Tuesday, May 31, 2011

Quick Note: Agricultural Chemistry & Gold

Over the past decade fertilizer prices have generally increased when priced in dollars as can be seen in Figure 1.
Figure 1: USDA fertilizer prices in US dollars from 1995-2011. 
If you price fertilizer, an essential resource, in gold (real money) you come to a different conclusion as can be seen in Figure 2. 
Figure 2: USDA fertilizer prices in ounces of gold from 1995-2011. It is assumed that the 2011 average gold price is $1600/oz.
When priced in gold, fertilizer has not been increasing. It has oscillated somewhat, but over the past decade and a half it has generally been dropping when priced in gold. Note that the spike in 2001 was due to gold reaching a multidecade low as economies faltered and central banks sold gold into the market (which was obviously a blunder). The point should be quite obvious: The price of an essential resource (fertilizer) is not increasing when priced in gold, rather, the value of the US dollar is decreasing!

Thursday, May 26, 2011

Platinum & Palladium - Money or Catalyst

I would classify platinum and palladium as highly industrial precious metals, which are susceptible to demand destruction should world economies grind to a halt. Though they have all the elements of a precious metal, they don't have a significant money vector, meaning, it is unlikely that central banks will allow palladium or platinum to be used as collateral. With that said, ISO 4217 (a standard delineating currency codes) includes gold, silver, platinum, and palladium as currencies. Though this may be the case for the international standard, there are fundamental issues with platinum and palladium becoming official money.
  1. Platinum and Palladium are only located in a few places across the globe, which would effectively concentrate wealth to those areas (North America, Russia, South Africa) should they be monetized. This of course would be unacceptable to the rest of the world. In contrast, gold and silver are widely disbursed across the world.
  2. Both platinum and palladium are extremely rare. The ranking of abundance in Earth's crust from most abundant to least abundant goes something like this: silver (67th), gold (74th), platinum (70th), palladium (72nd). Compare this to the prices: silver ($37), gold ($1520), platinum ($1770), and palladium ($750).
  3. Historically, there is little precedent for palladium and platinum being used as money. In fact, most people probably haven't even heard of palladium.
Overall, it's unlikely that platinum and palladium will become money in the same way that gold and silver will. Something to note, palladium is more rare than platinum and has similar uses, but it is less than half the price of platinum. If you're interested in learning why...take a look: The Case for Palladium - Stillwater Mining Company, Montana (pdf).

Wednesday, May 25, 2011

Technical Charts - SI & SLW

Technical post for Silver Futures (SI) and Silver Wheaten (SLW)

The SI chart includes Fibonacci retracements for the recent correction (cyan) and the prevailing trend line since QE2 was factored in (bold yellow). The next major resistance point is at the 50-day moving average around $39.30 where the chart previously reversed. In addition, there is minor resistance at the 50% Fibonacci retracement at about $38. One of two things will happen: 1. The chart will reverse and continue to channel between $33-$39, or 2. The chart will break through the 50-day SMA and head into the $40s where I believe it should be. We'll see what happens...

Silver Futures SI with moving averages and Fibonacci retracement.
Silver Wheaten looks as though it has bounced off the bottom of its prevailing channel. If the previous trend holds and silver continues to move higher SLW should test its highs within 4 months.
Silver Wheaton (SLW) with prevailing channel, daily chart.

Tuesday, May 24, 2011

Strategic Resources - Precious Metals

The world will soon become familiar with three words: money, production, and efficiency. Here I'll discuss production as it pertains to strategic resources. So the immediate question becomes: what is a 'strategic resource?' I'll personally define it this way:
Strategic Resource: A raw material that is essential for economic growth, is located or produced in geographically limited areas, is sought after the world over, and can theoretically be monopolized by a government, corporation, or individual.
I'll address several classes of strategic resources beginning with precious metal and continuing in subsequent posts with agricultural chemistry (N, K2O, P, H2O etc.), industrial metals (copper, steel, aluminum etc.), energy metals (uranium, lithium, etc.), energy sources (crude oil, natural gas, etc.), and strategic entities (ports, railways, shipping routes, etc.). In my opinion, the world will shift to sound money and raw production, but with slightly different timing. There is still the potential for large scale demand destruction before consumption based commodities really take off, but that's a discussion for another day...

