Wednesday, August 22, 2012

the silver surfer

This is a tough time to be an investor, because so many of the traditional, formerly easy ways of using money to make money have turned sour.

Real estate? Forget it. Securities (i.e. stocks and bonds)? Too risky. And in this depressed economy, you don't hear of anybody sinking big capital into an ambitious new startup enterprise.

However, the need to invest, in order to protect our savings, has never been more obvious. This is not your grandfather's depression, when money actually gained value as stunned governments unsuccessfully tried to hammer together policies which would induce recovery. In our current depressed circumstances, the US Treasury and European Central Bank are attempting to "create" (print) enough cash to neutralize the crushing debt that has handcuffed both the public and private sectors, with the inevitable inflationary result. And the brunt of present-day inflation is ballooning the prices of the things everybody needs: food, fuel, rent, and medical care.

Now there's a new book whose authors have devised an investment strategy designed to deal effectively with our changed circumstances. "SWAG: Alternative Investments for the Coming Decade," by long-time investors Joe Roseman and Louis Bacon, advises investors large and small to buy silver, wine, art, and gold as hedges against inflation.

Silver is the easiest and best investment for the long run right now, because its price has been kept artificially low for several years now due to of market manipulation by one of the usual suspects, JP Morgan. But government regulators are on to the game now, and Morgan's corner on the market is showing signs of deteriorating under pressure.

Investing in wine and art requires knowledge in both cases, and a discriminating eye for "good" art, as opposed to the mediocre. In our decadent era, more than ever, it pays to know as much as possible about what you're buying, and quality trumps quantity by a wide margin. These types of investment also assume that there will always be enough very rich people able and eager to buy such luxuries -- a safe bet if there ever was one.

Finally, gold remains the best long-run store of value. Just follow the most basic rule of investing (and it never changes): buy low and sell high, or don't sell and hang on to it, if you're in for the very long term.

That same rule applies to all these commodities, and yes, art is a commodity too, in a cash-exchange sense. And welcome to the new century.

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