On pages 17 to 19, Mr. Buffet outlines three big categories of investments and comments on each. The first category are "Currency-based", things like bonds, mortgages, bank deposits and so on. He rightly argues that these are bad news in times of declining currency values.

The second broad category are non-productive assets such as commodities, and he uses gold as the poster-child for this asset class. Stored in a vault, these assets just sit there, doing nothing. As Mr. Buffet says, you can fondle them, but they will not respond.

The third category, his favorite, are what he calls productive assets: businesses, farms, and real estate. His assertion is that in the future, the value of these assets will grow enough to provide a real return, even taking currency depreciation into account.

I understand (and mostly agree) with his comments on gold… but he hasn't looked at the investments he likes so much PRICED in gold. He doesn't realize just how much erosion of currency value there is these days – it is much worse than the government and mainstream economists he relies on will admit. So while he is correct that it is theoretically better to invest in companies that can create value and growth, that only makes sense when there is a positive growth climate and stable money… which is not where we are today! Someday, he will be right in spades; but for now, it is much better to be in cash (real cash, that can't be devalued by governments, that is to say GOLD, and maybe silver.)

Take a look at the performance of Berkshire Hathaway stock, as an example. In the 1990s, it did great, making it's shareholders rich compared to buying gold or holding other forms of cash – multiplying their capital invested by 10x or more. But from 1999 to today, those investors have lost more than 75% of their money, as compared to just holding gold. My sense is that they will lose the rest of their gains as well, if they just hold on. Eventually, those BRK-A shares may start to really grow again… but that won't occur until the economy is sorted out and money is once more stable. And that will take some serious doing, and won't happen for a long time, maybe decades. Virtually everyone who bought shares of BRK after 1996 is now in a LOSS position on that investment, as compared to just holding onto a lump of gold instead… Sometimes it is better to just hold cash!

Of course, while BRK has been declining, there are investments that have been growing in true value. Apple Computer (AAPL) is one example. During the 1990s, it held it's value pretty well, but didn't grow the way Berkshire did. But while Berkshire lost value after 1999, Apple began to grow, really picking up steam after 2003. While it is possible to grow your wealth in gold terms, it takes careful attention to what is really happening, avoiding investments that are falling in gold value – regardless of how attractive they may look when measured in depreciating currency – and focusing on investments that are providing genuine returns.

Will Apple keep going up? I can't know the future with any certainty. But I can implement a sound money management system that will keep me from holding investments that are declining in gold value, and I can seek out opportunities that offer a shot at true growth as measured in gold. And until I find a good opportunity, I can keep my capital safe by holding gold rather than depreciating currency or declining stocks.

Some people worry that interest rates are too low, and that as inflation continues to head higher, rates will begin rising, increasing the attractiveness of currency-based investments and hurting the price of gold. While that might create an updraft for the USD and other currencies relative to gold, significant and sustained rises in rates would also destroy the stock markets, the bond markets, the housing markets, and the Government's budgets… so I don't think the central banks will be allowed to take that action any time soon (by which I mean pretty much forever). More likely they will continue the gradual destruction of currency values that has been so successful for decades, until a major war or other emergency gives the excuse to take direct control of the economy and "reset the game" for another round.

If such an updraft develops, take advantage of it to accumulate more gold, or even speculate on rising currency values by trading some of your gold for currency-based assets. But realize that holding government issued currencies and currency-based investments is a highly risky speculation. Gold is where you want to keep your savings, preferably in physical form, safely stored outside your home country.

Eventually, when the monetary insanity has run it's course, government has receded to a much smaller footprint, budgets are in surplus and debts have been defaulted on or paid down, money is stable and interest rates are being set by the free market, and the central banks have disappeared or lost their power, then you should trade most of your gold for solid, growing companies and other productive assets – maybe even some shares of BRK, if it's still around! But not before then.

Cheers,

Sir Charles
Editor, http://pricedingold.com

After the 2008-2009 crash bottomed on March 6th, 2009, the S&P 500 quickly bounced from a low of 22.7 grams to about 30 grams.  Until July of 2011, it traded in a range between 24 and 35 grams, gradually trending lower.  On July 1st, the index peaked at 28 grams and began falling, passing the 2009 low on August 4th. and trading as low as 18.6 grams, 18% below the 2009 low.  It has stayed below the 22.7 gram level with one brief exception: on October 18, the S&P rallied to 23.4 and held above 22.7 until October 31, peaking at 23.6 grams, 4% above the 2009 low.