Precious Metals
  • Gold - With global currency debasement continuing unchecked, either the market or governments around the world will have no choice but to establish an asset-backed currency. This will almost certainly involve gold being adopted as money. Such an event would be something like Bretton Woods 2.0, where the initial Bretton Woods Agreement was unilaterally terminated by the United States in 1971. Curiously, termination of the agreement was marked by surging debt levels and the prospect of gold outflows as countries began to lose confidence in the dollar and began to migrate to gold. Sound familiar? Prior to 1971 gold was fixed at $35/oz, once allowed to float against the dollar, it rose to $850/oz in 1980. A 24x increase! It later retreated from bubble territory and settled between $300-$500/oz during the 80's and 90's, which even then, accounted for a 8.5-14x increase or 850-1400%. Fast forward, and in 2001 gold reached a multi-decade low of roughly $250/oz once growth in the United States was terminated by the dot-com bust. This set into motion government efforts to stimulate the economy by implementing artificially low interest rates, stimulus, and overall money printing. Since 2001, gold has risen to roughly $1500/oz (as of May 2011), being called a bubble all the way up. Note that this marks a 6x increase over the course of a decade, which is nowhere near the 24x increase seen in 1971 when the US economy was on firmer footing and households actually saved...but I digress. Overall, gold will officially become money making it a strategic resource that will be sought after by every major economy.
  • Silver - Though gold and silver are often lumped together, they are in fact very different. Silver is very much an industrial metal that is used in electronics, biomedical devices, solar panels, batteries, film, mirrors, and catalysts to name a few. It also has the highest thermal conductivity, electrical conductivity, and highest reflectivity of any metal. In addition to its ever increasing industrial uses, it is historically a monetary metal to Muslims (Pop. 1.5 billion), Chinese (Pop. 1.3 billion), and Indians (Pop. 1.1 billion). That's 3.73 billion unique individuals when the Muslim population is not double counted in India and China. Again, that's 55% of the entire world population. The Chinese economy is estimated to surpass the United States by 2016 and with that will come increased industrial demand for silver as well as monetary demand as currency debasement continues. Something interesting to note, in Chinese the literal translation of 'bank' is silver  shop/profession 行. Telling isn't it? A quick video detailing some of silver's attributes can be found hereIn summary, the industrial and monetary vectors for silver will position it to be a strategic resource for decades to come, especially in emerging economies.
Additional Information Sources:

Kitco - Current and historical quotes for Gold, Silver, Palladium, Platinum and Rhodium
Rationale for Investing in Physical Gold - Passport Capital LLC, California (pdf)

    Tuesday, May 17, 2011

    Investment Fundamentals - A Quick Note

    Investing has become a mainstream phenomenon, especially in the US, where everyone and their bequeathed cat have an investment fund of some sort, whether it be a general account, an IRA, a 401K, an education savings, their pension, endowment, or a myriad of others. Quite frankly, everyone has some skin in the game whether they know it or not. 'Investments' take on a variety of forms including stocks, bonds, commodities, currencies, real estate, and everything in between. However, few people understand the fundamental principle behind true investment.

    Let's consider investing in its purest form involving three principle parties: the saver, the broker, and the entrepreneur. The broker's job is to bring the saver and entrepreneur together with the objective of striking a mutually beneficial deal. If the deal goes well, the outcome goes something like this:
    1. The saver gives the entrepreneur funds to grow his enterprise. In return, the saver owns a portion of the company and shares in the profit.
    2. The entrepreneur obtains the required capital to grow his enterprise, become more productive, profit, and generally grow the economy.
    3. The broker receives a commission for bringing the entrepreneur and saver together, facilitating a transaction that he believes will benefit both parties (not like Goldman Sachs...)
    The idea is concise, as sound theories tend to be, but you won't hear such simple logic from investment advisers or brokers. The reason is quite simple, they have lost touch with the idea of real investment. The incentive structure revolves around obtaining clients or facilitating transactions rather than understanding the economics and viability of the investments involved. The latter requires due diligence and a sound understanding of how the world works, what drives it, and where it's trending. Investment classes fluctuate in-and-out of favor, but the cycles can be anticipated and capital can be allocated to where it produces profits and benefits society as a whole---increasing the standard of living for everyone.

    If Wall Street were less of a casino, we had sound money, and investment revolved around real production, the standard of living would dramatically increase. The take away: when investing consider  what your money is actually doing and whether it is truly viable given current and future economic trends.

