And for the record, gold has lost ground against the dollar this year… the Australian dollar.

I own a bit of gold that I bought in February; it’s up something like 18% since that day. The very same day I took a large position in Australian dollars and used it to buy BHP Billiton shares directly on the Australian exchange (because ADR shares are a rip-off). The Australian dollar has gained around 41% against the US dollar since then– leaving gold in the dust. Oh, and the BHP Billiton shares are, in Australian dollar terms, up by around 21%, so multiply 1.41 x 1.21 and that’s around a 70.6% gain vs. the US dollar… and that’s before you even count the sustainable Australian-dollar dividend that BHP pays… and after all, I thought we’re trying to “live off dividends” here, no?

One more thing re: gold: I would suggest that the real issue in gold’s recent rise is simply that the USD is tanking. The recent news is that in nominal USD terms gold has reached a record high… but gold is actually 30% off its high against the AUD, and I think about 7-8% off its high vs. the Euro.

One can, indeed, hedge against USD weakness while outperforming gold and while staying true to the “living off dividends” philosophy.