Gold to Outshine Dollar?

As the price of gold has gone up fivefold over the past 10 years, why would one buy it at today’s prices? A key reason to hold gold today might be to prepare for the crisis tomorrow.

When I wrote the book ‘Sustainable Wealth: Achieve Financial Security in a Volatile World of Debt and Consumption’ in early 2009, my editors wanted me to talk about the financial crisis in the past tense. I balked, arguing that the crisis will be far from over by the time the book would be published later that year. The crisis has long been in the making and may be far from over.

Just about anywhere in the world, politicians running for office promise to cut wasteful spending. The definition of wasteful spending tends to be what “the other party” spends money on; in turn, when elected, the politician will redirect resources to more productive projects. Of course, those other projects are similarly considered wasteful spending by their political opponents.

The presidential hopeful has already committed to continue subsidizing student loans and to keep up defense spending.....By the way, when politicians refer to “reducing the deficit”, they typically mean reducing such deficit as a percentage of Gross Domestic Product (GDP), rather than in absolute terms.... as we have seen in Europe, austerity is not a popular policy.... Different from the Eurozone, however, the U.S. has a substantial current account deficit..... In our analysis, currencies of countries with a current account deficit are more vulnerable, because such countries are dependent on inflows from foreigners to finance the current account... markets can stay irrational longer than you can stay solvent....

          ............... Axel Merk