Greenback Mountain

Nothing is planned
By the sea and the sand
--The Who

A primary focus in 2008 was to increase liquidity by building cash reserves. I was pretty fortunate along these lines, with current accounts now sporting better than one year's worth of expenses.

I was planning to continue accumulating cash over the next couple of years. However, the massive amount of government-sponsored stimulus that has been, and will be, injected in world economies has me rethinking just how aggressive my cash build should be. The huge pending increase in dollar supply conjures visions of 1920s Weimar Germany citizens chucking piles of worthless marks into the furnace for heating purposes.

Jim Rogers commonly refers to the dollar a 'flawed currency'--which may be a rare understatement for him. (Of course, he's also referred to the situation as an 'inflationary nightmare' and 'inflationary holocaust.' He's in the process of unloading his remaining dollars in favor of commodities. He knows that to preserve wealth and purchasing power in an inflationary environment, you want to trade worthless paper for tangible assets.

So, I'm thinking of scaling back my cash build in 2009. If I go this direction, incremental funds will be applied towards my mortgage paydown project (real estate is a hard asset) or towards acquiring more gold--particularly at sub $1000 bullion.

position in gold