I truly believe that inflation is one of the worst and most insidious forms of theft that plagues this country. It's an inconvenient fact that inflation hurts poor people the most. It's a regressive tax. Depressed wages, higher energy costs, high unemployment, endless war, tax increases, benefit cuts - these societal maladies all stem from inflation, which of course is a byproduct of excessive debt.
We know that state-run central banks ALWAYS try to inflate their way out of debt. It's simply the easiest way to make debt go away. If you disagree, then just remember how painful it was for our current leadership to raise taxes by $400 billion for the next 10 years. And they still haven't cut spending! So if you doubt that inflation will be how we deal with our debts, then I don't know what to tell you.
Ben Bernanke and Tim Geithner might call their inflationary measures by a different name - like quantitative easing - but the effect is the same. And while I believe these inflationary policies will decimate the savings of regular Americans, it's a necessary ingredient for a successful bull market in commodities.
Make no mistake - these policies will destroy lives. The average living standard of Americans will continue to slide (as it has for much of the past 40 years). Average wages will continue to dip. High unemployment will remain. But that's why it's of vital importance that you give yourself what my colleague Tyler Laundon calls "an ownership stake" in some of the trophy commodity investments that are available today.
If you don't have this kind of ownership stake, then it won't matter if you've been a diligent scrimper and saver for your whole life. It won't matter if you've socked away a small fortune into a 401(k).
It won't matter. Your savings will get inflated away along with America's debt. Your 401(k) holdings will shrink as people pull money out of the broad stock market in droves as they realize they too need an ownership stake in something "real."
This stage of the commodity bull market is the most dangerous for many investors - because more and more of them become convinced every day that the boom is over. And they sell. And then they won't buy back in until it's much too late.
Just today I talked to someone who, for about the thousandth time, asked me if I think the bull market in gold is over. I know it's not over because he hasn't bought in yet. Only when I start to hear about gold ownership from my barista or my non-finance friends will I know that the end is near.
But today, almost no one owns gold - especially when you compare gold to other assets like stocks or bonds. Gold ownership is STILL near all-time lows. There are still millions of people who will likely buy gold at some point during this bull market. And as with all bull markets, most of them will buy it at the top.
Until then, we're only in the middle of this bull market. And we need to stay in it if we want to capture the lion's share of the profits.