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Sunday, April 10, 2011

Gold Shines Bright

It amazes me that people still walk up to me and ask why I'm such a big "fan" of gold and other hard assets. I try to explain to them that it's not about being a fan. After all, gold can't do very much as far as possessions go...You can't live in it. You can't drive it. You can't cruise around the world in it.
But it does do one thing which just about nothing else can: It can protect you in times when your government can't.
F*** the Fed!
Right now, the world's central banks are printing money like there is no tomorrow. And as each desperate act to calm the markets fails, the value of everyone's purchasing power is being squeezed to nothing.
Most investors are running to physical gold...
You see, folks, every dollar you own today is nothing but a promise from the United States government to pay back the value printed on that note.
Unfortunately, people the world over are starting to understand the worth of this promise.
With a national debt approaching $15 trillion and inflation rising, even those least experienced in finance are starting to ask the question Where's all this money coming from?
Just think about it...
When our national debt hits $15 trillion — which it surely will before the next presidential election — it will represent a personal liability of almost $49,000 for every man, woman, and child in this country.
Do you have $50k to give to the government — on top of what you already give them — for every member of your family?
And if you think that sounds disturbing, consider this: It's the people and organization that created this planet-sized problem who are on the hook for fulfilling the promise of every dollar, every cent you spend.
The Federal Reserve prints the money and the Secret Service protects it. It's not so much the symbol of the United States, but the symbol of the United States Federal Government.
How's your confidence now?
This is the same government which, in the next few days, will almost definitely be forced to close down because they can't keep their own operating budget straight...
The same government which, in the last eight years, has spent more than a quarter of our annual GDP fighting two wars (wars that most citizens couldn't explain if their lives depended on it).
When was the last time you heard about the our ground forces actively looking for Bin Laden?
Moreover, this is the same government which, despite a growing consternation among its citizens, continues to take steps to limit their freedoms.
Two days ago, I read about a New York Federal judge who "sentenced" a juror to "indefinite jury duty" because he was personally offended by the way she filled out her application.
Ladies and gentlemen, that's free speech being quietly stripped away from us, little by little.
There was a time when living in America meant being free to say whatever you wanted, no matter how displeasing it may be to the person standing next to you. It was set up by our forefathers as a challenge to us; to live with both the fruits and responsibilities of being the masters of our own voice and of our own actions.
But now, evidently, the federal government — which might not even be operating a few days from now, which has diluted the value and stability of the dollar to the point where it will likely lose its status as the world reserve currency to the Chinese yuan in the next three years — is telling us what we can and cannot think.
Gold has no national or political backing. Any stamp carried by any bar or coin vanishes the moment it's melted, and the value remains unchanged. It has been prized the world over since the time of ancient Egypt for its rarity, its color, and its unique ability to resist tarnish.
In short, it's permanent. No matter what shape it takes, its value will not depreciate... ever.
And at over $1440 an ounce, it's also been on a steady rise for the last 11 months — something you cannot say about the U.S. government or their rapidly deteriorating paper-ambassador to the world, the greenback.
To those who like numbers backing the big talk, I usually bring up the following little example...
In 1930, gold was trading at around $20 per ounce. Back then, that $20 could buy you a nice three-piece suit, a tie, shoes, and socks — essentially everything a proper gentleman needed to go to the office looking his best (or, if you're talking about 1930, to dress for a day at the office).
Today, that same ounce is worth close to $1500. Again, enough to buy yourself a three-piece suit, a tie, shoes, and socks — everything you need to look your best.
But what does $20 in cash buy you? A car wash? A cab ride? Enough vodka to drink your troubles away?
This might seem overly simplified, but the fact is, it's not at all...
Our current economic problem is exactly that simple to understand — and exactly that frightening.
As the value of your cash moves toward 0, gold isn't just maintaining its value; it's actually growing.
Maybe it's not surprising that 40 years ago, the federal government took us off the gold standard. Giving the citizens such direct access to the power of gold was just too risky for them.
Maybe that's why back in 1933 — when the nation was reeling from a crisis much like the one we're still wading through right now — the government made private ownership of gold beyond $100 illegal altogether.
They knew its power and wanted to hoard it for themselves. And they continue to do the same today.
This is the biggest reason I'm a "fan" of gold.
Gold isn't just money...
It's power, it's wealth, and it's freedom — true freedom — from the laws, regulations, and limitations of an increasingly paranoid, inefficient, and bankrupt organization.

Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
Nothing in this article is, or should be construed as, investment advice.

Prasanth KS
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