Gold must follow the fake inflation, the CPI, not the true inflation. Inflation has been rising for the past few years. Maybe that’s why gold started its most recent run. If gold followed the true inflation, it would still be rising. So I think it follows the CPI. Any comments on that Chris? I am waiting for a good buy spot to put 10% of my net worth in gold. I am scared holding dollars. I don’t see how dollars can stay strong. As soon as the Fed lowers rates, in our recession, the dollar will weaken again. What do traders and FCBs buy whenever the dollar weakens? Any data on that, Chris? Do you have friends who are currency traders?
Somebody should make a true inflation number. Just take about 50 things that we all buy, like housing, insurance, tuition, music lessons for our kids, and don’t strip out the steaks (for the meat eaters out there, I’ll stick with tofu) and gas. Track this over time. I read a funny blip on The Big Picture, about a bunch of traders that kept a trader CPI. They kept track of price changes in a trader’s basket of goods: dry cleaning, WSJ, martinis, golfing. No matter how you set up your index, you will come up much higher than the government CPI, which minimizes the weightings of things we consume, and strips out the rest.
So the question is: does gold track true inflation, or just the government doctored numbers?
