This week we have a shorter Outside the Box, from my friend David Galland at Casey Research, with an interesting insight into why gold can be considered as a poor investment by some rather influential investors (like Warren Buffett) while others may see it as the core of a diversified portfolio. As usual when I use someone's material for an OTB, I include a link at the end, if you want to look deeper. The rather large team at Casey Research specializes in gold, natural resources, and energy-related investments, for those with such an investing bent.
As a quick note, the feedback on this weekend's letter on taxes has been substantial, and a great deal of it is quite good and worth thinking about. Many bring up real problems with the position I took in my letter, and I may surprise you by agreeing with some of them. My intention right now (barring something happening between now and Friday night) is to take some of the better statements and questions, and answer them. I am not married to any specific plan. I just want to solve the problem and am open to anything that is politically feasible and makes sense, as long as we solve the basic problem of the deficit. I think it will make for a very interesting letter. I do read your feedback, by the way. So if you wanted to respond and wondered if I might actually read it, the answer is yes I do, and this week will answer as many as I can.
And to answer a question I get a lot, I buy a little physical gold every month. I don't even look at the price. The check is written the same day each month, for the same amount. I take delivery. I hope the price of gold goes down so I can get more gold per dollar. I also hope it ends up being worthless, as that will mean everything else has worked out just fine. But my gold is there just in case my crazy gold bug friends are right and we can't actually trust the government to find a reasonable solution to our dilemma. And maybe because deep down I really don't trust the (insert your favorite expletive). Just a little insurance, you understand.
So, until we connect this weekend, have a great week!
Your I am not a gold bug analyst,
You're familiar with my thoughts on gold: I buy it regularly as insurance, not an investment. Now here's something you didn't expect: I just watched a STRATFOR video and learned that the Venezuelan president, Hugo Chavez, keeps an epic 60 percent of the nation's reserves in gold. Wow. Guess he sees it as insurance as well?
Watch the video. It covers four recent moves by the ailing leader in an attempt to drum up some cash for his social programs, which can only be interpreted as a strategy to keep his waxing and waning political support strong. It all goes to show that Venezuela is a nation to watch, for better or worse, given Chavez's illness and the absence of a strong successor.
Oh, and let's not forget that the U.S. imports about a million barrels per day of oil from Venezuela, or 8 percent of total U.S. oil imports ... not insignificant.
After you <<watch and digest the video>>, I suggest subscribing to STRATFOR to access all their geopolitical intelligence. They cover everything from Chavez to China, and all things in between, with a unique perspective. OTB readers get a whopping 63% discount off their first year, plus a free copy of The Next Decade, the forward-looking bestseller by STRATFOR CEO and founder George Friedman. Try them out. As they say, it's a golden opportunity.
Your keen on geopolitics analyst,
This week’s Outside the Box is from my friend David Galland, an interview he did for The Casey Report, and it represents a philosophical train of thought more in line with Austrian economics and libertarianism than my own. But if we only read what we already think, then how do we learn? It is only when your ideas are challenged and you must determine why the other guys are wrong and you are right, that you can either become more firm in your beliefs, or change. And much of what David says in this interview resonates. (I wrote about the end of QE2 a few weeks ago.)
The guys at Casey are natural resources, commodities, and precious metals investors. Yet David argues that cash might be the wise thing now, after pounding the table for years on gold. He believes that the end of QE2 will be more important and dramatic than most think. That it is coming to an end I have no doubt, so it is important to think about what the effects, if any, will be. There are those who argue that we can live without it now. I argued (and still do) that we should have never had it. The unintended consequences are the ones I worry about. We just don’t know. It was a crazy experiment, with no understanding of what would really happen. But hoping for the best is not a strategy, so let’s think about it. David provides us with some different ways to look at the process.
You can subscribe to The Casey Report at a 20% discount for my readers, right here.
And for those who want to read more, you can get a free subscription to Conversations with Casey, which is a weekly e-letter delivered directly to your inbox every Wednesday. Contrarian investor and financial bestselling author Doug Casey talks about the economy, the markets, politics, society, and anything else that matters in life… a fireworks of informative, controversial, and entertaining viewpoints from one of the most original free-market thinkers of our time. Occasionally CWC will also feature interviews with Casey editors or “outside experts” on current market moves or important economic or political events. If you don’t like libertarian thought, be warned. You can subscribe here.
Last, a housekeeping item. I “fat-fingered” my inbox and lost about a hundred emails from the last three months or so, which I planned to get around to, but now they are buried in about 25,000 deleted files. (It’s what happens when you don’t touch-type and have to look at the keyboard. Yes, I know…) One way to clean out your inbox I guess, but if I owe you something, you might want to drop me a note again.
Your already buried with 75 new emails in a few hours analyst,