Congrats to those who were able to take advantage of the Holiday sale in gold we saw on Friday and Monday morning.

I like the steady advances we are seeing in gold. It doesn’t feel like a bubble to me. We are seeing the occasional pullback followed by nice, steady, reasonable gains. At the top of a bubble, you will typically see more volatility than is currently exhibited by the price of gold.

The demand for gold from the U.S. mint was up 75% this year and the Fed is planning to destroy the dollar, so gold seems the logical place to be for the foreseeable future.

I’ve been thinking about the following quote from that great opponent of central banking, Thomas Jefferson:

If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered…I believe that banking institutions are more dangerous to our liberties than standing armies… The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.

I think ol’ TJ had it almost right. To more accurately describe what is happening today, the quote should probably be changed to ‘…first by asset inflation, then by wage deflation…’. The Fed is inflating assets using ridiculous zero-or-near-zero-down government-backed (FHA, Fannie, Freddie, etc) loans while wages are continuing to fall. Essentially, the Fed is creating debt that can never be repaid. In that kind of environment, the dollar is going to continue to collapse and fiat-money substitutes are going to continue to go up.

TJ was right about the kids too, what with 25% of American kids currently on food stamps. So long as the Fed exists, Americans who hold dollars will continue to get robbed of their wealth.