In other words, gold was yesterday's inflation hedge. Generals always fight the last war. Portfolio managers always invest in the last bull market. The idea that gold
has always been the great store of value is absurd. There have been many times in history when gold has lost
purchasing power—sometimes for decades.
I should add something else about gold. Remember that three-dimensional puzzle I was talking about, where
there are always pieces being removed and added. Don't forget South Africa in that puzzle. Gold is more complicated
because of the South African situation. I fully expect South Africa to eventually blow up, because I think that the
government has painted itself too far into a corner. If there were a revolution tomorrow and the blacks took over, the
South African whites would dump all their gold. So the price would actually go down a lot.
In a situation like that, I would think the price of gold would go up sharply, because of the panic related to disruptions in mine production. While the revolution is going on, the price will go up, but after that, it will go down. The move down will
completely confuse everybody. They will ask, "Why is the price of gold moving down?" But you will want to buy after
that move down, because the euphoria of the revolution will also bring chaos.
We have talked about your long-term views for the stock market, bonds, currencies, and gold. Any thoughts about oil? Yes, when the recession hits—and I guarantee it will some day—the price of oil is going to go way down. You
can put that in writing; I don't mind saying that. It certainly is going to go under $12. Whether that is $11 or $7 or
$3,1 don't know. [The price of oil was approximately $16 at the time of this interview.]
Given the general scenario you are talking about—the stock market going down, the dollar going down, etc.—is there anything that the average guy can do to protect himself? Buy European and Far Eastern currencies; buy Treasury bills; buy farm land.
