Fighting the Inflation Tax

[calmB4storm]

With Ron Paul spreading the truth throughout America, the issue of the inflation tax has finally gained some much-needed attention. And honestly, I'm pretty damn scared at how much the dollar has depreciated, and how much debt our government has proceeded to rack up.

But what the hell can we do, other than hope and pray that Ron Paul gets elected? Convert all our cash into Liberty Dollars? Is it safe to assume that gold is a better "investment" than U.S. dollars? And if so, how liquid is gold? For example, would it be feasible to trade all my cash in for gold, sort of like a savings account, and then convert back to cash whenever necessary?

Just throwing some ideas out there, hoping for some advice slash discussion...

[clowntable]

<conspiracy_nut>
If he ever gets close to being elected he will be killed by the international bankers anyways.
</conspiracy_nut>

[adios]

[ QUOTE ]
With Ron Paul spreading the truth throughout America, the issue of the inflation tax has finally gained some much-needed attention. And honestly, I'm pretty damn scared at how much the dollar has depreciated, and how much debt our government has proceeded to rack up.

But what the hell can we do, other than hope and pray that Ron Paul gets elected? Convert all our cash into Liberty Dollars? Is it safe to assume that gold is a better "investment" than U.S. dollars? And if so, how liquid is gold? For example, would it be feasible to trade all my cash in for gold, sort of like a savings account, and then convert back to cash whenever necessary?

Just throwing some ideas out there, hoping for some advice slash discussion...

[/ QUOTE ]

There's better investments than gold. Here's a link to chart of gold prices since 1975:

Historical Prices of Gold Since 1975


If I did my math right the rate of price appreciation is something like 2.5% compounded per anum. From U.S. government CPI statistics the rate of inflation is something like 4.7% over the same time period, again if I did my math right. I might add that many believe that CPI data does not accurately measure inflation in that the CPI numbers under state inflation. Again I've arbitrarily picked years but I think if I went out longer term we would see that gold is not always the greatest inflation hedge. Sometime yeah, sometimes no. I think bonds have done better and stocks have done better yet i.e. they've beaten inflation in the long term. Whether they will continue to do so in the future is certainly open to debate but with gold being not that far off it's all time high IMO, I'd say there's inherent risk, alot of it, in putting your dollars in gold too.

[Ron Paul]

[ QUOTE ]
If I did my math right the rate of price appreciation is something like 2.5% compounded per anum.

[/ QUOTE ]

You appear to have not done your math right. I get 5.8% per anum. $200 -> $650 in 21 years. (650/200)^(1/21) ~ 1.058.

[Mempho]

[ QUOTE ]
<conspiracy_nut>
If he ever gets close to being elected he will be killed by the international bankers anyways.
</conspiracy_nut>

[/ QUOTE ]

I know how to get the most out of my money. Invest in aluminum! [img]/images/graemlins/cool.gif[/img]

[Brainwalter]

[ QUOTE ]
<conspiracy_nut>
If he ever gets close to being elected he will be killed by the international bankers anyways.
</conspiracy_nut>

[/ QUOTE ]

Like Kennedy.

Edit: oops forgot /conspiracy everyone knows oswald acted alone!

[adios]

[ QUOTE ]
[ QUOTE ]
If I did my math right the rate of price appreciation is something like 2.5% compounded per anum.

[/ QUOTE ]

You appear to have not done your math right. I get 5.8% per anum. $200 -> $650 in 21 years. (650/200)^(1/21) ~ 1.058.

[/ QUOTE ]

1975 - 2007 is 32 years. So redoing it I come up with (650/161)^(1/32) ~ 1.045. Gold started out in 1975 at 161. So yes I did do it wrong.

I did find this link to prices since 1833:

Historical Gold Prices 1833-Present

(650/18.93))^(1/174) ~ 1.021.

Serious question, is using 1833 prices a valid data point? If not why not and what would be better and why? I could be convinced that gold should be a good inflation hedge but I honestly can't see the evidence where it is by looking at the data. To me it looks like the hyper inflation in the 70's led to wild speculation in gold which was a "bubble" more or less. After the bubble burst it's taken a long time to get back to it's "bubble" price. I think price appreciation of gold in the current decade has a lot to do with the depreciation of the US $. However, the US $ has been in this territory before and gold didn't do all that much. I've heard conspiracy theories about the cental banks artifically keeping the price of gold low for a long time. Maybe, maybe not. Why have the central banks loosened up now then? Anyway I'm actually interested in looking at the price history of gold and seeing why it's good inflation hedge.

[technologic]

there are inflation protected bond funds you can hold like this one from vanguard

https://flagship.vanguard.com/VGApp/...FundIntExt=INT

[Nielsio]

http://forumserver.twoplustwo.com/showfl...=1#Post10564520

[maxtower]

The problem with using the 1833 price point is that the USD was convertible into gold for much of that time.