There is another reason to own gold

Everybody knows that gold is an inflation hedge. That’s why most people buy it. They know from experience that the purchasing power of all national currencies is being constantly eroded by inflation. But they also know that their purchasing power is preserved by owning gold.

For example, the price of crude oil has been rising for decades when viewed in terms of dollars or any national currency. But when the cost of a barrel of crude oil is viewed in terms of ounces or grams of gold, its price is essentially unchanged. In other words, the dollar price of crude oil and the dollar price of gold are both rising more or less lockstep. By owning gold instead of US dollars, you can today purchase basically the same amount of crude oil as at any other time in history.

In other words, gold is an inflation hedge. But that is only one of gold’s advantages. There is also another valuable reason to own gold, and significantly, this other reason is becoming increasingly important.

Gold is also a catastrophe hedge. Gold enables us to protect our wealth from a financial meltdown because it does not have counterparty risk.

The monetary and financial system is rapidly spinning out of control. We are witnessing the unwinding of decades of reckless credit expansion. Borrowers--corporations, hedge funds, homeowners, etc.--who no longer have the financial capacity to repay their debts are defaulting on their obligations in increasing numbers. In that environment, the safety of one’s wealth becomes paramount, to protect against the catastrophe of default in all types of financial assets.

In short, promises are being broken, so in an environment in which financial assets are becoming increasingly doubted, one needs to own tangible assets. Own things instead of promises, and there is only one money that is not dependent upon someone’s promise and that’s gold. So buy gold; it is the best catastrophe hedge. But also buy gold because it remains the best inflation hedge.

For example, gold was $670 per Toz in August of 2007, and crude oil was $71.50 per barrel. In other words, the ratio was 9.37 Toz of gold per barrel.

Gold today is $992 per Toz, and crude oil is $109 per barrel. So both prices have risen considerably in dollar terms (i.e., inflation), but the price of crude oil today is 9.10 Toz of gold per barrel, less than last August, but essentially unchanged. Gold performed as expected, being a nearly perfect hedge against inflation.

So when considering all of its advantages, gold provides what everyone wants: peace of mind knowing that the portion of your wealth placed in gold is safe.

Loving my country while loathing its government

Last October, a reporter asked Barack Obama why did he refused to wear his American Flag lapel pin. He, as well as other Congressmen, wore the pin right after 9/11 as a sign of unity and American pride. But October 2007, Obama said refusing to wear the pin was from principle: "You know, the truth is that right after 9/11, I had a pin. Shortly after 9/11, particularly because as we’re talking about the Iraq war, that became a substitute for I think true patriotism, which is speaking out on issues that are of importance to our national security, I decided I won’t wear that pin on my chest."

Some of the neocons might get steamed. Neoconservatives--and the rest of the conservatives, and liberals today--think that refusing to wear his American Flag pin is the opposite of patriotism. They say the act is a lack of this noble gesture.

Although I find fault with many of Obama's positions, I applaud him for that. I know there is a difference between loving my country and loving its government, and Obama knows it too. As for me, I love my country, but I don't trust its government.

In fact, the Founders and many important people in government in the past think like me. Thomas Paine said, "It is the duty of every patriot to protect his country from its government." Carl Schurz said, "The peace and welfare of this and coming generations of Americans will be secure only as we cling to the watchword of true patriotism: 'Our country -- when right to be kept right; when wrong to be put right.'" Theodore Roosevelt said, "Patriotism means to stand by the country. It does not mean to stand by the president or any other public official, save exactly to the degree in which he himself stands by the country." Are all three men unpatriotic?

Even the founding documents had a difference between the country and the government. When you look up the Preamble to the Bill of Rights, you will see that the "Bill of Rights" doesn't give us rights at all. On the contrary, the Bill of Rights is actually a bill of restrictions restricting the government from interfering with our unalienable rights!

If you ever want to befuddle one of these people who conflate the government and the country, remind them that the very purpose of the Constitution, with its equal but separate branches of government, those branches are checked and balanced by the other branches, and adding a Bill of Rights before ratification, is to protect the country from the government. Their systems will begin to short-circuit as they try to figure out a response.

A perfect example of true patriotism was the White Rose. The German newspaper, consisting of a number of the University of Munich students, was a resistance leaflet opposing Adolf Hitler and Nazi Germany during World War II. All of the students were beheaded because of it. You tell me, were members of the White Rose patriotic, or they were just traders?

