Golden Codpiece Protection Strategy

"I was going to unveil the new product from Mogambo Dubious Enterprises (MDE), which was a codpiece for men, made from ingots of pure gold, which makes wealth not only portable, but also protective in so many other important ways…"

by The Mogambo Guru

Bill Bonner at The Daily Reckoning anecdotally reports that "The demand for gold coins is so strong that a local coin dealer says he is out of stock on a number of items", which makes me think that people are finally waking up to what people always wake up to at the end of a long inflationary boom; what to do with the money?

If you put it into stocks, you will almost certainly lose money because stocks are at the top of their range, and if you put the money into bonds I can guarantee that you will lose money because bonds are already so grossly, insanely overpriced that they are yielding - for up to 30 years! 30 years! - less than the current rate of the absurdly-low, government-massaged estimate of pre-tax inflation of 4%! This is so ridiculous that I was inspired to create a new joke:

Person 1: Knock, knock.
Person 2: Who's there?
Person 1: A buyer of bonds.
Person 2: A buyer of bonds who?
Person 1: What?

And this Person 1 will look even more ridiculous because inflation is destined to go up from the current 10% because the M3 money supply is going up at 17% a year! We're freaking doomed!

So what to do with the money if you have sold out of the stock market and you have sold out of houses and you have sold out of bonds and you are sitting on this big pile of cash that is being devalued away by the Federal Reserve, more and more with every tick of the clock and you can almost sit there and watch your pile of money shrinking?

In all of history, people always turned to gold only because there is, literally, nothing else that can take its place as a portable, indestructible, divisible, universally accepted store of value!

This "portable store of value" value thing was where I was going to unveil the new product from Mogambo Dubious Enterprises (MDE), which was a codpiece for men, made from ingots of pure gold, which makes wealth not only portable, but also protective in so many other important ways, such as when ladies reject your romantic overtures by kicking you in the groin (a real turn-off, ladies, in case you ain't heard!), or when the police leave you alone because they know, just by looking at you standing there with a stupid golden codpiece in the middle of the damned mall, for crying out loud, that you are too weird to deal with.

But I am having production problems with those damned offshore slave-labor factories, (which are not as efficient as their brochures say they are, and which don't even mention the constant crying and whining of all those kids, which plays hell with their productivity statistics, I'll bet!).

In the meantime, judging by the way that the stock market goes up in the face of every piece of bad news imaginable, Mr. Bonner says that "The Dow may still go to 36,000". I arch my eyebrows to indicate that I am quizzical about such a statement, which worked like a charm, too, as he explained that it would happen "probably when a cup of coffee goes to $132."

And how has the stock market been doing lately? He says, "Last we looked, it was almost 10 years later and the Dow was back to where it ended 1999. During this time, too, the dollar has lost about 30% of its purchasing power…so the investor who believed in stocks for the long run is down about a third." Hahahaha! Nice "investing for retirement and the long-term"; you've lost a third of your buying power! Hahaha!

In more prosaic terms, 10 years ago, according to the stock index (which conveniently leaves out fees, expenses, charges and taxes and more fees, more expenses and more charges you pay to the financial services industry every freaking time you turn around), an average "somebody" invested a whole pizza cut into six equal slices, and now, 10 years later, our aforementioned "somebody" has only four slices of pizza because inflation has eaten away a third of it! Hahahaha! And yet people think they are going to have enough money to retire? Hahahaha!

Especially since Anthony M. Cherniawski of Practical Investor.com notes that although the Bureau of Economic Analysis reported that "Personal Income increased $32.2 billion or .3% in January" and that "This is down from a Personal Income increase of $54.0 billion in December", things are not as rosy as they seem. Oops!

Sure enough, even worse, "If it hadn't been for 'Bonus payments and gains on the exercise of stock options boosted private wage and salary disbursements; pay raises for federal civilian and military personnel boosted government wage and salary disbursements; and cost-of-living adjustments to several federal transfer payment programs boosted personal current transfer receipts,' personal income would have risen only .2%. Compare that to the Consumer Price Index, which rose .5% in January."

And Agora Financial's 5- Minute Forecast reports that "Prices at the wholesale level jumped 0.3% in February. 'Core inflation,' stripped of food and energy costs, and regarded by the Fed as the accurate measure of rising prices, actually shot up 0.5% - its biggest monthly leap in over a year. Over the past 12 months, PPI is up 6.4%, with energy goods (up 19%) and food (up 6%) leading the way."

Yikes! Prices rising but incomes falling! We're freaking doomed!

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The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning and other fine publications. Click here to visit the Mogambo archive page.

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