Monday, November 24, 2008

GOLD & SILVER

The Obama administration is confirming itself as a status quo administration with no substantial ideas for change. Sorry everyone. You were all fooled by this sweet talking salesman. Expect more of the same and if you know history, then look at FDR's unsuccessful bid to end the depression.

What does this mean? He will print the most amount of money ever in the history of the US. He will expand the size of government to put people to work in meaningless and unproductive infrastructure projects where businessmen with the best political connections will make gobs of money without respect for efficient allocation of resources. Risk will become a purely political term. We have already seen this. Political risk is one of the largest risks for investors and traders. If the government intervenes and reverses a trend in the market, then it becomes less profitable to engage in trading, leading to less liquidity, and more volatility.

I may start taking payments and converting them into gold and silver. It doesn't make sense to hold dollars if tomorrow there are going to be more of them tomorrow to depreciate my holdings. Gold, silver, and other commodities are money. Nearly everything we create is some byproduct of commodities, therefore if we continue to produce more money, then these commodities will become more valuable, unless of course, production is not rewarded because of government interference. Simple economics 101.

No comments: