Dell, Hewlett-Packard, IBM, Microsoft and the runt Apple will all be fighting over customers this holiday season while Google will be directing the purchases. Indentured and strapped American consumers have been reigning in their purchases. As the deflationary credit contraction intensifies, holders of capital continue seeking safer and more liquid assets in which to allocate capital while prices nose-dive and economic activity grinds to a halt.
Major computer companies should buy and take delivery of physical gold instead of buying back their own shares because (1) the entire banking system is unstable, (2) their own shares are plentiful, (3) gold is extremely cheap money and in short supply relative to the size of their balance sheets and (4) to reduce counter-party risk. At all times and in all circumstances gold remains money and therefore is the most important currency in the world.
The computer majors, or anyone else for that matter, can purchase gold and put options. Then they can protect themselves from the ultimate liquidity crisis by sending their armored trucks to the COMEX, having them loaded up with the supposed gold and hauling it away. Taking physical delivery is extremely important because there are approximately 140 ounces of ‘paper gold’ for every ounce of physical gold.
As the economic pain from the current system intensifies, more rational market participants will seek out alternatives and eventually substitutes, as they are with Apple and Google, to the current monetary system which will only increase the velocity of gold and its perceived value. Those companies which embrace the new monetary systems first will be best positioned with solid balance sheets based on real and solid assets. Who better than the technology companies?