blog.milesfranklin.com / By Bill Holter / November 19th, 2012
Adam Taggart did a piece late last week asking Jeff Clark “How many ounces of Gold (Silver) should you own?” (Jeff Clark: So How Many Ounces of Gold (or Silver) Should You Own?)
He did 2 charts (one for Gold and the other for Silver) assuming various monthly budgets and assumptions on how long inflation lasts. He uses an assumption of either 10% or 15% to do his calculations, it is not clear. There are several flaws in the logic, the biggest is that he uses current Gold and Silver prices while assuming a high inflation rate and does not allow for higher prices which would surely be the case with inflation ramping up. He also assumes that the metal is THE only asset that one may have to pay monthly expenses with and it looks like he is making the assumption that there is no income from whatever job you might have. While not really correct in my mind, this is a very good article to read to get YOU to do the math for yourself as to “how much is enough?”
Let me say that once the onset of inflation begins (it is already started), I do not think it can EVER be stopped without changing the currency/monetary systems. For starters, you can’t have 15% inflation and 0% interest rates… for very long. Sovereign governments as a whole cannot afford even 6-7% interest rates, they could not pay the interest on their accumulated debt. Of course, this brings into play even more “printing” to pay the interest and the hyperinflation cycle gets more gas for the gas tank. My point is this, once the ball gets rolling and it is understood and public knowledge that inflation is running wild, nothing short of a change in the global monetary system can or will be able to stop it. There is ZERO ability of a new Paul Volcker riding into town and jacking up interest rates to quell inflation, this is no longer an option. In fact, there are no options left other than how hard they press on the accelerator (print). There is no brake, there is no steering wheel, there is nothing… other than the accelerator pedal.
So, how much is enough? In my opinion, you should have as much as you can afford to purchase. It makes no sense in my opinion, if you know that the currency is mathematically doomed to hold anything more than 6 months or 1 year’s worth of liquid cash. You are receiving no interest and the currency itself is losing value every day. This loss of value will only accelerate as debt increases and central banks print in support.
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