Let's see if this rally can carry the S&P above the 23.6 gram level.  If so, a further rally to 26, 28 or even 30 grams area might be possible.  Even these levels are well within the downtrend channel established since 2008, however.  A lot hinges on the news coming out of Europe, and how it impacts investor psychology. With limited upside, and lots of downside, I would rather rely on solid gold than risk my wealth on animal spirits.

And speaking of the US economy…

The Dow Jones Industrials, which closed today at 242.76, have retreated to their lowest level since March 20th, 2009, and now stand only 10% above their 2008/2009 financial crisis low of 220.22, set 10 trading days earlier on March 6th. Once that level is breached, prices will have rolled back to the level of January 1991, with the next support at about 200, and below that at 180 (which was the low for 1990 and the high just preceding the "Black Monday" crash of 1987. The S&P 500 shows almost exactly the same picture.

US Treasury bonds continue to fall, with SHY making a new all-time low in gold, and TLT just 2% above it's all-time low, even as they approach their old highs in dollar terms.

This week we've added coverage of natural gas to the site, another commodity sitting near it's all time lows. Home prices were also updated this week, and they are – surprise! – also making new lows.

Commodities were mostly lower last week, with crude oil, silver, copper, and coffee down, while cotton was up 5.4%. Commodity prices have risen significantly over the last year, however. Silver and coffee are up over 50%, cotton is up 63%, crude is 6% higher, and copper is 7.4% higher from one year ago.

The Canadian dollar is following close on its US cousin's heels, and the Euro and Yen, while they gained a bit last week, they are both down solidly over the last year. The Swiss franc is the one currency I track that seems to be holding it's own. Take a look at the currency charts for more.

Of course, if you own bonds, or large-cap stocks, real estate, or hold lots of currency (whether USD, CAD, EUR, or other), this sounds all sounds very depressing. But it is important to remember that it also means these things are ON SALE for those who do their saving in gold. They may get cheaper yet, so I'm not suggesting that you go "all in" at this point, but by following two simple rules, you will be ready to take full advantage when the time comes.

First, keep your "cash" and savings in gold, whether physical, in GoldMoney.com, in ETFs or closed-end funds (I use a combination of all of them for my own savings) and

Second, monitor your other investments' values in gold to be sure they're growing (and be ruthless about cutting your losses when they're not). If it isn't growing in gold value, you're better off just holding metal until you can find something that is growing. Don't forget that the USD and other currencies are potential speculations that make sense from time to time, but only hold them when they're appreciating in gold terms; at all other times, hold as little as possible.

Do these things, and you will find that the whole world will eventually be yours at fire-sale prices.

This is how great fortunes are made!

Currency Watch:

After revisiting its all-time low of 21.89 mg on January 3rd, the USD rallied during January, peaking at 23.58 on January 28th, up 7.7%. Since then, it has been drifting lower, and currently stands 2.7% above the all-time low. A similar pattern exists for most other major currencies, though the Yen and Canadian dollar have lost less ground in the past year than the US Dollar and Euro. [Washington's Birthday update: as of 21-Feb-2011, the USD stands at 22.17 mg, only 1.3% above it's all time low.]

Bond Watch:

US Treasuries have been a terrible investment for at least the last 8 years. Since 2002, shares of SHY, an ETF that tracks the 1-3 Year maturity T-Bonds, have lost 74% of their value, despite an apparent increase of 28% when measured using dollars – and these figures include interest paid! The long bond, as measured by the share price of TLT, is just as bad, having lost 69% of its value since 2002, despite a smoke-and-mirrors “gain” of 56% when measured in dollars. And as we'll see in a moment, these losses are not simply due to a “gold bubble”. Priced using dollars, most things you buy every day have increased in price dramatically since 2002 – gasoline has more than doubled, food prices are 2.6 times higher, cotton prices are over 4 times higher! The lion's share of these increases are caused by dollar depreciation. And keep in mind that the so-called gains are taxable… while the real-world losses are not deductible. The government takes your money at full value, repays you with currency that will buy much less, and taxes you on the difference – all part of the miracle of inflation!

Equity Watch:

Major stock indices have been falling for the last 10 years. The Dow Jones Industrials, for instance, hit its all-time high around 1,400 gold grams in 1999. It has since lost over 78% of its value. For the last two years, major indices have been pretty flat after bouncing off the lows set in March of 2009. As with bonds, nominal prices have risen as currency values have fallen, leaving investors with purchasing power losses and huge tax liabilities. One area that has bucked this trend is resource stocks – a specialty of my friends at Casey Research. Selected issues have soared, and even the broad resource indices like the HUI show real gains over the last year.