That's why John McCain, Mitt Romney, Rudy Giuliani, and the rest of the Republican presidential candidates were angry and confused when Ron Paul said the reason for 9/11 is American foreign policy and "blowback". In fact, Rev. Jeremiah Wright (Obama's pastor) preached the same thing during his "America's chickens are coming home to roost" sermon (except both speakers use the word "we" too much--it's more accurate if they would switch "we" with "the American government"--I didn't nuke Japan, or I didn't starve Iraqi children or make them have diseases) . But the other Republican candidates can't understand the reality that the country and the government, including our foreign policy, are completely different. In their minds, Paul's philosophy is to "blame America", because (in their minds) the federal government and America are conflated into one entity.

But don't blame it solely on the conservatives. In 1995, when the Alfred P. Murrah Federal Building was bombed (I live and was living in Midwest City OK, a suburb of Oklahoma City, when the bombing occurred), I felt a lot of emotions. But when I asked the reason why the terrorist(s) wanted to do this, I made the correct conclusion and concluded that the OKC bombing was exactly two years after the fire and deaths of 74 innocent victims outside of Waco (the OKC bombing killed 168 innocent victims), so OKC was a reaction to Waco. Many people made the correct conclusions also. And the reasons that the Murrah building was the building to be bombed was most of the ATF and FBI agents was stationed in that building. Some people (including me) made Timothy McVeigh seem almost human (although I totally condemned his actions). When word came to Washington, Bill Clinton was flabbergasted. He said in disgust, "There's nothing patriotic about hating your government or pretending you can hate your government but love your country." He can't understand how Americans could love their country while disapproving of the government's massacre of innocent men, women, and children at Waco.

Many conservatives and liberals can't understand it either. They would rather put on your American Flag lapel pin, recite the Pledge of Allegiance, wear red, white, and blue clothing, and never question the government's motives. That, to them, would be a true patriot.

Ron Paul concedes the presidential bid is over...I think

It's a sad day. Yesterday night, Ron Paul released a video (below) that said his candidacy is winding down. However, he doesn't say "quit", or "halt", or "give up", or "come to the end", or something to the effect that the race is over.

And, for unexplained reasons, he does urge "loyal volunteers" to keep up the struggle to gain delegates to the GOP convention in September, although John McCain already has acquired more than enough to win the nomination. Paul sounds rather like the general who got safely off the island radioing back to his stranded troops to keep up the good fight.

But it sure sounds like a farewell message. Paul says things like, "The presidential campaign will soon wind down." And, "I will continue to make every effort to visit states where enthusiasm for liberty exists."

And also: "While victory in the conventional political sense is unavailable in the presidential race, many victories have been achieved due to your hard work and enthusiasm. For that I am deeply grateful and encouraged."

But he said his campaign was "a significant first step" and we should "plan for the next phase". Does that mean the second step will be continuing his campaign as a Libertarian? I hope so. Since there are no Democrats campaigning in TX District 14 this year, and 3rd parties will not compete against him (on account of they like him), Paul has already won his seat and will have nothing to loose in trying. You can see it for yourself:





UPDATE: Ron Paul is still running! ...except for what? Check out this new video:





Now, the Libertarian National Convention will be in May. I guess I will have to wait and see how things turn out.

Chicago bans small bags

This is the most asinine law I know. According to the Chicago Sun-Times, in order to win the fight in the war on drugs, Alderman Robert Fioretti, with the help of the Health Committee, passed a law banning "self-sealing plastic bags under two inches in either height or width." His reasoning is that those bags are used to sell small quantities of meth, heroin, cocaine, marijuana and other drugs in.

That's right, Chicago is prohibiting small plastic bags, under a "crackdown"!

With an I.Q. bigger than your shoe size, you can figure that drug dealers would sell the same drugs in a bigger bags.

Fioretti is not alone. According to Lt. Kevin Navarro, commanding officer of the Chicago Police Department's Narcotics and Gang Unit, he said the law would be an "important tool" to go after the rogues in the city, such as grocery store owners and other businesses who sell the evil bags (...but not drug-dealers or drug-users).

And Health Committee Chairman Ed Smith said the ban on the bags (but not the drugs) is a part to stop "the most destructive force" in Chicago.

"We need to use every measure that we possibly can to stop it because it is destroying our kids," the chairman said.

Violators would be punished by a $1,500 fine; it doesn't matter if the bag is used to carry something perfectly legal.

Now, I am not a drug-dealer, but I am a rock musician, and in my lifestyle, drugs are everywhere, especially marijuana. And speaking of marijuana, the bags which hold a quarter ounce of pot (the standard size for personal use) are larger than 2 inches by 2 inches.

But based on the fact that some people in government think this is a good idea, I think that the Chicago City Council committee (and all Chicago politicians) should be drug tested. No sober person could possibly think that this is going to curb an iota the war on drugs!

The government of Chicago have lost their minds!