Friday, October 16, 2009

How's That Inflation/Deflation Going?

Back in January, I recommended buying some gold, when the price of gold was $855/oz. The price today is about $1050/oz. If you bought gold when I recommended it, you'd have a return of nearly 23% in 9 months. How are your other investments going?

MonthMonthly
Inflation
Rate
Annual
Inflation
Rate
May 2008 0.84% 0.34%
June 2008 1.01% 0.41%
July 2008 0.53% 0.46%
August 2008 -0.40% 0.44%
September2008 -0.14% 0.40%
October 2008 -1.01% 0.30%
November 2008 -1.92% 0.09%
December 2008 -1.03% 0.01%
January 2009 0.44% 0.01%
February 2009 0.50% 0.02%
March 2009 0.24% -0.03%
April 2009 0.25% -0.06%
May 2009 0.29% -0.10%
June 2009 0.86% -0.12%
July 2009 -0.16% -0.17%
August 2009 0.22% -0.12%
September2009 0.06% -0.10%


(Note: When I posted this in May, the April numbers were still preliminary.)

The CPI is showing annual deflation. Gold is going nuts. What does that mean? The FED is trying to fight deflation by pumping out as many dollars as possible, but they're not stopping it. The dollar is on its way to being worthless. Yay!

Another note about this is over at zero hedge, where they've looked at the Dow Jones in constant dollars and vs. gold. The first time the Dow hit 10,000 was in 1999, and the cost of that 10,000 in gold was about 30 oz. Today's Dow at 10,000 costs less than 10 oz. of gold.

Goodbye, dollar -- it was nice knowing you.

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