I don’t comment on world news much, but Venezuela’s Hugo Chavez just announced a 50% devaluation of their currency.  Currency devaluation is a topic I like to discuss, so I thought I’d comment on this development.

Chavez is devaluing the currency due to the struggling economy and increasing government spending (sound familiar)?  He doesn’t have enough “money” to continue his social programs.  So, why not just double the “money” you have with a simple declaration? Completing the one-two punch in the fight against prosperity is the enactment of price controls.  Chavez says that if any business raises prices, he won’t hesitate to seize the business.

Here are some additional articles on the story:

• ZeroHedge
• Reuters
• Bloomberg

While an explicit currency devaluation will never occur here in the United States, news stories like these remind us of the need to hedge against currency debasement and political risk.  Everybody should have SOME gold holdings.  At the minimum, you must have some insurance or hedge against the dollar destruction policies of our country.

Looks like gold is up big today…