Stewart Thomson is again focusing on a topic that is near and dear to The Doc’s heart- the importance of valuing your wealth in ounces of silver and gold, not in paper dollars.
This will be more critical the closer we come to a hyperinflationary episode in the US dollar, as it clearly becomes meaningless to value your wealth in a hyperinflating currency. If your physical, tangible assets are not increasing, then you are not building wealth. Period.
What are your dollars really worth? A dollar is worth about 0.31 grains of gold. That dollar was worth almost 2 full grains of gold when the current dollar bear market began. You are experiencing an epic bear market for the dollar, and it is poised to get exponentially worse. A dollar is currently worth about a third of a grain of gold. Look at a grain of gold like you view any other paper currency’s unit of account, because that’s what it is.
Do you understand that there is a time to use one method of valuation, just as there is a time to be invested in one item or another? Do you understand how high the risk of hyperinflation really is, are you really facing that risk? Do you understand how totally useless the dollar valuation of gold during hyperinflation is, as a measurement of both the price and value of your gold? Do you really understand that nobody cares what the dollar price of gold is, during real hyperinflation?
All that matters during hyperinflation is how much gold weight you have. Do you understand what an institutional money panic out of the dollar really is, and what the ramifications of such a panic really are?
Now is the time to build ounces of gold wealth and value that wealth with the gold currency unit of account. The 1970s gold bull market was about building dollar wealth, but not this one. Run a chart that gives you a weekly gold weight valuation of your gold stock holdings. If the dollar hyperinflates, it doesn’t matter what your stocks are worth in dollars. All that will matter is how many grains, grams, and ounces of gold you can buy with those stocks. Do you understand?
If the number of ounces you hold is not increasing, is any wealth being built, and if so, how permanent is that wealth? The saying, “don’t wish for something too hard, or you just might get it”, can be directly applied to the wish for a higher gold price during a real hyperinflation.
As the hyperinflation begins, dollar wealth is built, and it appears solid. As the hyperinflation of paper currencies accelerates to a point where it is out of control, the entire financial system seizes and only those with the most amount of gold bullion weight remain in any sort of “driver’s seat” position. Vast bread lines form, and dollars become a focus of hatred.
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