Bill Fleckenstein recommends gold above all as a hedge against money printing from the Fed and the ECB.
In one or two years you’ll be thankful, he tells King World News:
Tomorrow the Fed is probably going to bring QE3 and meanwhile Europe is in a state of disarray. All of that will sort itself out bullishly for gold even if were to decline for the next couple of days. The Japanese, the British, the Swiss, the Americans are all printing money. In Europe, this particular phase of their crisis has all been about the fact that Trichet didn’t want Greece to default, but didn’t want to print money.
Now the ECB is actually printing money in a back door fashion because they have these repo’s. They are also buying debt and they are not sterilizing it, so they kind of are (printing money). But we have evolved as a society over the last twenty or thirty years since the world went off the gold dollar exchange standard, whereby every iteration we rely on the printing press more and more. Now we are just on a pure printing press standard. This will end, this is the end game for that. It could take a year or two. Maybe if the euro has to implode and they all have to take printing presses back and use them for the people to revolt because in the end the printing press is no panacea, otherwise Zimbabwe wouldn’t have collapse.
Rothschilds own all the gold, allowing them to manipulate that money supply, too. There is too much silver in the world for them to have controlled all of it yet, though.
If you’re worried about inflation then buy inflation-protected bonds. Although your fears of inflation are unfounded as the Fed has already make explicit it’s plan for removing all that liquidity from the system once inflation begins to pick up. This is reflected in the TIPS spread.
Because the real price of gold is not guaranteed to stay the same, in may very well fall! . TIPS are guaranteed to protect you from inflation, and - when liquidity trap conditions don’t hold - they pay you interest.
Marginal Interest wrote:
“If you’re worried about inflation then buy inflation-protected bonds. Although your fears of inflation are unfounded as the Fed has already make explicit it’s plan for removing all that liquidity from the system once inflation begins to pick up. This is reflected in the TIPS spread.”
Good advice if you believe the CPI is an accurate measure of inflation, trust government backed securities, and don’t mind paying taxes on the income ‘created’ by the periodic inflation adjustments.
Acutally the CPI overstates inflation a little bit. So on average you’ll probably be doing slightly better than inflation with a CPI adjustment. Yeah it’s pretty stupid that the adjustments are taxable. No argument there. But what else are you gonna do? Gold isn’t a hedge against inflation, it’s a hedge against tail risk. Nothing hedges against inflation except indexed-bonds.
Haha. Yeah let’s use a measure of inflation from some guy who openly admits to compeletely ignoring the substitution effects of price rises, doesn’t understand that we need measures of underlying inflation to correctly assess the impact of monetary policy, and decided to add in to his calculation an unspecified “adjustment for the geometric weighting that is not otherwise accounted for in BLS historic bookeeping”. What could go wrong?!