Mark Johnson was quoted on Bloomberg this AM basically echoing von Mises in that rapid money printing actually first pushes up the prices of commodities which are the 'raw ingredients' for all products. This is particularly true with precious metals mining hence the current global flight away from the dollar. Also gold mining stocks are so undervalued when compared to the broad market.
'What people today call inflation is not inflation, i.e., the increase in the quantity of money and money substitutes, but the general rise in commodity prices and wage rates which is the inevitable consequence of inflation.' Ludwig von Mises.
Sept. 22 (Bloomberg) -- Mark Johnson, whose precious-metals mutual fund topped all rivals over the past decade, is betting gold-company stocks will rise faster than bullion as miners’ profit margins widen.
“For every 1 percent move in gold, the stocks should gain 2 to 3 percent,” Johnson, 59, said in a telephone interview from San Antonio, where his USAA Precious Metals and Minerals Fund is based. As gold prices climb, production costs advance more slowly to yield bigger profits, he said.
The $1.2 billion fund has about 80 percent of its assets in mining stocks, which it picks based on balance sheets, ability to expand production, political risks and valuation. Johnson, who travels to mines to find details that can’t be found in financial reports, such as whether workers are idle, says gold will rise as the dollar falls and inflation accelerates.
Johnson’s fund, up 51 percent this year through Sept. 18, averaged 23 percent returns in the 10 years ended Aug. 31, first in its category and second among all U.S. mutual funds behind ING Russia, data from Chicago-based research firm Morningstar Inc. show.