It seems some people are intrigued about the inversion of the Treasuries that occured twice this week. I commented on it, but I don’t really feel it is all that important for physical gold bugs. My first response to anything Treasuries-related is that I don’t understand the point of investing in something that doesn’t go up in value, once you factor in true inflation. You could get 2%, 5%, even 7%, but in the end you’re losing against the rising cost of living — this cost of living goes up due to the central banks creating money out of thin air.

I’m seeing more “big name” investment advisors putting more of their money into gold and gold-backed stocks, some of them as much as 20%! I’m not an investment advisor, I could care less about giving people advice that could make them wealthy or poor. All my money IS good, it is not IN gold. In the past month, many friends and relatives ask me if the rise and fall makes me nervous — it does not. When gold bought more dollars (went up to US$540) I was happy that I might be able to buy more goods. When gold dropped back to US$490, I was happy as I could trade fewer US dollars for the same gold as a fw dys earlier.

If you are a physical gold holder as an avenue for long term savings instead of long term investment, you need to modify your thinking process fom “what is my gold worth” to “what can my gold buy, today and tomorrow.” I qualify the gold to oil ratio here, almost every day. That ratio signifies how many barrels of oil one ounce of gold will buy, based on the NY spot market and the NYMEX exchange. You and I could not trade 1 ounce of gold for this many barrels. It just doesn’t happen.

As such, I am going to start working on a new gold charting mechanism in 2006 — it may take some time as I am not the most efficient in programming anymore, but I should be able to get it going. Some of you will like the chart, others will completely ignore it. That is how it should be.

This chart wll track how many gallons of gasoline (87 octane) an ounce of gold will buy, how many cartons of eggs, how many heating units of natural gas, and other “daily commodities.” I’ll get the prices on a weekly basis from the same gas station or same grocery store or same bill, all based in my home county: Lake County, Illinois. Initially these numbers won’t mean anything, but it could be a good watch on where gold and living costs are really heading.

If the chart doesn’t end up being valuable, I’ll kill it. If you can think of living commodities I should compare, let me know. The chart will always be helpful for me, as I do use gold to buy food, gas and pay bills. When I have extra US dollars in my pocket, I convert them to gold coin and bullion (I get a very good price from my local coin shops as I send them good business). When I need to pay bills or go shopping, I convert back. I don’t end up losing very much (at most, 3%) during the conversion — but over the past 18 months, I am actually ahead slightly. Even if I was to lose 10% over the time frame in value, nothing can replace the safety and security I have in knowing I hold real money and am not helping the counterfeiters keep devaluing my life’s work.

Gold moves up to US$515 today, hitting a high of US$517.30. Oil stops just under the $60 mark at US$59.93.

Bloomberg News adds to the speculation that central banks (the biggest holders of gold bullion) might be adding more gold to bolster their reserves. Isn’t it interesting that governments hold the most gold but tell their constituents that there is no reason to use gold as a currency?

In the same article, new home sales fell 11% and a record number of homes were left on the market at month’s end (according to the Commerce Department). The report also speaks about the Treasuries inversion I wrote about earlier today.

Gold is now sitting about 16.30% over the same price last year — a significant rise compared to the dollar and the U.S. stock markets. As government manipulation of the dollar continues to make the currency worthless, governments and citizens all over the world consider the repercussions of holding too many U.S. dollars.

Some news reports are showing significant drops in gold mining production. I’ve covered other news reports of falling gold production, and with gold’s use in inventory constantly going up, the reduced supply could put a definite price pressure in the upwards direction.