Investing in the Age of Obamanomics
Think Outside the Box
By Howard Ruff
The most important
thing you need to know about investing in the
Age of Obamanomics is: invest in inflation.
Consider two key investments that are perfect
for the Age of Obamanomics: precious metals and
carefully selected stocks. When we’re done with
this chapter, you’ll know exactly what to look
for and how to avoid the pitfalls.
Your investment program should be based in coins
and bullion. Invest at least one-third of your
assets in gold and silver coins or bars.
Precious Metals Are Basic to a Ruffonomics
Gold and silver are perfect pure inflation
hedges. Strictly seen as an investment, as the
dollar shrinks in value, gold will be worth
thousands of dollars an ounce and silver will be
worth hundreds of dollars an ounce. Glenn Beck,
one of my favorite talk show hosts, said he is
“not buying gold as an investment, although it
will be a good investment, but as insurance.” He
doesn’t tell us what he is insuring against, but
I’ll tell you. He’s insuring against the
plummeting loss of purchasing power of all
dollar-denominated investments, even the
possible collapse of the dollar.
Precious metals feel so solid. When I was in
South Africa, I went ten thousand feet down in a
gold mine, and then came up to visit where they
were producing gold bars. I held a new gold bar
in my hands. It felt like wealth. It was real.
Then I went to the mint that manufactured
krugerrands, South African gold coins, and we
were permitted to handle these coins. Same
feelings. I understand why people killed for
Why Gold and Silver Now?
In these current circumstances, not buying gold
or silver is one of the dumbest money decisions
you can make in 2009-2010. Here are just a few
reasons why this is so:
1. Obamanomics: Socialist states always inflate
the paper currency. Obama, Congress, and the
Federal Reserve are diluting the dollar like
never before by creating more of it.
Accommodating Obama and Congress, the Fed has
manufactured trillions of dollars out of nothing
at by far the fastest pace in history, and it’s
accelerating. The government has given trillions
to the big banks, which will loan the dollars
into circulation or give them to politicians to
spend into circulation. This money expansion
currently dwarfs several times over the monetary
explosion that led to the Carter-driven metals
bull market in the ‘70s. I can’t overstate what
is happening. Economists may call this
monetary-expansion process “inflation” but it
really should be called “dilution”—dilution of
the money supply and consequently its value.
Inevitably, sooner or later, consumer prices
rise and laymen then mistakenly call that
“inflation.” Calling rising prices inflation is
like calling falling trees hurricanes. When will
the public catch on? Price inflation and gold
prices are the chief measurements of public
awareness. Sooner or later, awareness becomes a
critical mass, the public catches on, and the
metals go through the stratosphere.
2. Real money: Gold and silver (especially
silver) have been real money over and over
again, in all ages of time and on all
continents. Ever since Gutenberg invented the
printing press 400 years ago, the world has been
littered with worthless dead paper currencies
every seventy-five to eighty years, due to
runaway money printing. Every time the dominant
currency has been inflated, gold and silver
coins have become hugely profitable investments,
and sometimes the only surviving currency.
Throughout history, each time a paper currency
finally caved in to inflation, gold and silver
(especially silver) became the only universally
acceptable coin of the realm. Gold and silver as
a means of exchange and a store of value have
always survived. They have always been symbols
of wealth, far more precious in our
consciousness than any mere paper.
During periods of hyperinflation, there always
comes a time when people refuse to accept more
and more counterfeit, inflated money or
base-metal coins in return for their
hard-produced goods and services. At that point,
society instinctively turns to gold and silver.
It has happened over and over again, and as
George Santayana said, “Those who cannot
remember the past are condemned to repeat it.”
3. It’s early in the game: Gold and silver are
early in an historic bull market (in fact, as
this is written, it’s only a Golden Calf),
making this a low-risk investment with an
awesome upside for the long-term investor.
Especially silver. This gold and silver bull
market will dwarf the last great one in 1973-80,
when fortunes were made by relatively small
amounts of money invested by amateur investors
(many of them my readers). All of the factors
that created the last bull market are here
again, only amplified several times.
4. Supply and demand: Both metals are far rarer
than most people know. All the gold ever mined
since the dawn of history, including that in
Central banks, gold fillings, and sunken
shipwrecks in the Caribbean, etc. would cover a
football field about four-feet deep. It would
make a cube about the size of a typical 8-room
house. Demand is now leaping past new supplies.
Likewise, most of the easy silver has been mined
over the centuries, even with primitive methods.
For example, during the Roman millennium, they
used silver coins for currency and exhausted the
Spanish silver mines.
Now that prices are high enough to make gold and
silver mining profitable again, it will take as
much as seven to ten years to develop new mines,
and stagnant supply and rising demand have made
higher prices inevitable for the imminent