Monday, March 10, 2008

Gold as the new currency?

(Click to enlarge)

The price of gold has been surging faster as of late. It’s enough to make a connoisseur of Bling Bling worry his pretty little head over. As gold is used as a hedge against inflation, it is worrying that a slowing economy coupled with a depreciating dollar could lead to some very painful economic times. The price of gold has gone from $250 an ounce to over $950 during a ten year time span without any significant change in the gold supply; this means that too much money and too much credit is chasing supply and driving up prices. Hence, what we have is monetary inflation. The dollar is the world’s reserve currency and as it continues to slide downward, the cost of goods and services for Americans will get pricier. Additionally, any raises that you get at work will probably be eaten away by inflation and a depreciating dollar. My wish is that the Fed finally takes control of the situation and does not lower interest rates to appease Wall Street. The last thing we need is more printed money in this economy because it is causing inflation. In any case, get those gold rims before the price of gold hits 1,500 dollars an ounce. You’ll thank me later.
See a related article on this topic in today's Wall Street Journal

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