Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Intel Empire Fights Back with Rocket and Alder Lake! - 24th Jan 21
4 Reasons for Coronavirus 2021 Hope - 24th Jan 21
Apple M1 Chip Another Nail in Intel's Coffin - Top AI Tech Stocks 2021 - 24th Jan 21
Stock Market: Why You Should Prepare for a Jump in Volatility - 24th Jan 21
What’s next for Bitcoin Price – $56k or $16k? - 24th Jan 21
How Does Credit Repair Work? - 24th Jan 21
Silver Price 2021 Roadmap - 22nd Jan 21
Why Biden Wants to Win the Fight for $15 Federal Minimum Wage - 22nd Jan 21
Here’s Why Gold Recently Moved Up - 22nd Jan 21
US Dollar Decline creates New Sector Opportunities to Trade - 22nd Jan 21
Sandisk Extreme Micro SDXC Memory Card Read Write Speed Test Actual vs Sales Pitch - 22nd Jan 21
NHS Recommends Oximeter Oxygen Sensor Monitors for Everyone 10 Months Late! - 22nd Jan 21
DoorDash Has All the Makings of the “Next Amazon” - 22nd Jan 21
How to Survive a Silver-Gold Sucker Punch - 22nd Jan 21
2021: The Year of the Gripping Hand - 22nd Jan 21
Technology Minerals appoints ex-BP Petrochemicals CEO as Advisor - 22nd Jan 21
Gold Price Drops Amid Stimulus and Poor Data - 21st Jan 21
Protecting the Vulnerable 2021 - 21st Jan 21
How To Play The Next Stage Of The Marijuana Boom - 21st Jan 21
UK Schools Lockdown 2021 Covid Education Crisis - Home Learning Routine - 21st Jan 21
General Artificial Intelligence Was BORN in 2020! GPT-3, Deep Mind - 20th Jan 21
Bitcoin Price Crash: FCA Warning Was a Slap in the Face. But Not the Cause - 20th Jan 21
US Coronavirus Pandemic 2021 - We’re Going to Need More Than a Vaccine - 20th Jan 21
The Biggest Biotech Story Of 2021? - 20th Jan 21
Biden Bailout, Democrat Takeover to Drive Americans into Gold - 20th Jan 21
Pandemic 2020 Is Gone! Will 2021 Be Better for Gold? - 20th Jan 21
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Combating Annuities With Gold, Silver and Oil

Commodities / Gold and Silver 2010 Jul 06, 2010 - 10:19 AM GMT

By: Richard_Daughty

Commodities

People are always writing me and asking questions, which can usually be divided into one of two categories. The first category is the one that I call "Is there something wrong with you that you sound/look/appear so stupid/ugly/weird?" (Answer: "Probably"), and the other, smaller category is the one I call "Other."


Most of the questions this week were, as usual, in the first category, but there were a few "Other" emails, surprisingly asking me questions, as if a jerk like me would know anything about anything except that you should be buying gold, silver and oil with all your money, which is pretty much my answer to all questions.

The first question was "Dear Handsome And Wise Mogambo (HAWM), You are always yammering about how the Federal Reserve is still creating So Freaking Much (SFM) excess money and credit so that the federal government, in a nightmare coming horribly true, can borrow and spend us into bankruptcy which will destroy this country. My question is, 'What about annuities?'"

This is an easy one for me: I think annuities are probably the worst investment one can make, and for a variety of reasons, all of them stemming from the Federal Reserve creating the aforementioned So Freaking Much (SFM) excess money.

Uh-oh. I can tell by looking at you that you have had it up-to-here with my Constant Mogambo Harangue (CMH) about how all of this new money from the Federal Reserve will create roaring inflation in consumer prices. So, in deference to your sudden sensitivity, I will not get into how all this new money will create blistering inflation in consumer prices and how that inflation will make bond prices fall as interest rates rise because bond buyers will require higher and higher interest rates to offset their losses of buying power.

So, with an annuity, what we have is a promised fixed stream of income (that must already be low as result of the abnormally, weirdly, manipulated low interest rates) coupled with a seeming lack of alternatives in the popular sense, although a portfolio of gold, silver and oil is not only AN alternative, it is THE alternative, and as such, is the exact opposite, the very antithesis, the polar extreme, and even the antonym of annuities.

The result is that the payout from an annuity to you is fixed, never going up, never going down, so that you will continue to lose buying power, more and more day after day, week after week, month after month, year after year, compounding and compounding your misery, as far as I can tell, until you die a horrible, painful death from starvation and other miserable privations caused by your fixed-income buying less and less until it is almost worthless, all thanks to the inflation caused by the Federal Reserve creating more and more money and the despicable federal government borrowing it and spending it, and with deficit-spending an amount that is already, as unbelievable that as it is, roughly equal to a tenth of GDP! Just the deficit! Gahhhh! We're freaking doomed!

The veins in my head suddenly throbbing at the horror of such an economic catastrophe, I was on the precipice of falling into the Zone Of Loud Mogambo Outrage (ZOLMO) when my frantic, protruding eyes flashed upon a piece in the Gold Newsletter by Brien Lundin of Jefferson Financial.

He notes that inflation is worse than commonly thought, and "the government has changed the CPI. People don't realize that in the 1980s and then again during the Clinton administration, the government jiggered the CPI to minimize reported inflation. Economists can argue whether these changes were justified, but the point is that they changed the unit of measurement."

If you are like me, then you already knew that, and are wondering "What's in this economic mumbo-jumbo for me, a guy who is just out to make a lot of money without working?"

Well, apparently he can read our thoughts, as he replied that gold is under-priced as a true hedge against inflation, and that "John Williams of Shadow Stats has gone back and recalculated what he calls the 'Alternate CPI,' which takes out the government's changes to the index. As it turns out, when you use the historical CPI that was actually in effect during the 1980s, that $850 gold price record in 1980 is equal to $7,576 in 2010 dollars."

So gold is grossly under-priced, and with the Federal Reserve still creating so much money, so that the federal government can borrow the money and spend it, you would have to be an idiot NOT to bet against such preposterous economic insanity by frantically, desperately, feverishly buying gold, silver and oil.

And remember; it's not for nothing that I say, "Whee! This investing stuff is easy!"

Richard Daughty (Mogambo Guru) is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the writer/publisher of the Mogambo Guru economic newsletter, an avocational exercise to better heap disrespect on those who desperately deserve it. The Mogambo Guru is quoted frequently in Barron’s, The Daily Reckoning, and other fine publications.

Copyright © 2010 Daily Reckoning

© 2010 Copyright The Daily Reckoning - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules