TIPS

Here is a long piece worth reading, with pencil in hand.

Here

I went to this site as pundits and investment bankers are talking up the market, talking about the FED raising or not raising rates or when, or what happens when they do.  Lions and tigers and bears, oh my.

This is all fun, but the article from Kitco will offer some caution.  At some point the manipulators lose control of the strings and the marionettes crash into one another.

Investors are like the person with a hammer - everything looks like a nail. They have been making money, after losing it and destroying our monetary infrastructure, but that was a long time ago, right? Now, they see more investment because of cheap money - think about this distortion.

I mentioned Soros was buying B of A last month and, sure enough, it took off today.  Clearly, there is information insiders know, like the government protects its own. He looks smart, but is just connected.

Gold fans just buy without examining its underlying value which, it turns out, doesn't matter, as yet, as what is more important is the bad value of our economy.  Old time traders say: wo, way too high, look for 850.  Other old timers say, don't sweat the dips all hell is breaking loose. Depending on the time frame, both are right.  Still, there is a see-saw.

My only point, in the end, is anyone with cash is nuts. You are paying money to keep it. Why not protect it in something not a stock and not a commodity?  If you have extra assets, then you can play investor as and see what happens.  If you a worried about survival, time to take a conservative action.

Stocks and gold, and so on, are flags in the wind of monetary pricing and government interference.  Winds change.

If you go here, you can learn how to buy TIPS.

TIPS are ignored, in general, as they are not sexy, at all, but they are the only security against serious inflation. There is no reason to not purchase these treasury bonds, other than emotional inertia, the tool of the crooks.

The site mentions you can buy TIPS from your broker.  TIPS are bonds and trade at a discount or premium.  Prices change and one can buy and sell them like regular bonds.

Here, you can see TIPS prices move. When inflation is low, TIPS are low; when inflation heats up, TIPS move up.  Why?  Because they guarantee a return so they are of interest to those wanting to defeat inflation.

A TIP guarantees a certain, modest return, no matter the inflation rate. If you get 2%, that sounds trivial, but if the inflation rate goes to 18%, as it has in recent memory, you will get 20%

If that doesn't sound like fun, consider what you are getting on your checking and savings account, then factor in a 7% reduction in the dollar each year.  The government is using an invisible tax to take your assets.

When inflation starts up seriously, see article, investors will look around for a place to park cash.

If you are holding TIPS, you will see the value of the bond increase both to match inflation, as promised, AND because of a panic to get to security, the price of the TIP will see an increase.  It could be a serious move.

Also, I am concerned that there will be an attack on Iran soon, so security is a nice idea.

The government is using inflation to erase debt.  It eats debt by making the debt easier to pay as money becomes worth less and, thus, you get paid more. (Hence, get a loan now as it will be easier to pay later)  Real assets, like silver, will apparently go up during this time, but mostly it goes up because the dollar goes down. The same with oil.  As I was informed yesterday, an ounce of gold will always buy a good suit.

If inflation takes off, so will oil prices- even as demand goes down.  Supply and demand have an affect, but the devaluation of the dollar will trump the markets.

Your friendly government is digesting your money. It does so intentionally.  So, you do as you think best.  A god serf will have a nice checking account.

Even Republican politicians join in this shell game, though not at the spectacular numbers afoot these days, so I won't bother to activate the socialist meter at this point.  

Monetaristic policy is agnostic, you can be whatever party you like as you play with people's lives.