Mas I live about a mile and a half from the 21 acre farm, never been there and it looks perfect. I will have to make an effort to get down there one of these days.

That appeals to me as well.

In relation to The Golden Constant, the inflation hedge thesis is little more than an old wives’ tale. Unfortunately, that hasn’t stopped it sprouting like a weed. Lacking dispassionate empirical support, it rests instead on other theories that at root are political rather than economic.

We turn also to common sense, and note the fundamental economic difference between other commodities and gold: all other commodities are produced for consumption, whereas gold, precisely as a function of its money-like qualities, is produced for accumulation.

Gold is what you want when they seal the borders and you need to get across; it’s what’s accepted when there’s blood in the streets and nothing else flies.

Given the current underlying conditions, with increasing chances of a deflationary credit implosion related to housing, along with some chances of a collapse in the dollar, Yen, or fiat currencies in general, the incentive to store wealth in the form of gold is massive.

Ed – I hear ya …though the deflationary spiral will impact everyone IMO (not just the US). If you are listening to Glenn Beck though, my best investment advice to you is to turn off your TV!

http://articles.moneycentral.msn.com/Investing/SuperModels/mad-world-chinas-bind-is-ours-too.aspx?page=1

But I don’t believe that the worlds super power will allow itself to simmer in a deflationary spiral and allow another country to kindly take its position. Historically, its never happened, so I lean towards self induced hyperinflation or war. I hope my theory is wrong.

I think Glenn Beck said it right last night. “there’s definitely a transformation occurring much like what happenend in Russia.”

If I thought inflation was a serious probability I’d be long miners or do as Karl mentions: buy OTM leap call options. But I don’t. So like you I’m in cash and funds that short equities.

http://globaleconomicanalysis.blogspot.com/2007/02/is-gold-inflation-hedge.html

Gold is apparently good in the Mad Max (or Mad MAS ) scenario, but otherwise not so much. And even in this case it must be physical gold …gold ETFs and futures can’t be bartered very well for black market goods.

So a hyperinflationist is left with either real estate and/or commodities as good investments. RE for reasons I already mentioned. Commodities, since a hyperinflating currency will buy less and less “stuff” …and therefore the same commodity “buys” more and more dollars.

Regardless, I am still in the deflationary camp, which means cash and short equities. I have been more into system trading lately though, which takes advantage of high volatility regardless of market direction (i.e. makes long and short trades, but short term).

The only answer I’ve heard is that the USD will decline against GOLD and other commodities. MISH believes this as Gold is protection in a deflationary collapse. Denninger believe the opposite. I don’t know. I do see a crowd forming on the precious metals side and that always concerns me.

The only equivalent leverage I know of is /YG (gold) futures contracts or GLD call options, which are also both highly levered.

Anyway no offence, but I just think most gold bugs are talking their book. Other good hyperinflation investments are always completly ignored and gold is always the only option presented …even though real estate and currency trading would likely be more profitable (and less risky) in a hyperinflationary environment.

Thanks for that link Jim, I book marked it and will read it again later. It does make sense but I wonder (cautiously) if some important issues have been overlooked.

As this deflationary process deepens, and our debt soars, nations which have already begun to slow their purchase of treasuries, let alone dump them, have already started the quest to bail on paper for more tangible assets, things of real value, on the cheap while they still can. The level of confidence is eroding. So as this imbalance drifts further apart, these assets no longer become as cheap possibly resulting in hyperinflation, as countries compete with each other desperately attempting to bail in dollar denominated paper assets.

Also its been said that a new financial crisis could develop from the failure to effectively regulate derivatives, where attempts will be made to buy real assets through insider scams. Banks have lobbied hard against any changes that would make them unable to do so. Since wall street owns the government, we shouldn’t expect otherwise.

I assume the international bankers want a peaceful solution to the global financial mess, with a one world currency ,without a fight of course.

Deflation aint ruining my summer, and that’s a good thing.