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Time to Switch

November 10, 2010

Three years ago, I counseled people who asked to buy gold because our economy is built on paper and nothing of substance. I personally moved half of all my investments into gold futures, gold stocks and gold mutual funds in order to hedge against inflation, deflation or stupid moves by the Federal Reserve.

I had one investment broker laugh in my face. Another one tried to talk me out of it, almost as if he were trying to talk me off a ledge before I jumped. I did it anyway.

From this article in the New York Times this morning comes this announcement:

On Monday, the president of the World Bank, Robert B. Zoellick, surprised experts when he suggested the price of gold should be considered a financial yardstick, reversing 40 years of relying on paper currencies to store value in the international monetary system.

Deemed intrinsically valuable for thousands of years, gold has traditionally been a hedge against rising inflation and political or economic uncertainty.

But this time around, investors worry that the Fed’s move last week to pump $600 billion into the nation’s banking system, as well as a surge in borrowing around the world, will undermine paper currencies, making gold a refuge once again.

Over the last two months, the dollar has declined 6 percent against its principal peers, but gold has jumped 17 percent.

Don’t worry that you’re too late to hedge your investments. First, renowned investment broker, Peter Schiff, says that there are ten more years left in this gold run. He has been right for 2 decades on his commodities calls (being from the Austrian School of Economics, he is usually on target). Second, as I said yesterday, the best hedge against a falling dollar is to invest it in Missionary work where you will get treasures in heaven, where moths and rust will not destroy.

And neither can the Fed destroy what you give to the Lord.

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