Looking at the monetary system we have at present through the lens of the Austrian perspective, one tends to want to invest in precious metals and hold them for a long time. For example, since the inception of the Federal Reserve in 1913, the dollar lost 98% of its value. This is compared to an ounce of gold. Most people don't realize it, but this is a direct outcome of inflation. In 1913, a dollar and an ounce of gold would buy you a nice suit. Today, an ounce of gold will still buy you a nice suit, but a dollar will buy you a candy bar. Inflation makes it very difficult for a middle class family to save money for their retirement. We have to stay ahead of inflation, which means we have to invest our savings instead of just saving it for a rainy day. It means we have to be speculators exposing our personal wealth to the risk of loss. Personally, I think it is the main reason people do not save. They know they had better spend it now before it loses value than to save it. Behavior like this over a long period for a family or nation eventually leads to a lower quality of life. Understanding this, I took on the strategy of buying silver every month to accumulate my "savings". I figure that both gold and silver will maintain their value relative to the dollar or other fiat currencies over time. I assumed that this is a way to save my capital against inflation without the risk of investing. However, I could be wrong. Yesterday I read an article by technical investor that has made money by shorting silver and believes that being a gold or silver bug is not a good strategy. He also expects silver to go down much farther yet as well.
His article is here.
Admittedly, this article concerned me. Maybe I am taking the wrong strategy. Maybe I should be more aggressive and use options and short term trading to get ahead. I really do not want to do this, because I would rather focus on my core business (my fitness studio), than to spend time on studying the markets. Ironically, I read another article today that expresses my views and the rationale behind my strategy. It put me a bit back at ease.
Here is this article.
I am sticking to my original strategy. I don't feel comfortable investing in this climate. I feel the stock markets are too manipulated, bonds are too dangerous (too much debt-investors sooner or later will take a haircut), and real estate needs to correct another 20 to 25% before I would even consider getting back in the game. As per Bill Bonner, I think we are in the midst of a "great Correction" that may take years (decades?) to get back on track.
What do you think?