-Congress went on vacation without doing anything. No health care reform, no budget, no debt limit increase. Value of dollar is down 10%.

-Meanwhile stock market is surging towards 22,000. 15 trillion dollars in MZM. Gold at 8 week high. A hidden loss in purchasing value – loss is in quality, not quantity of dollars. The dollar value on a statement may not have changed, but the underlying value of the account has diminished.

-To protect oneself, the first step was to move out of the bond market. Now need to move out of the dollar market.

-Alan Greenspan warns of a bond bubble, says the bubble is in bonds, not in stocks, and predicts a rapid rise in interest rates. He was Federal Reserve chairman under 4 presidents, now Greenspan Associates.

-Tangibles like gold and silver and numismatic coins are the best hedge against inflation.

-In a deflationary depression, money gets sucked out of the market, as happened in 1929. Money is extinguished through retirement of debt. Bullion and numismatic values decline. A half-dollar from 1929 is an unusual thing, because all of them were spent. Versus 1940 half-dollars, which are more plentiful because the money supply expanded then and half-dollars were saved. Now 3 times as much debt as money to pay, and the entire economy is driven on debt.

-If we enter a deflationary depression, Treasury bonds and dollars will be worth a premium. But everything else will be crashing, so we are all doomed anyway.

-Andy’s advice is predicated on the Fed not having the political will to protect the value of the dollar.

-2008 was a deflationary depression. Had a liquidation of mortgage backed securities (MBS), which sold at $.30 on the dollar. Andy believes the central banks will not allow another deflationary depression to occur. Historically these occur cyclically, but American politicians think they’re repealed the business cycle. The Federal Reserve’s job is to lean against the wind. Harry Dent predicts a shortage of money and another depression.

-What to do now? Look at where your dollars are. What will happen to you if there is an inflationary period and interest rates rise rapidly? Historically July and August is slow for investment activity. But even in these doldrums, prices are rising. Can expect a rush to hard assets after the summer. Mitigate counter-party risk. Get maturities short.

-Housing prices in California have doubled since 2005. Andy advises stripping the asset by taking the equity out when the value is high.

-Eli asks about buying a numismatic coin vs. bullion if he only holds it for 2 years. Andy’s advice is to buy a semi-numismatic coin, which has a premium above the value of the gold in it. For numismatic coins, the value is in rarity only. Long-term oriented, hold for dear life. Opportunity to buy rare coins can be as rare as the coin itself. Semi-numismatic coins – bulk of value is in the gold and silver in it, plus an additional numismatic value.