    Monday, May 16, 2011

    Information Overload - Part I

    Information is everywhere, understanding it is a powerful thing, and in my opinion, this is one of the most important times in history to understand the economic, financial, and geopolitical events that are taking place. The events will affect nearly everyone on the planet, and in many cases, dramatically.

    The second greatest investment one can make begins and ends in the mind, which will serve you for the rest of your life, compounding over time. Here I'll present a few information sources that will hopefully provide a starting point toward understanding today's economic and financial situation. There are numerous other sources that I'll present in the future, but this should serve as a primer.

    I've arranged an assortment of books, articles, websites, and videos...they all contain good information, take your time reviewing them, it's worth it.

    Mike Maloney - Advisor, Author, Industry Expert
    WealthCycles.com - The concept of wealth cycles revolves around the idea that investment classes perform in  a cyclical manner. I'd have to agree with this assessment, and one can look throughout history and identify investment vehicles that have outperformed during certain periods of time, while others have lagged. It is Mike Maloney's contention that there is a reason for this, and that it can be predicted. Based on my own investigations, I would agree with this. These cycles occur for distinct reasons and can be anticipated and profited from assuming the investor has a sound understanding of the underlying mechanics. Overall, There is a lot of good information at WealthCycles.com and it's worth browsing.
    GoldSilver Knowledge Center - The GoldSilver website provides a range of information geared toward, you guessed it, gold and silver. Again, browse around and read some articles. If there is something you don't understand Google it and dig a little deeper.

    Why Gold and Silver? (DVD)
    Why Gold and Silver? An Afternoon with Mike Maloney, subtitled versionMike Maloney's DVD/Video contains a wealth of information concerning Gold and Silver and how he and others believe they're an investment of a lifetime given the currency situation. One should note that gold and silver by themselves are not the end result, instead they are a means to preserve and grow your wealth while the currency cycle runs its course. Once a new currency is introduced holders of gold and silver should look to acquire real estate associated with cashflow or production. Personally, I would rather reinvest in production associated with agriculture, energy, and mining, rather than cash-flow (rental) real estate as Mike Maloney seems to promote. I would encourage everyone to watch this video (I've watched it several times). It can be streamed from Amazon for a few dollars and I've attached an Amazon streaming video link in the image to the left. Take a look.


    Peter D. Schiff - CEO Euro Pacific Capital Inc.
    Peter Schiff's YouTube Channel - Schiff's YouTube channel provides commentary rooted in sound economics. If you follow the headline news and it doesn't make sense, odds are there is a reasonable explanation and Peter Schiff is on top of it. Recently his video updates have been more sporadic due to his involvement in Schiff Radio, but he does post from time to time. Schiff's most recent video with good commentary can be found here.
    Schiff Radio - I have to admit, that I am not a regular listener of Schiff Radio, but I have no doubt that his discussions are rooted in sound economics. If you feel inclined, I would recommend listening to his podcasts. You'll find that real economics can actually make a world of sense...

    How an Economy Grows and Why it Crashes

    How an Economy Grows and Why It CrashesThis is actually a 'picture' book that illustrates the basics of real economy in an easy to grasp manner. The simplicity is striking, but one can immediately begin to see how a sound and working economy really functions through production, innovation and real capital savings. In my opinion, this book should be a requirement for students as an introduction to economics. You can click the image to the left and it will take you to Amazon where you can buy a copy for less than $12.00. It's worth the read and everyone on this planet should and can understand the basic concepts presented in the book.

    Crash Proof 2.0: How to Profit from the Economic Collapse
    Crash Proof 2.0: How to Profit From the Economic CollapseThis book by Peter Schiff is actually an updated version of the original that was written before the housing implosion. In the original he details how to profit from the collapse as well as how to position your investments for the next global financial crisis. Think of the housing collapse as the dress rehearsal for the real show, which I expect to occur before 2015. Overall, this book is a good read because Schiff discusses what has essentially happened and compliments it with a post-housing meltdown analysis and what the future holds.  Again, you can  click the image and it will send you to Amazon where you can pick up a copy for less than $20.

