Tuesday, March 24, 2015
Right now, all the headlines scream about the dollar's rally and gold's subsequent fall.
But these headlines are misleading...
You see, when it comes to purchasing power, the dollar is down big. And thanks to inane government policies – no matter how well-intentioned – the dollar's purchasing power is likely to continue decreasing.
Let me explain...
I just paid $7 for a dozen eggs.
Granted... these were the cage-free, antibiotic-free eggs laid by chickens that get regular spa treatments and pedicures. But last December, the same dozen eggs – laid by the same pampered chickens – cost just about $4 per dozen.
So what caused the 75% increase?
In January, a new law went into effect requiring increased cage sizes for egg-laying chickens in California. It also required that any egg farmers outside of California comply with the same cage-size regulations in order to sell their eggs in the Golden State.
To comply with this particular law, California egg farmers – and egg famers wishing to sell to California – massacred their flocks so that the survivors would have the required room to lay their eggs in comfort.
With the egg supply basically cut in half, prices went up.
This situation is an excellent example of how the government can harm the consumer. Thanks to foolish government policies and money printing, the dollar's purchasing power has dramatically decreased over the past 16 years.
A dollar in 1999 bought six eggs. Today, that dollar only buys 1.7 eggs. The purchasing power of the buck has decreased by 70%.
And it's not just eggs. If you look at gasoline, bacon, filet mignon, or real estate, you'll find the dollar's purchasing power has decreased significantly.
That's why I often worry about whether the numbers in my bank account will buy the food, shelter, and security my family will need in the future. I wonder if the dollars I have now will fund my retirement. You're likely worried about all of these things, too.
So how can you protect yourself?
By owning gold.
While the dollar's purchasing power has decreased over the past 16 years, gold has maintained its purchasing power. In 1999, it took 0.00667 ounces of gold to buy a dozen eggs. Today, despite the new regulations, you can buy a dozen eggs for just 0.00583 ounces of gold.
If you look at the purchasing power of gold in terms of gasoline, bacon, filet mignon, or real estate, you'll find the same thing. An ounce of gold buys at least the same amount of everything as it did in 1999.
You see, governments can't print gold. It has been used as money for thousands of years.
Gold is the ultimate standard of value. It's an insurance policy against the stupidity of government and the foolish money-printing policies of central bankers.
I'm confident that 16 years from now, gold will buy the same amount of everything it does today. I don't have the same confidence in the dollar.
That's why I'm buying gold and I urge you to do the same.
Best regards and good trading,
Dr. David "Doc" Eifrig has shown DailyWealth readers how powerful it can be to hold "chaos hedges" – like gold – in your portfolio... "When investors get nervous about bad economic news... debt crises in Europe... and the specter of runaway inflation in the United States," he writes, "stocks fall, and gold and silver rise." Learn how Doc protects his wealth with precious metals here and here.
In this must-read essay, Dan Ferris explains how owning physical gold and silver preserves the purchasing power of your wealth. The Fed is "an imbecile with a hammer. The hammer is money-printing, and every economic problem is a nail. So you should always own gold..."
Insurance company Travelers jumps to an all-time high.
Housing recovery continues... flooring company Mohawk Industries soars 38% over the past eight months.
A positive sign for the movie business... Cinemark and Regal Entertainment rise 25%-plus over the past year.
German stocks move higher... country fund EWG is up double digits in 2015.