Mother of All Hedges ?

Everyday when you open the newspaper pages or on the TV, you are bombarded by "experts" telling us that how USD will fast becoming Japanese Occupation Army banana notes and how inflation would wipe out all your savings. And they always conclude that you should start buying gold in one form or another (our beloved local banks even issued gold funds etc) because they "think" gold is the mother of all hedges against all the nasty things in life.

Before William's article appeared a few days ago, I was always trying to explain to my friends - "no, gold is NOT the mother of all hedge" simply because the today USD2,000 is definitely very much lesser than that the 1980's USD. Period. In fact, gold has today really turned into fool's gold - luring many fools into the scam of buying.

Of course, one day, gold may really reaches $7,150 but that only mean you have just broken even if you had bought them back at 1980 peak price. No gains. Talk about missed opportunity cost if you had invested in some other sector. In fact if you put a gold chart expressed in a basket of non-USD currencies, the chart is so lousy. Meanwhile have you ever start to wonder why entity like the IMF has been dumping gold recently ? God forbids - it could be just another America's dirty conspiracy to suck the rest of the world dry !

John Williams : $7,150 is the inflation-adjusted equivalent to gold's 1980 peak.


“If the methodologies of measuring inflation in 1980 had been kept intact, gold would have to hit $7,150 to be the equivalent of the 1980 record,” Williams said.

Gold would need to rise more than sixfold to top the 1980 record, using a more accurate inflation-adjustment, said John Williams, an economist and the editor of Berkeley, California. He said the government has understated the cost of living over the past two decades with adjustments in the way it measures the basket of goods and services monitored by the U.S. consumer price index, or CPI.