Story Comments

Two questions:

1. If your dollar today can buy MORE stuff than it did last year, then isn't that deflation? When the price of goods are coming down, isn't that deflation? You can buy more gold, silver, commodities, stocks, property now than a year ago... so why is it still deemed that inflation is the problem?

2. Since Don thinks inflation is the problem, why is his column called 'ahead of the curve' - he's so far behind it, it's rediculous. If he's putting his money where his mouth is, ie buying up on the markets because he believes the bottom is here or near, then woe betide those investors in his funds.

The bear market has a long time more to run, somewhere between 2-6 years!

You read it here first!!!

Fed is simply creating liquidity to manage the current financial crisis. When credit starts to flow freely, central banks can and will remove execess liquidity from the system since no one wants 18% interest rates and volker stlye inflation control. Current Fed chairman is a smart guy who knows what he is doing! (Look at his swap lines to Korea/Singapore..very unlike 1998). I would not be surprised if he gets a nobel prize down the road for fixing greenspan's bubbles.

So, gold will make a poor investment at this point. Time to use extreme caution on gold investing!!

Just my opinion! All disclaimers apply! I could be very wrong!!

Author quoted Proverbs 11:1 in this article. Amazing.

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The FED increasing its balance sheet by itself does not cause inflation. Look at John Williams' Shadow Stats, in which he calculates M3, and shows its rate of growth declining, not increasing. Until the FED's building its balance sheet results in increased bank lending, the money supply rate of growth will decrease, and the money supply may fall, not grow. Bank loans are the engine of money supply growth (and shrinkage), not FED balance sheet. Loan defaults result in extinguishment of money. It is not the simplistic, dogmatic process described in this article.

It is not only cash that drives up inflation, it is the wider money supply (M2, M3, etc), which is cash plus credit. The Fed is pumping cash into the financial system, but credit is contracting, so inflation might not get out of control, assuming the Fed restricts cash once credit (the wider money supply) increases again.

So a rational investor should be borrowing paper money and buying gold.

What you say Don makes perfect sense, however, you miss one important ingredient in my opinion and that is the destruction of trillions dollars in the stock market.

Now there is a lot less money chasing those goods and services thus causing deflation.

poor DL. one wrong call after another, completely missing on the market and the economy and now...failing to see that gold is not behaving as the hedge that it once did, in fact almost just the opposite. But he is good at hedging. his last column basically said the economy and markets will go south if Obama wins. whatever you think of the candidates this was clearly DL hedging his completely wrong calls on the economy and the markets over the past year of columns. but thats what happens when u have a guy who tells you how the economy is doing based on his trips to Hawaii and Disneyland. Great research.

I have a 401k plan that allows a self-directed portion. Is there a 'gold' ETF fund? Of course, BO and the lefties are going to confiscate my 401k plan anyway! So, I'm not sure it matters if I try to preserve it or not! Welcome to the coming 'worker's utopia'...ObamaLand!