Commodity Watch:

Each of these commodities has its own story to tell… tales of weather (good and bad), of mine cave-ins, political instability and bureaucratic stupidity.

Silver is skyrocketing, not just in dollars, but in gold value as well, having closed convincingly above its long term resistance level at 0.7 grams of gold. It will be interesting to see that level retested in the weeks to come. If it holds, the 1.0 gram level, last seen in the early 1980s, could be the next stop.

While it is clear that the trend is mostly up, what is not so clear in the numbers above is the bigger picture – that most of these commodities are rebounding off their all-time lows.

Crude Oil, for example, finds its long-term support at around 1 gram per barrel, and hit 1.1 grams two years ago in February of 2009. Although it has recovered to almost 2 grams, crude traded over 4.9 grams per barrel as recently as 2008. Coffee is another example – in May of 2010, it traded under 34 mg per pound. Although it stands today at 61.1 mg, in 1997 it traded over 230 mg/lb (and at a dollar price very similar to today's, highlighting the massive depreciation of the dollar.) Cotton has really been on a tear (pardon the pun) gaining another 2.2% this week following a 12.4% rise last week, and more than doubling in the last year. But these gains are coming off record lows of less than 20 mg/lb in early 2010. Cotton's 30 year average price is 53.2 mg (20% higher) and its record high of 250 mg is more than 5 times today's levels.

Chart of the Week

This chart was inspired by the events in Egypt and elsewhere in the developing world, where concerns over food price rises are playing a major role in people's dissatisfaction with government. As one who is profoundly dissatisfied with all governments, I think this may be a good thing. But what is really going on here? When you strip away the veneer of currency depreciation, we see that food prices are actually near their 20-year lows, not making new highs!

In fact, the overall food price index would have to rise 72% from today's levels just to get back to its 20 year average. The Meat component would have to rise over 140% to get in line with its average. And even Sugar, the fastest rising component, would need to rise a further 20% just to revert to the mean.

The real problem here is that governments are destroying the purchasing power of money – your money – even while technology and intelligent employment of capital are reducing the costs of food, technology, energy, housing and transportation. Unfortunately, governments are kleptomaniacs. They corral your money with capital controls, then steal it openly by raising taxes in the form of new regulations, closed loopholes and higher rates; and stealthily, through currency destruction and the taxes collected on the resulting pseudo-gains. This has left most households with less disposable income than they had in 1950 – requiring them to work two or more jobs just to make ends meet!

But that's a story for another edition…

In the meantime, don't be fooled by bogus government currency shenanigans! Keep track of your investments' true value, using gold.

Sir Charles

So as the song says, are happy days here again? With all the talk of QE2, of inflation being too low for the Fed's liking, and their stated willingness to "do whatever it takes" to fix up the economy, it's hard to know what the USD price of anything means any more! Let's see what the Dow priced in gold is telling us.

Back in April, I pointed out that the Dow price of 300 grams of gold was about where it had been since the start of 2009, pretty much a flat-line, aside from a brief excursion down to 220 in March of 2009. Since then, the Dow has been working its way lower, and now sits at 253.4 grams, about 14% lower than the last time it traded above 11,000 in USD. As the chart below shows, the recovery of stock prices (as measured in USD) is an purely an illusion.

The US Dollar itself is losing value about as rapidly as stocks and other assets are being inflated. In fact, the specter of rising taxes, increasing regulation, and the uncertainty of what crazy bailout, stimulus or pork-barrel program will be announced next has investors working their way to the exits.

That's something to keep in mind when reading the financial news priced in fiat currency! Don't let it ruin your investments. There are things that are rising in gold terms. That's where you want to be invested.

I would love to see a long running value of the U.S. M3 in gold. I've wondered if this pool equals a relatively fixed gold value while the dollar price of gold reflects mainly the fluctuation in the amount of money in the pool. Thanks.

I'm not sure which measure of the money supply would be best for that purpose… M3 hasn't been published since 2006. I did do a chart of M2 in gold, but it looks pretty much like GDP – for the most part the change in USD purchasing power relative to gold overshadows the changes in M2 or GDP, making the charts look pretty similar:

There are many other measures (M0, M1, M2, MZM, etc. as well as private measures like Paul van Eeden's Actual Money Supply) that might be more informative. I have not tried to investigate them all.

