Gold is a stability hedge.
Long time commodity investors understand this. It's not an inflation hedge - unless the inflation is particularly destabilizing.
China and Russia and India and the Middle Eastern countries and the Eastern European countries are all experiencing inflationary pressures and they are all hyper aware of the current instability. Most of these countries are buying gold through central banks or sovereign wealth funds and through active campaigns to encourage their citizens to buy gold.
They understand this is the ultimate hedge against the emerging global instability.
The dollar is still the world's reserve currency. Yet much of the world views this as a source of instabilty and seek to hedge against it.
The United States is also experiencing a destabilizing inflation - but somehow the faith in the dollar as a source of global stability remains high here.
Faith in the government and the judiciary is at all time record lows. Faith in congress stands at 15 perdent. Faith in the Fed has dropped to 40 percent. Faith in the Supreme court is at 35 percent.
Yet 62 percent of Americans rate their own economic health as comfortable. They have a lot of dollars. So what's to worry?
62 percent see the instability in the crumbling institutions around them but they feel they'll personally be fine.
American exceptionalism means that everbody thinks they will be the exception with regards to the emerging global instablity. Ands faith in the power of the world's reserve currency lies at the bottom of this.
Therefor Americans still don't believe they need stability insurance.
But America has a severe debt problem. Having the reserve currency helps because you can print money to purchase your own debt.
But this is a highly inflationary exercise. Which gets worse and worse because the more you print to buy the debt the more debt you have, the higher the rates and the greater the debt service and the more debt you have so the more you have to print so the more debt you have...
There is no way out of this. It doesn't matter who we elect. It doesn't matter who's running the Fed.
We'd like to think it does. But it really doesn't.
The inflation is the way out because it inflates away the debt. It also erodes the standard of living for everyone but the billionaire class.
Especially for the younger generation that inherits this mess.
The mess is only now starting to manifest because it takes a critical mass of debt to tip the balance from stability to instability.
Most of the world thinks we're there.
America doesn't quite see it that way.
We'll soon see who's right.
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