GOLDBUGS AMEX Goldbugs Index (GOLD)

[Joe Kernan]

Let me rephrase that... inflation is good for the American government, not necessarily for the majority of the American people in the short run. In the long run, and in the historical sense, the inflationary practices of the FEd have been very good for the US because it has allowed the US to make ciritical infrastructure investments at a discounted price. China buys up the foreign bonds that build us a bridge, then we inflate the dollar past the interest rate that the bond was paying out. When the US pays the bond back, it was cheaper than the cost of the bridge. The Fed needs inflation as a way to continue to tax the world in return for Pax Americana, but this only worse so long as the dollar is the reserve currency and the US military might is recognized. The big question is whether or not the inflation can be controlled in the coming decade, and whether or not the government will respond correctly (and not over-react with populist demagoguery) as the political pressures mount as people lose their homes and their jobs. The question for us is where to hide the money while the adjustments take place. Certainly, getting a 3% CD or savings account is silly, because true inflation is taxing your account at somewhere near 20% these days, if not higher. So where to put the money to preserve its worth, or even make money?

The answer, of course, is to place resources into the best looking junior miners, as there is rapid growth potential there that will far outpace the growth of bullion. And, right now it would be better to invest in foreign junior miners that have Canadian or American leadership and ties, rather than US or Canadian companies directly, because the cost of energy is so critical, whereas in Colombia or some other place the costs of labor can offset energy losses in the production/efficiency analysis.

Does this make sense?