    Ludwig von Mises, Friedrich A. Hayek, Murray N. Rothbard et. al. - Dead Geniuses
    Mises.org - The Mises website is educational by nature and serves to promote the ideals of Austrian Economics. In the US, Keynesian Economics is the generally accepted school of thought both in academics and at the government level. It's something of a top down approach where the government and central banks meddle in the markets in an attempt to 'smooth out' the business cycle. Conversely, Austrian Economics is more of a bottom up approach emphasizing real production, sound money, and free markets. A couple of humorous videos debating the school of thought can be found here (Part I) and  here (Part II).  As for articles from the Mises website, these are my favorites:
    and these are further readings in the collection:
    I originally bought a book that contained all of the essays; however, the entire collection can now be downloaded in PDF form here. Some of the essays can be quite dry, but the top three listed above are quite profound in explaining the business cycle and its relation to interest rates and capital investment. In my investment strategies I use the Keynesian and Austrian theories to predict what the government will do (Keynesian perspective) while understanding how economics really works (Austrian perspective).

    A note on game theory: In essence, you can predict how the Fed and politicians will set policy by understanding the Keynesian perspective and set investment strategies based on their flawed maneuvers and your sound understanding. The general idea goes something like this: "understanding how your opponent will play their hand, even if they continue to play it incorrectly, will allow you to capture their perspective. With their perspective solved, you can tailor your hand to continuously outplay them." Food for thought.

    Finally, the essence of of what I'm trying to say goes something like this: understanding real economics is critical to identifying investment opportunities before they arrive.

    National Inflation Association (NIA) - Documentaries and Commentary
    The guys over at inflation.us believe that that United States is headed for a hyper-inflationary depression and provide free information to prepare the public for such an event. With that said, the website also promotes a number of penny stocks that it sends out in its newsletter from time to time. It has also employed at least one individual who turned out to be shady in my opinion. Finally, the president of the website has a history of pump and dump (as a teenager). The story goes something like this: As a teenager Jonathen Lebed would go into chat rooms and talk up penny stocks that he owned and when a bunch of people bought, the price would rise, and he would sell for a nice profit. As a teen, he made hundreds of thousands doing this. Overall, he's brilliant with money and somewhere between a stone-cold and white-collar hustler, which part of me respects. With all that said, the website seems to have an agenda that I'm not sure is completely above board, but the information they provide is good nonetheless just don't buy their penny stocks without doing your own homework.

    The real value that I garner from inflation.us is the well put together documentaries that expose reality in an otherwise fanciful world. Two of their more recent and more popular videos are embedded below. If you have the time, take an hour and watch them, they're pretty easy to take in and provide good perspectives.



    If you learn a few things from this post then I've done my job, but remember not to take anything at face value. Instead, take in information, think about it, and come to your own conclusions.

    Friday, May 13, 2011

    QE3 - Scenario 1

    Today, Quantitative Easing (QE) is the hot topic on everybody's mind. The question goes something like this: Will the Federal Reserve (Fed) end QE2 in June or will they continue with a third iteration, QE3? Admit it, that's exactly what was on your mind... The first scenario goes something like this:

    Outcome 1: 
    The Fed ceases QE2, on schedule, at the end of June 2011.

    Situational Analysis 1: 
    Currently the Fed is responsible for monetizing a large portion of the US debt and has become the largest holder of treasuries followed by China and Japan (as of May 2011). If the Fed stops purchasing treasuries the yield will have to rise to entice investors into purchasing treasuries. That would cause a rise in interest rates across the board and make borrowing more expensive for consumers, as well as the US government, which is in the process of issuing record debt (a lot of treasuries to sell). The increase in interest rates would be a significant drag on the economy, likely pushing the US back into recession (over the course of several months). At that point, additional fiscal or monetary stimulus (aka money printing) would certainly be called for, especially during an election cycle. If this wasn't bad enough, the 'assets' on the Fed's books are interest rate sensitive, meaning, if rates go up then the Fed's assets bleed losses. Now, the Fed is something like a black hole where losses and malinvestment seem to disappear. In any event, rising rates would kill the Fed's 'assets', giving additional incentive to keep rates low...not to mention the Fed isn't hedged against rising rates, but that's another $200 trillion dollar discussion, literally.

    To further complicate matters, the recent disaster in Japan and inflation concerns in China are likely to reduce their appetite for treasuries, putting a greater burden on the Fed to monetize the debt. Which of course, Bernanke said he would never do and yet here we are. Oh, and housing prices will never come down, that didn't work out too well...recall that this guy is still in charge.

