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Ashes & diamonds: Ideas on how to protect our savings from Bush's fire sale on the dollar

By       Message Jane Stillwater     Permalink
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Back in the 1960s when I was a student at UC Berkeley, I used to sit around the Caffe Mediterraneum on Telegraph Avenue and plot revolution and gossip about what SuperJoel and the Red Rockets were up to. In the last ten years, however, I've been too busy blogging to have time for all that. I NEVER sit around cafes and drink lattes. But today I made an exception and was really glad that I did.

As I was biking past an outdoor cafe on College Avenue, my friend Stephen flagged me down. "Come join us," he called. Hey, they sell organic shade-grown fair trade de-caf. Why not.

Stephen is a jeweler so I grilled him about possible commodities one could buy to protect one's savings in case of inflation. "I'm hearing a lot of rumbling about how a potential economic shipwreck is in the works due to the Bush bureaucracy's horrendous debt and the Federal Reserve's instant-money-by-fiat policies," I said. "What if there is another Great Depression or one of those super-inflations where it takes a wheelbarrow full of dollar bills to buy one loaf of bread? If that happens, what can average Americans like us do now to protect our savings? Would you recommend buying gold?"

"Nope," said Stephen. "Definitely not. While the price of gold may go up and down, its value will always remain the same -- based on what it costs to mine it. This means that even though the speculative price of gold on the market might even reach over $2,000 an ounce, it's never going to be actually WORTH $2,000 an ounce."

Okay. So we missed the gold boat by about three years. "But what about silver?"

"Silver is too uncontrolled. Plus there's too much of it. Nope."

"So. What would you recommend?"

"I myself invest in diamonds." Diamonds are Stephen's best friend? Apparently. "Right now, a top quality graded and certificated diamond sells for $1,150 per carat. You could buy a certified 0.21 to 0.29 carat diamond for around $300." And keep them in a safety deposit box? Or under the mattress....
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"But why are diamonds better than gold?"

"Diamonds are highly controlled, Jane. DeBeers rides herd on the price of diamonds like you wouldn't believe. This company is rich beyond your wildest dreams. They OWN the diamond industry. And they only release enough diamonds per year to keep the price steady. There's NO fluctuation in the supply."

"But what if the diamond market crashed too?" I asked.

"Jane, for the diamond market to crash, the world would have to come to an end." Oh. "DeBeers is way above and beyond politics and economics. They live in a whole different sphere."

Moving on to the next question. "Exactly how fluid are diamonds? Suppose I buy diamonds and then the dollar inflates and I want to cash my diamonds in. Are they easy to liquefy?"
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"Sure," answered Stephen. "Just put them on Craig's List."

Stephen also told me that if I didn't trust dollars, there was an internet bank called www.everbank.com where I could keep my bank deposits in whatever currency I want. Euros are good.

Just then we were joined by my friend Martie who is also interested in the subject of money. But he was very hopeful about the economy's future. "There's not going to be a major depression," he said, "but there WILL be a war on Iran."

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Stillwater is a freelance writer who hates injustice and corruption in any form but especially injustice and corruption paid for by American taxpayers. She has recently published a book entitled, "Bring Your Own Flak Jacket: Helpful Tips For Touring (more...)
 

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