.  Neither gold or silver or any other commodity that fluctuates in price and can be manipulated by unseen hands are good investments.  Only things which you can trade directly - the scale doesn't matter - are important.

So your investments...and even value of the cash you have in the bank...depends on a solid economy.  I don't believe one exists on earth. 

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