Trapper John and Me

11 Jun

A recent perusal of the Fox News channels (by mistake) showed ad after ad touting the advantages to holding gold in ones portfolio.  The numerous ads all looked creepily similar, with a celebrity spokesperson (like Wayne Rogers-of Mash Fame) speaking about the Federal Government and their printing press, the threat of hyper-inflation, and the instability and distrust engendered by the 2008 great recession. The ads got me uncomfortably thinking about our own line of reasoning with respect to hard assets. Unlike these ads, our thesis is not built on some return to hyper-inflation or some conspiracy theory based strategy that thinks confiscation is just around the corner. Our strategy, at its core, is based on simple supply and demand: when the supply of dollars becomes endless, the value of that dollar is unceasingly under pressure and the way to protect and profit from such pressure is to allocate significant portions of ones portfolio to things that will hold value in the face of this pressure (hard assets). Negative real and nominal rates only add to this pressure leaving all currencies ultimately in a race to the bottom. Buy Stuff.

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