An Investment to Depend on in Questionable Times

Thursday, June 11th, 2009
By Inya Ivkovic, MA for Profit Confidential

— by Inya Ivkovic, MA

Judging the health of a nation depends heavily on economic stats. How many people have gained employment and how many have lost their jobs? How is the pulse of the average consumer doing? How much is an economy earning from sales of its goods and services? Your PROFIT CONFIDENTIAL editors have looked at the answers to these questions separately and together many times over, never failing to admit that the truth has always been in the eyes of the beholder. Where one would see years of excess unwinding as part of a healthy process, the other would see a bottomless pit out of which there was no way out. But what if there were no proper tools to determine who is right? What if economic statistics are what we should actually be debating?

Here is a creepy, yet plausible scenario. A surveyor’s job is to collect data. A statistician’s job is to compile it and sort it into neat spreadsheets. A politician’s job is to take those neat spreadsheets, package them nicely, and present them to voters. But what are politicians to do when things are not pretty? There is nothing they can do about facts, but there is plenty they can do to convince statisticians to change their methods and measurements. It doesn’t have to be the grand fulfillment of some Pollyannaesque conspiracy theory either. But it could be a decade of small conspiracies compounded to the point that nothing is discernable any more.

We get regular government updates on jobless rates and, every time the numbers are released, in spite of the worst economic crisis to hit us since the 1930s, the jobless rate is stubbornly below 10%. Yet, when I talk to people, it seems everyone either knows someone who has lost their job or has a pink slip of their very own. It somehow feels a lot worse than the jobless rate of seven, eight percent that we are being regularly fed.

And that’s not all that is creeping me out. I have been closely following forecasts concerning the GDP’s shrinking act, both domestically and globally, and I really have a problem with estimates ranging from five to six percent at the most and the noting of deceleration in the pace of the downturn. That number looks much higher to me, too, with or without the positive spin about deceleration. And don’t even get me started on consumer prices and the creation of new money. When this is all said and done, we might find ourselves forced to use money as toilet paper, the former actually being the cheaper option.

Regardless of whether we believe the numbers presented to us in the media or whether we find economic forecasts based on those numbers nothing more than smoke and mirrors, there are other, more tangible arguments cracking Pollyanna’s perfect picture. For example, social security benefits are supposed to be adjusted on an annual basis to compensate for the increasing costs of living. If the numbers were not fudged, those payments should be at least double what they are now.

Of course, only you can decide what is best for you. And only you know what makes sense to you. But here is what makes plenty of common sense to me — gold! Gold doesn’t worry about unemployment, inflation or GDP. It doesn’t contemplate conspiracy theories, nor does it wait for bailout money. It is a great proxy for one’s wealth and, as such, it is timeless and priceless.

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Tags: GDP, GDP growth, U.S. economy