To my mind, the direct mathematical relationship between number of dollars and their purchasing power is only a minor part of the story. The dollar really has no basis on which to have any value at all, and it is simply people's confidence that someone else will take them that gives them utility. So things that shake that confidence tend to drive down purchasing power in a big way. This shows up first in highly liquid, heavily traded commodities like gold and oil, but eventually works it's way through the system into everything else.

When people feel things are on the right track and improving, like they did under Reagan in the 80s, the dollar gains strength even though the government is running big deficits that logically should be pushing it down. Bank failures, defaults, bailouts, rising unemployment, stock market crashes ("flash" or otherwise) etc. shake confidence and lead to concern about the future viability of the fiat money, whether or not they cause net additions to the number of dollars actually chasing after the available goods in a monetarist calculation.

But eventually, the numbers will have their due. We now have so much debt, and are creating more at such a great rate, and have announced plans to do so for the foreseeable future, that the whole house of cards pretty much has to tumble at some point. We are already past the point where there is any reasonable hope of repaying the principal in a meaningful way. Interest can still be paid, but there is a finite tax base from which to pay it. As the amount owed continues to rise, and interest rates continue to rise, and taxes continue to rise, there will be more big downdrafts in the USD value, followed by smaller updrafts as the fear eases off from time to time. When super high taxes can't confiscate enough to cover the interest due, default, either explicit or through hyper-inflation, will occur.

This is one point where my view differs fundamentally from that of most analysts and economists. They are looking at gold and wondering how high it can go. They think gold will enter a "mania" phase that will push it up like tech stocks at the end of the 90s, or gold and silver in late 70s. They want to be able to recognize the top of the gold market so that they can get out before it falls like it did back in 1980.

I do not foresee a gold mania. I foresee the end of the dollar (really, the end of the fiat currency experiment all around the world.) Others talk about "the end of the dollar", but in the next paragraph, they talk about how to recognize the "blow off" in gold prices, and the importance of selling at the right time. This totally misses the point.

There is a basic difference between fiat money and gold, silver, real estate, tech stocks, or even tulips. The fiat money HAS NO INTRINSIC VALUE AT ALL. The others all have some real value, independent of what their "price" in some monetary unit is. They serve a real purpose, even if it is only to decorate your window box or make your house smell nice. Someone will always want them for what only they can do better than anything else.

Although I often point out that gold can be priced in dollars or dollars can be priced in gold, and that one is just the mathematical inverse of the other, gold and dollars are not in fact interchangeable. Dollars can, just like all the earlier failed fiat money experiments, go all the way to zero. Disappear from the monetary scene. Become a footnote in the history books. Become "as worthless as a Continental", just like the current dollar's predecessor, the bills issued by the Continental Congress during the American Revolution. Gold will not. It is too useful in its own right, and has been through the fire that has consumed hundreds of other forms of money over thousands of years and always come out shining.

Will the dollar eventually be replaced by the "New Dollar"? By the "Amero"? By the Renminbi? Or the Euro? Or the Islamic Dinar? Who knows – and who cares!

Use gold as your money. Keep your savings in gold. Measure the prices of things in gold. Watch the demise of the dollar from the comfort of your easy chair, drink in hand, as it continues to head, in fits and starts, toward its intrinsic value of zero. If the dollar enters an updraft, or even a mania, feel free to speculate a little, but watch carefully for your exit point near the top of the rally, or use trailing stops to get you out. The same holds true for stocks, real estate, and other investments. Keep the gold value of your investments growing. Take some profits off the table from time to time, adding them to your store of gold savings.

And whatever happens to the US dollar, you will still have your gold. And you will be able to exchange bits of it for whatever you need: to eat, to start a new business, to help your friends and family, to travel, to LIVE!

And that's what it's all about.

Why?

Because there is a market in money. All the world's currencies compete against one another. Each has a large "captive" user base, mostly in it's country of issue, but all are traded on exchanges, just like stocks. Traders who see a currency with weakness not yet reflected in its price will sell the weak one and buy something stronger. Although there can be price distortions, over time these tend to correct, and traders are rewarded for their insight.

Gold is one such currency, although it has no captive user base at the moment. The US dollar is another, with a large domestic user base and popularity around the world as central banks hold it in their reserves, individuals hold it for savings, entire countries use it as their means of exchange, and important commodities like crude oil are priced in it. Euros, Pounds, Renminbi, Yen, and many others also compete in this marketplace.

