How to invest in gold? Part 1

While I was on the plane, I almost did not believe what I read: US Treasuries bills, 3 month yield went to almost zero. Fear rules -- they don't even want to keep their money in the bank because they fear bank will bankrupt. No interest is OK as long as they can get back their money. Geez, what the hell is going on? We are talking about a very developed and most powerful nation in the world. A nation that envy of everyone and wish to model, what the hell is going on really?

(Financial Times)Senior Democrats signalled hard bargaining ahead on the Bush administration’s proposed $700bn bailout for the country’s financial institutions as officials met members of Congress over the weekend to seek bipartisan agreement on the package.

The plan to quell turmoil on the financial markets would allow the government to buy the toxic assets of any US institution for the next two years, raising the legal ceiling on the national debt from $10,600bn to $11,300bn.

This is clearly inflate or die kind of situation. What they have done is planting a seed of extreme inflationary environment to fight assets deflation. From historical perspective, this phenomenon is similar in the 1970s.



The US government was very reluctant to act in the 70s and essentially causing the inflation to go through the roof. Paul Volcker had to raise double digit interest to kill off the inflation in the early 80s. Gold went to US $ 2000 on inflation adjusted basis. While I agree that the inflation is at the cyclical peak due to weak global economy but the next up cycle is going to be very ugly, if you care to look into 2011 or 2012.



Can a small guy like us(shoe string budget) do something?