By JLP | April 20, 2011
From page 10 of Jeffrey Hirsch’s Super Boom: Why the Dow Jones Will Hit 38,820 and How You Can Profit From It* comes this quote regarding inflation:
The U.S. Department of Labor’s Bureau of Labor Statistics (BLS) has tweaked and manipulated the Consumer Price Index (CPI) so many times over the past 30 years or so in an attempt to mask inflation that the indicator may very well not detect a true upsurge in inflation in the years ahead. No one is really sure how this new and improved version of the CPI will react in a hyperinflationary environment. We may see a 40 percent to 50 percent increase in the CPI—or we may see another 200 percent rise.
From page 119 comes this:
He goes on…
The price of an ounce of gold (in U.S. dollars) and the New York Futures Exhcange Commodity Research Bureau (NYFE CRB) Index are better indicators of the prices consumers actually pay for daily necessities.
Since 2001 gold is up 402 percent and the CRB is up 230 percent. Much of these moves could be in response to a weakening dollar. From its July 2001 peak to the November 2009 low, the U.S. Dollar Index (USDX) had shed nearly 40 percent of its purchasing power—another strong argument that inflation is much higher than the CPI calculated 23 percent.
His hedge for inflation is stocks. Not gold or silver. Stocks.