Gold is the strongest, safest form of money mankind has yet discovered. It has many uses, it is easily tested for purity and easily divided in convenient units. It does not rot, rust or corrode, it is rare enough that it takes real effort to obtain more of it, but not so rare that it cannot be had by anyone who wants to own some. Of course it is not perfect; nothing is! But for thousands of years people have been experimenting with various forms of money, and gold is the one form that has withstood the test of time, again and again.

Most people use the local brand of currency because it's easy. All the local banks use it, all the prices they see marked on the shelves when the go shopping use it. It is easy to obtain, easy to save, and easy to spend. In some countries, at some times, people have had little choice; use of the local currency was mandated by law. Holding or trading in foreign currencies without special permission from the government was a punishable offense. Often, taking the local currency out of the country in any meaningful amount was also a crime. In almost every country, "legal tender" laws force many types of transactions to be conducted using the local currency. You will need some, too; but just enough to facilitate your day to day transactions.

The last 30 years or so have been a time of fairly strong monetary freedom; people from all over the world have been able to own whatever currencies they wanted. They have been able to open accounts in other countries, to travel the world and exchange their home country cash for local cash or use their credit cards to make purchases when traveling, or from home over the Internet. Most have been able to own gold.

Storm signals are now flying, however – signaling the end of this period of relative freedom. Austerity measures, deficit reduction programs, tax increases, and new reporting requirements all point to a period of increasing government control and regulation. A period of increasing nationalism, of homeland security, of tightening borders. A period of diminishing freedom and privacy in many ways, but especially in terms of money and travel.

With a tip of the hat to The Daily Crux, I recommend this piece from the Expected Returns Blog:

There are certain periods of time in history when seemingly obscene prognistications are right. I believe we are in one of those times. It is at times like these that "conspiracy theorists" (whatever that means) become what I like to call "reality theorists." 

Economic shocks come from nowhere. One day the global economy is humming along; the next day it collapses. Crashes don't occur because the fundamentals suddenly change; they occur because the public at large recognizes the fundamentals and heads for the exit at the same time. What's crashing next is the public's confidence in governments across the Western world. You can guess how that will affect the price of gold.

And how it will affect freedom in general.

A great place to start is by dumping the local currency as your unit of account. Start thinking in gold terms, not in terms of the local funny money. But that is just the start.

If you do not own any physical gold, buy some now. Buy one little coin, even if it just one-tenth of an ounce. Hold it in your hand, put it somewhere safe, or carry it in your pocket, but get started.

If you do own some gold, think of it as your core savings position. Is it enough? Add to it until you can sleep well at night, knowing that whatever transpires in the markets overnight, when you wake up you will at least have that core position to work with. If you own stocks or other liquid assets that have been appreciating in gold terms, take some of your profits off the table and bank them as physical gold. If your stocks and other investments are declining in gold value, consider selling them and buying gold with the proceeds. You won't be making any money by doing this, but you will not be in a losing position, either. You will simply be holding the best, safest form of cash, keeping your powder dry until the time is right to invest in other assets that will appreciate in terms of gold.

You may want to diversify some of your savings into silver as well. Silver is more volatile than gold, and as it has significant industrial uses, and most of its production is as a side of-effect of base metal mining, its price is more strongly influenced by the state of the economy in general than is gold, which is primarily a monetary metal. Still, silver has a long monetary tradition, and because it is less rare than gold, it is more useful in smaller, everyday transactions. This is why the US issued silver dimes, quarters, half-dollars and dollars, but used gold for five, ten and twenty dollar coins.

Holding gold and silver is a great start, and provides you with a form of savings that is insulated from the devaluations and defaults of governments, both subtle and blatant. This will give you options and expand your freedom, but it is not enough. Money is a wonderful thing, but it is not the only thing, or even the most important thing! Think about what is most dear to you… and try to set up a framework that will give you options to maximize that.

Protect yourself from the coming blizzard of restrictions and regulations while there is still time to maneuver. You want to be able to decide where you will live, where you will travel, who you will associate with and do business with, as well as what money you will use, and where you will keep it. Having viable choices is what freedom is all about.

The key is to act before it is too late, before everyone else is rushing to the exits. Do not allow yourself to be lulled into a sleepy daze by the entertainment spread around you by the media. Do not drowse in the warmth of the water in the pot as it heats slowly toward the boiling point. Do not allow the other crabs in the pot to pull you back in if you decide the time has come to make a break for it.

