Wednesday, November 4, 2009

Get Ready to Sell Your Teeth!

Years ago, I had several gold crowns put on various molars. This happened back when gold traded at 300 bucks an ounce although undoubtedly, I paid something north of that.

Yesterday, India was reported as buying 6.7 billion worth of gold. India chose to invest in gold rather than US securities. Interesting. They bought at 1040.00. Today gold is trading right at 1100. They have already made 4 or 5%. Try getting that rate of return anywhere.

Because the dollar is so hideously weak, and oil is traded in dollars, the price of oil continues to trend up. That and China is signing contracts with anyone willing to sell. It's over 81 bucks a barrel.

Now I watch CNBC Business News. Far more than I should. And because they are a network, and a news channel, they bring on these talking heads. Today they were talking about commodities "bubbles." Thinking that all of this pressure on commodities is about to burst and rapidly deflate just like the housing bubble.

Not so. In fact, what makes this situation different is that this is not wild speculation. It is simply people and countries investing their money in a tangible, relatively safe asset. They are not buying paper hoping to make more worthless paper. That is a no confidence vote in the dollar as the world's reserve currency. China is doing the same thing. I expect oil exporters to follow suit. All of that demand of course is simply going to drive the price of gold up.

And there's not a damn thing the U.S. can do about that. Kinda makes a guy wonder whether Obama, Bernanke, and Geithner got a little gold socked away. Or whether or not the Fed Reserve is buying gold. Don't know. We can't audit them. What an excellent trade. Give money away and buy gold at the same time. Sweet.

At any rate, don't worry about all that talk of a commodities bubble. Unless of course, China and India quit using oil. Or they quit producing wealth and buying gold. Or the U.S. quits printing worthless and non existent currency.

I ain't selling my teeth for anything less than 1500.00. Don't be a sucker and don't worry about missing the boat, it may arrive sooner than you think.

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