    So, how can this scenario possibly work out? If the US economy is on solid footing and can produce organic growth the cessation of QE2 would not harm the economy. In fact, it would be harmful to continue the program under this assumption. One must believe the economy is sound and does not require stimulus. There also must be an appetite for treasuries, even though yields are at record lows and treasuries are at record issuance. Essentially, supply, demand, and reality must be thrown out the window.

    Overall, ceasing QE2 will reveal severe weakness in the US economy, dashing GDP expectations, and raising serious questions about how the US will service its debt. The emperor will be exposed, naked for the world to see. Game, set, match. No one wants to be be holding the bag when the economy collapses, and for this reason, the Fed will continue the charade as long as possible. The trade-off of course is a much larger collapse when the game finally ends...

    Overall, 'Scenario 1' is unlikely to be the hand that the Fed plays, there is little to no advantage in doing so, unless a short term collapse is needed to provide covering fire in the face of inflation. This sounds somewhat conspiracy theory, but in fact, its more along the lines of game theory and strategy. Stayed tuned for Scenario 2...

    Wednesday, May 11, 2011

    Gold - The Money of Kings

    Gold has been used and perceived as sound money for thousands of years and for a number of reasons, but at the end of the day, its utility is quite simple. 

    Gold provides an unadulterated method of account

    Typically gold is thought of as the 'money of kings', whereas silver is 'poor man's gold.' Indeed, gold is the money of kings...and of central bankers around the world. Have you ever wondered why central banks continue to hold  the vast majority of gold reserves and have recently become net buyers? It's because gold is money, it's the 'currency' of last resort and an asset that has weathered the test of time. Many will argue that gold is not a good investment because its industrial uses are few and far between. I'd argue to the same point. Gold is a terrible investment and rightfully so---it's not meant to be an investment. The definition of investment goes something like this:
    Investment 
    1. The action or process of investing money for profit or material result.
    2. A thing that is worth buying because it may be profitable or useful in the future.
    You can see that if gold is in fact money, then definition (1) makes no sense and if gold has few uses then definition (2) doesn't bode well for the future. Gold's objective is to preserve wealth by retaining its purchasing power against other tangible items. This doesn't mean that items priced in gold don't fluctuate, they do, but if you saved in gold you'd retain your general purchasing power. 

    Prior to 1971 gold was fixed at $35/oz by the US government (and also illegal for citizens to own), which was artificially low given the amount of outstanding currency. In 1971 president Nixon abolished the gold standard and allowed the value of gold to float against the dollar. To put this into perspective, in 1971 the median home price was $25,000 and with gold fixed at $35/oz that amounted to 714 oz of gold per median home. Once the price of gold was allowed to float, it reached a high of roughly $850/oz in 1980, at which point a median sized home could be purchased for roughly $64,600 or...76 oz of gold. In this example, the purchasing power increased, but this was due to the artificial price fix by the government at $35/oz. In fact, if the price of gold had not been allowed to appreciate the United States would have been drained of all its gold reserves as foreign central banks sought to redeem their currency for gold. This is precisely why Nixon closed the gold redemption window for foreign central banks---it would have bankrupted the country. This is a gold outflow scenario and has historically bankrupted empires as there wealth is transferred abroad. Nixon sought to stop this and embark on a grand experiment that has led us to the present day---a world of floating currency, possessing no anchor.

    As another example, in 2001 the price of gold reached a low for the year of $250/oz whereas a median sized home was $175,200.  That meant it cost 701 oz of gold to purchase a median sized home...is this sounding familiar? In 2010 gold reached $1420/oz while the price of a median sized home was $221,800, which meant a home cost 156 oz of gold. Today, home prices are dropping and gold continues to rise. It is my belief  based on historical precedent that an individual will be able to buy a home outright for less than 50 oz of gold before long...

    Overall, this is just scratching the surface, but the idea goes something like this: Measuring assets against other assets is a better way to measure wealth than looking at the balance in your bank account. A good video discussing the gold/asset relationship can be found at: http://bit.ly/lpP9vt.

    Saturday, May 7, 2011

    Money - What is it?

    If you ask someone how much money they have, they'll likely give you a figure in dollars, euros, pesos, real, yen, yuan or whatever currency they are familiar with. Currencies are used to measure a person's economic wealth, but if one steps back and considers the intrinsic value of the currency, one must conclude that there is little to no intrinsic value. For example, when you go to the bank and your account balance is reported to you, it exists only in a computer accounting system, which of course, isn't any more valuable than a Pac-Man high score. If you decide to withdraw cash, now your worth is associated with a piece of "paper" that is 25% linen and 75% cotton. Alternatively, you could withdraw coins which would posses intrinsic value, though generally much less than the face value (except for nickels, see coinflation.com). 