Do it for yourself. Do it for your family. Do it for future generations. But get started now!

Using gold pricing to get an accurate measure of your investment performance will enable you to do more than just survive the upheavals ahead – you will be able to make a fortune!

I urge you to watch the video, understand where the actions of governments and central banks are taking us, and most importantly, I urge you to look over your portfolio, to look over your life, and take action!

If you have questions or comments, send me an email, leave a comment, or call the Priced in Gold Hotline at 888-868-5656.

I think it's time we all switched to using gold as our unit of account, as the fiat currencies of the world continue to be consumed in a firestorm of inflationary "money" creation. Whether or not we hold actual physical gold (which we should, as our bedrock cash position) we should be seeking to own stuff that is rising in value in gold terms. The real problem is that the signals we get from investments priced in EUR, USD, JPY, etc. are being seriously distorted by the massive issuance of these currencies, resulting in investors continuing to hold them and even add to them, believing their value is rising when it is in fact falling.

US government bonds are a prime example – widely considered the safest investment in the world, and rising fairly steadily for years as interest rates drifted lower, they have in fact fallen to about half their 2002 value. Here are the details, using TLT, the 20 year T-Bond ETF as an example… In July of 2002, when the ETF was launched, you would have paid $82 per share for it. Over the years, you would have collected $29.71 in interest, and today you could sell each share for about $90. A nice, safe 46% return over 7.75 years, or 5% CAGR. But measured in gold grams, the picture is radically different. Each share cost 8.4 grams in 2002, and paid a total of 1.8 grams in interest over the years. Today, you could sell each share for about 2.5 grams – a 49% loss over the same 8 year period, for a -8.4% CAGR. I have created a chart of TLT in USD and gold, based on the "adjusted closing price" as calculated by Yahoo finance. Take a look at it to see what I'm talking about.

And this is just the start of the collapse… as more dollars are created, bond buyers will begin to worry about the value of the dollars that will eventually be returned to them, and the interest they demand will skyrocket. This will create a double-whammy drop in bond prices as their value in dollars falls, and the value of each dollar falls as well.

Of course, just holding gold doesn't earn any profit (as measured in gold) but it doesn't lose value, either. There are plenty of investment strategies that have risen in gold value over that same period, but buying and holding most stock indices, bonds, real estate are not among them.

I'm working on a DVD series called "The Truth About Gold" that will detail some strategies for dramatically expanding your wealth, as measured in gold. I will be making a few copies available to early adopters on a pre-order basis; if you are interested, drop me an email at truth@pricedingold.com

I've recorded an expanded commentary on this topic as a podcast. You can download it or listen to it here:

In summary, prices had been rising since 2003, and began 2006 around the 11,000 level. They continued a relatively steady march to a new all-time high around 14,000 in the fall of 2007. The credit implosion of 2008 rapidly forced the index to a low around 6,500 in March of 2009, but since then it has been recovering strongly, returning to the 11,000 level today.

This is the conventional story… but what is the truth?

The problem is that the Dow Index is measured in US Dollars, a highly volatile currency. As a result of the credit crisis, there has been tremendous creation of new money by the Federal Reserve to keep the monetary system afloat, causing a drastic reduction in value of the USD. In spite of this, there have been moments when the urgent need for US Dollars, to pay off debts and de-leverage, has forced the dollar's value higher, in a kind of "short squeeze", and occasionally problems in other countries have become so severe that the USD was seen as safe by comparison, increasing demand for it, and temporarily boosting it's value. (As Doug Casey recently observed, the US Dollar may be toilet paper, but at least it's three-ply!)

So when we remove the roller-coaster value of the USD from the picture, by pricing the Dow Jones Industrial Average in gold, what do we see?

From 2006 to fall of 2007, instead of rising 27% from 11,000 to 14,000 the index actually went sideways, hovering around 600 gold grams. Instead of falling 53%, from 14,000 to about 6,500, it actually fell 63%, from 600 grams to 220 grams. From this low it quickly rebounded to the 300 gram level, where it has been for the last year.

Although it's dollar value has returned to the level seen in 2006 and mid-2008, it's true value, measured in gold, is half of it's 2006 level, and three-quarters of it's 2008 level. Stock prices have not risen at all for the last year. The US Dollar, and most other fiat currencies, have simply fallen in value due to central bank manipulations, creating the appearance – but not the substance – of recovery and growth.

So don't be fooled… Keep an eye on what your investments are really doing, by pricing them in gold!