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<p>[QUOTE=&quot;passantgardant, post: 1138989, member: 30033&quot;]Rono, I wonder if you could give us some hard facts upon which you base this opinion that fiscal collapse and hyperinflation are &quot;not likely&quot;.&nbsp; Because I&#039;ve crunched the numbers in Obama&#039;s budget (<a href="http://passantgardant.com/blog/59-mandatory-spending-exceeds-income" target="_blank" class="externalLink ProxyLink" data-proxy-href="http://passantgardant.com/blog/59-mandatory-spending-exceeds-income" rel="nofollow">http://passantgardant.com/blog/59-mandatory-spending-exceeds-income</a>), and I can find no likely path to prevent it.</p><p><br /></p><p>Also, what percentage would you assign to &quot;possible but not likely&quot;?&nbsp; 1%, 2%, 1/2%?&nbsp; If you plug that estimate into the calculator I linked previously, what does it give you as the fair value for gold?&nbsp; Even if you think hyperinflation is unlikely, the massive impact that it would have makes gold still an important part of your hedging strategy.&nbsp; Even if you give it a 0.001% chance of occurring, if it did, gold (and anything else of intrinsic value) would increase by 10,000,000% or more.&nbsp; So the unlikelihood coupled with the massive impact still makes it a pretty important thing to consider.&nbsp; It&#039;s the same reason you shell out a premium for home insurance.&nbsp; You might live in a 100 year old house that in its entire existence never suffered from a fire, but you still insure against it because of what a drastic impact that event would be.&nbsp; Gold is insurance against a monetary inferno.</p><p>&nbsp;</p><p>The problem with TIPS, corporate debt, sovereign debt, currencies, equities, etc., is that they are someone else&#039;s liability.&nbsp; In a major collapse, you can expect them to default en masse.&nbsp; Only real assets will survive.&nbsp; Real estate, farmland, etc., has carrying costs, maintenance, tenants, etc., which can be very risky and also time-consuming.&nbsp; Gold just needs a good vault and you can basically forget about it until your &quot;insurable event&quot; occurs and you need its wealth preservation and appreciation.&nbsp; And if that never occurs, well I&#039;ve never heard anyone lament that they paid a bunch for home insurance and their house never burnt down.&nbsp; Plus, you keep the premium!&nbsp; That&#039;s my kind of insurance!</p><p><br /></p><p>Now if you want to own gold (or silver) and also speculate in junk bonds, blue chips, or mining stocks for profit, that&#039;s great.&nbsp; That&#039;s what I do.&nbsp; But a core part of everyone&#039;s portfolio ought to be inflation insurance first and foremost.&nbsp; Even if you give hyperinflation a smaller probability than I do.&nbsp; To do otherwise is like owning a home and a car and not buying any home or car insurance.&nbsp; Are you really prepared for a total loss?[/QUOTE]</p><p><br /></p>

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