    The point is quite simple: 
    Currency today (fiat currency) has little to no intrinsic value. It only has general value as long as you can confidently pass it on to the next person is exchange for goods or services. The ability to function in this way demands a limited and predictable supply. 
    So why is the concept of money such an important topic? To fully appreciate the question, one must reflect on what money represents, or at least, what it’s supposed to represent. Let’s start with an example. Say I was a farmer and I grew oranges, while my neighbor grew apples. At the end of the growing season I might want some apples. Being that my neighbor has an apple orchard, I might talk to him about trading some of my oranges for his apples. In effect, my ‘money’ is denominated in oranges, whereas his are in apples. Assuming each of our harvests were equally fruitful we may arrange a 1-to-1 swap—one orange buys me one apple. Each unit of fruit represents the work that was put into planting, tending, and harvesting each of our orchards. You can think of this as the blood, sweat, and tears, or simply energy, or of course, work (W = F*d, for the physicists). The point being, that we are trading a portion of our own work for a portion of their work. This is a very simple concept, yet the dollar bill in your pocket is backed by nothing more than the paper it is printed on. It costs less than 10 cents to produce a $1 bill or a $100 bill, yet the work required to produce 1 apple is much less than 100 apples. Similarly, panning for 1 gram of gold may take half a day, but 100 grams will require 50 days of work. In essence, the 100 grams of gold harnesses the amount of work expended to obtain it. It’s like a little energy packet—potential energy. If you need to hire someone to tend your orchard for a day, you could pay them 2 grams of gold because that is how much work is stored in it (of course we are assuming tending an orchard for a day and panning for gold are roughly equivalent endeavors). This is a critical concept, which must be understood. Essentially, what you receive for your efforts should reflect the work that was put into it. This is analogous to conservation of energy, a physical law that accounts for energy in and out of a system. The analogy even works when debt is included, assuming the borrowed money is from genuine savings. This is the natural process for both the economic and physical world. Unfortunately the natural order has been corrupted by fiat currency and our dear politicians who know what’s best.

    The U.S. government completely abolished the gold standard in 1971 and has since embarked on a grand experiment, attempting to defy the natural process. By spending recklessly, printing money to finance it and invoking inflation, the government has added dollars that aren't associated with any productive work. You can’t heat your home without real energy and you can’t produce wealth without real production. So how is this reconciled in the economic world? Inflation. In the middle of winter, a home without heat (electrical work) will equilibrate to a cooler temperature. In the world of economics, a currency’s purchasing power will decrease, which is what we are seeing today. 

    In light of recent economic events, the government has thrown truckloads of dollars at toxic assets in conjunction with printing and borrowing to ‘stimulate’ the economy. Now some may argue that money is being destroyed as fast as it is being created, or that it is sitting in banks doing nothing thus inflation will be kept in check. This ignores the fact that work-less money is being pumped into the system, while even more is being used to prop up toxic investments that should’ve never occurred in the first place! This is a double malinvestment whammy! Destruction of capital and production capacity at its finest. I don’t want to argue deflation or inflation, but simply point out that currency and its relation to work has be skewed to unprecedented levels. Make no mistake, equilibrium will be achieved, and I can assure you that it will  result in lost purchasing power and a reduction in the standard of living. 

    To tie it all together, the fact that we have a currency that is backed by nothing has allowed the government to spend recklessly, which has put our currency and lively-hood in dire straits. To be honest, there is no easy way out of this predicament, but those who see the signs would be well advised to get their house in order and brace themselves for what is inevitable. A life’s savings backed by IOUs is nothing more than a heap of paper that will be blown away in the coming storm. It is advisable to anchor your wealth in gold and silver, which possess intrinsic value, are a sound asset, and have retained their purchasing power for thousands of years.

    Again, understanding the difference between currency and money is paramount. Mike Maloney tends to grasp this idea very well and has provided a wealth of information on the topic. One of his websites has some good articles and can be found at wealthcycles.com. There are several free articles that will further your understanding and hopefully transform your idea of saving from how many dollars you have to how many ounces you have.