The Other Decline

clipped from www.smartmoney.com But it's more than that. Gold is also a hedge against a general loss of confidence in currencies, and in government debt denominated in those currencies. I don't just mean the risk of a falling dollar. I mean the risk that all currencies will decline at the same time. How can that be? If they all decline, then relative to each other, nothing has happened. Right? Wrong. Something very terrible will have happened -- all currencies together will have depreciated against all the real tangible things in the world that we use currencies to buy: food, cars, movie tickets and everything else. That's what inflation is. It's not prices going up -- it's money going down. We may be looking at a world in which all the money everywhere goes down. How to hedge? Buy food? Cars? Movie tickets? Sure. That would work. But when there's a general inflation, you never really know which goods and services will go up a lot, which a little, and which -- perversely -- not at all.