It's way too easy to fall into the gloom and doom camp when you're a commodity investor.
After all, our investment thesis rests firmly on the belief and understanding that the dollar (and other currencies of the West) will continue to fall.
A weakening currency has rarely been good news for any society. In most cases, it spells at the very least a lower standard of living.
At the worst, it signals trade wars usually followed by shooting wars.
It's definitely bad news. And it's easy to get angered at the Fed. But the members of the Fed don't get out of bed and consider your feelings. It's not necessary to hate the Fed. They're just a bunch of politically appointed PhD bankers.
It's only important to know that they believe in their own ability to successfully manipulate prices. That's all we need to know. We know that they lean towards inflation vs. deflation. We don't know why. They seem to think that rising prices guarantee growth – so we know they'll constantly push towards inflation.
And this push towards inflation will ultimately destroy the dollar.
So we just need to focus on building our portfolios to protect against this eventuality. Just like folks in flood-plains need to be prepared for the levees to break. When will this dollar destruction occur?
Soon? One month? One year? A decade?
The answer is that it's occurring every day. It's been occurring every day since the Fed ended the convertibility of dollars into gold. Only a fool or a liar would deny the fact that the dollar has been in a 40 year decline. There really isn't anyone denying it either – or that it will continue.
So what's the debate here? The debate is whether the Fed really can adequately control prices without any negative feedback. Despite the fact that price controls have never worked, and despite the fact that the Fed has presided over the worst depressions and recessions in modern history – most people still have no idea that the Fed even exists or what it does. Even most market participants don't get it.
But we get it. The dollar is doomed – and gold is only the least-worst choice among asset classes.
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