Roller Coaster Economy
December 30th, 2011 at 10:59 am | Type:
Author: Ned Massie | No Comments
The last several years have seen more ups and downs in the economy than the best roller coaster ride at any theme park in the United States. The fact is that if you are being buffeted by those trends, there is a long line of folks who feel the same way. Economic whiplash seems to be a universal condition.
In an economic storm of this magnitude, it is important to find a safe haven. Traditionally, US Treasury bonds and notes have been considered a safe haven by investors around the world. Likewise, gold has been a very popular safe haven. However, both are suspect today.
US Treasuries could easily end up being devalued by the amount of money that the Federal Reserve is printing. That condition will be ameliorated somewhat by the fact that most other central banks are behaving similarly. But my guess is that at some point the wheels will come off of that process as it is controlled by humans and humans have this ugly habit of making mistakes.
Gold is another traditional safe haven. However, the rules that were put in place in 1936 relative to the commodity markets began being changed under the first President Bush and continued through Clinton to allow investment banks to get into the commodity markets in a big way. As a result, the commodity markets today have evolved into another form of gambling.
As a result, we see huge swings in commodities and in the middle of those huge swings, people are trying to say that gold (another commodity) is a safe haven. I do not believe it. It is now just another lottery ticket.
In Virginia, 50% of our land is wooded and timber production has many fine attributes that make it a “safe haven”. Consider the following:
- Trees grow larger every year regardless of interest rates, commodity prices, the price of gold, or the value of other commodities;
- We Americans annually consume about four percent more wood fiber than we harvest which builds in a long-term bias towards higher wood fiber prices;
- Land is tangible;
- And on a really stressful day, you can go for a walk and enjoy the world God created…try that with a Treasury note or gold.
Looking for stability in an uncertain world, your best investment is a great tract of timberland. Call us, we welcome the opportunity to help you.
Filed under : Market Perspective, Ned Massie
