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I haven't read the book, but from reading some of the captions, the authors apparently say that the over-all debt level from quantitative easing, money printing, and govt spending etc will eventually pop anywhere from 2013-2015 and create a second economic crash similar to the 2008 one. So, they're trying to "warn" people by telling them to prepare and to buy gold and so on.
They even included a sneak-peek of their so called bonus chapter.
Once a year (say march at the latest) rebalance to this ratio.
Wise old man I heard from basically said in his lifetime he's done quite well with this mix. He basically said that in the late 70s / early 80s when gold was zooming up because of inflation, he remembers the gold bugs ... and how they lost their shirts ... and missed the train on the biggest rally in market history between 82 and 2001.
He then remembers the fools who thought the equities would rally forever, and look how they fell.
Diversification is key because you don't know what the future holds.
Only a fool would say market timing is key. Timing is what causes the 95% of traders to lose money ... only the big boys in the club know what's going to happen.
Right now the US is in the trailing quarter of a secular bear market. Look it up. Basically, it says that most developed economies go through this cycle:
Growth in the economy (early to late 80s as the boomers had kids); extension (90s thru 2001, through debt and adoption of technological innovation); collapse (the dot-com boom, as credit dwindles, so does the economic growth); stagnation (2001 to today, quantitative easing aka printing money, deficit spending, and what we're seeing today, but also the seeds of future growth in the next wave of kids and technological innovation)
Growth periods tend to see equities rally, and equities peak in extension, then collapse and are replaced by debt in collapse, and in stagnation you see commodities rally.
This same pattern has been going on since the end of the civil war. Look up the "panics" of the 1800s to see what I mean. Guess what the panic of 1875 was? It was called the "Great Depression" until the 1950s when it was replaced by the "Long Depression" and the 1930s-40s were the "Great Depression."
My points here are a) don't get swindled by fear mongers, b) never ever put all your eggs in one basket (diversify), c) never try market timing.
The conditions for runaway inflation are not there, but there IS evidence of the seeds for it to start (all growth periods are preceded by periods of large inflation as the growth seeds take hold). Still though, I don't think it'll exceed 10% and that won't be till maybe 2015.
That is because the central banks were so focused on printing paper to provide the perception of stability that they didn't stop it in time. Once the banks start printing their own money through mortgages (banks and credit unions can do that - thanks to fiat currency) the Fed will have no choice but to charge higher interest rates (buy bonds during this time). Once that stabilizes though, and the dollars in the system get soaked up, it's boom time for industry and equities. The technological innovations that preceded it mean less and less materials are needed, and risk appetite is elsewhere, and capacity is typically overdone during bad times, leading to commodity price collapses, including gold.
I think gold will continue to be a good investment and hedge against inflation for as long as people see it as "real money" and as long as money isn't backed by anything. But don't think of it as your ONLY investment.
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