Hedging

     Save only real wealth. — John A. Pugsley

     Pugsley’s book The Alpha Strategy is one of the wisest pieces of financial advice ever penned. It’s also entertaining and hilariously funny, by turns. And now you can read it for free, at the link above.

     Since I retired, I’ve been unable to afford much in the way of gold and silver purchases. Nearly all my precious metal was purchased at least ten years ago. Even then, it was a strain to afford it:

• Price of gold in 2014: $1266.06 / Troy oz.
• Price of silver in 2014: $19.10 / Troy oz.

     Things are different today (I hear every mother say):

• Price of gold in 2024: $2502.70 / Troy oz.
• Price of silver in 2024: $29.33 / Troy oz.

     Thus, the dollar cost of both metals on the American precious metals market has increased greatly: by more than 50% in silver’s case, and by almost 100% in gold’s case. These figures don’t mean that gold and silver have become “more valuable;” they indicate that the dollar has become less valuable, measured by its purchasing power. If you’ve been looking for an explanation why the BRICS countries and others are abandoning the dollar as their common reference currency, you have it now.

     The precious metals are not investment vehicles. They’re hedges: ways to protect part of one’s savings against inflation. While I can’t do much to increase the size of my hedges, I’m inexpressibly grateful that I listened attentively to advisors such as John Pugsley back when I had the means to do so.

     If you have the means to do so, get started before our American Weimar is upon us. With a federal government that’s deepening our national debt by more than $2 trillion per year, it’s become far more likely than not.

     Only government can take perfectly good paper, cover it with perfectly good ink, and make the combination worthless. – Milton Friedman