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More Profits Than You’ve Dreamed Of

October 22, 2010 by  

More Profits Than You’ve Dreamed Of

As expected, I caught some flak from a few readers of my column two weeks ago, A Trillion Reasons to Buy Gold Now. Most, I’m happy to report, agreed with what I said. A few even had some dandy suggestions to add, such as the alert reader who strongly advised buying equal amounts of two metals — lead and gold. If you missed that column and the resulting comments, click here to see them.

Gold’s recent explosion in price — up almost 400 percent during the current bull market, far outdistancing almost every stock or bond — is really the story of what our government has done to our money. There is only one way to measure what a dollar is worth; that is by what it will buy. When measured against a basket of goods that you and I need to survive, the “value” of the dollar — that is, what it will purchase — has been plummeting like a rock dropped out of a skyscraper window.

It’s easy to understand why. Keep making more of anything and the price of each one will drop. Create several trillion more dollars, to finance all sorts of government spending schemes, and Economics 101 teaches that the value — that is, the purchasing power — of each individual dollar must fall.

Of course, this harsh reality drives our liberal brethren crazy. They want to believe that government is the solution to all of mankind’s problems. They want you to believe that rising prices are caused by greedy capitalists, not by their profligate spending. And worst of all, they genuinely believe they have a God-given right to take money from you and give it to those who deserve it more.

Well, scratch part of that statement; most of them don’t believe in God, much less that He has anything to do with granting us rights. But I’ll stand by the rest of that statement.

Of all the reasons my critics gave for not buying gold now, there is one I want to address today. That is the argument that gold has already gone so high it is bound to come crashing down. “It’s a mania, folks!” some critics insist.

What we’re seeing is a lot of things, ladies and gentlemen. But one thing it’s not is a mania. Unless someone tells Ben Bernanke to turn off the printing presses, I firmly believe that we will see a mania in the price of gold and silver. But we’re not anywhere near that point today. When that day arrives, you’ll want to sell your precious metals to the people who are clamoring to buy them. For now, keep accumulating more. When the mania arrives, you’ll be glad you did.

How will you know when the time to sell is here? In a recent column Jeff Clark, the highly regarded senior editor of the Casey Research publication Big Gold, told us what it would look like. Permit me to quote him at length:

You log on to your brokerage account for the third time that day and see your precious metal portfolio has doubled from last week. Gold and silver stocks have been screaming upward for weeks. Everyone around you is panicking from runaway inflation and desperate to get their hands on any form of gold or silver. It’s exhilarating and frightening in the same breath. Welcome to the mania.

Daily gains of 20% in gold and silver producers have become common, even expected. Valuations have been thrown out the window. Investors clamor to buy any stock with the word “gold” in its title. Fear of being left behind is palpable.

The shares of junior exploration companies have gone ballistic. They double and triple in days, then double and triple again. Many have already risen ten-fold. You have several up 10,000%. No end is in sight. Your portfolio swells bigger every day. Your life is changing right in front of your eyes.

Every business program touts the latest hot gold or silver stock. Headlines blare anything about precious metals, no matter how trivial. Weekly news magazines and talk-radio hosts dispense free stock picks. CNBC and Bloomberg battle to be first with the latest news.

Each tick in the price of gold and silver flashes on screen, and interruptions offering the latest prediction seem to happen every fifteen minutes. Entire programs are devoted to predicting the next winner. You watch to see if some of your stocks are named.

The only thing growing faster than your portfolio is the number of new “gold experts.” It’s a bull market in bull.

“It’s a bull market in bull.” Thank you, Jeff, for a wonderfully memorable expression. At first, the people who were smart enough to invest a sizeable chunk of their wealth in gold and gold-related assets, such as mining stocks, will be dazzled by how much money they’re making. But then, Jeff warns, their joy will turn to worry.

At first it was exciting, then breathtaking. Now it’s scary. You’re drowning in obscene profits but are becoming increasingly anxious about how long it can last. Worry replaces excitement. You don’t know if you should sell or hold on. Nobody knows what to do. But the next day, your portfolio screams higher and you feel overwhelmed once again.

You begin to worry about the security of your own stash of bullion — those clever hiding spots don’t feel quite as secure as you first thought they’d be. Is the bank safe deposit box really secure? Shouldn’t they hire a security guard? Should I move some of it elsewhere? Is there anywhere truly safe? You find yourself checking gun prices online.

As Jeff points out, a gold mania will only be a symptom of much more serious problems in this country:

Your wife calls and says the $100 you gave her that morning isn’t enough to buy groceries for dinner. Prices change often on everything. She urges you to get some bread and milk before the store raises the price again.

Citizens are furious with government. Agencies have been swarmed with bitter taxpayers and revolting benefit recipients. One government office was set on fire. A riot erupted in Washington, D.C. last week and martial law was temporarily declared. It’s too dangerous to travel anywhere.

As crazy as things are, it’s hard not to smile. You’re in the middle of a mania. Your life has changed permanently. You’re thankful you bought gold and silver before the mania, along with precious metal stocks.

As night settles and your house quiets, you log on to your brokerage account one last time. Even though you’re ready for it, your mouth drops when you see your account balance. It is truly overwhelming. You stare at the blinking screen, hand on the mouse, the cursor hovering on the sell button… 

Is this an accurate description of what the future will look like? No one knows for sure. As Yogi Berra once remarked, the future is awfully hard to predict. But it seems to me that betting on more inflation and higher gold prices is as close to a sure thing as you’re going to see in this life.

If you need more convincing, let me suggest you order the CDs from Casey’s Gold & Resource Summit which was held earlier this month. And then listen to them. The all-star line-up included John Hathaway of Tocqueville Gold Fund, Eric Sprott of Sprott Asset Management, Richard Russell, of Dow Theory Letters, and more than two dozen others, including Jeff Clark, Doug Casey, Rick Rule and Bob Bishop.

I’m happy to report that Personal Liberty Digest has arranged a special deal on Casey’s Gold & Resource Summit CDs for Straight Talk readers. To learn about it, just click here.

Remember, knowledge is power. And it’s tax-free to boot. What’s more, the CDs should be a tax-deductible expense for you. I call that a win-win.

Until next time, keep some powder dry.

— Chip Wood

Chip Wood

is the geopolitical editor of PersonalLiberty.com. He is the founder of Soundview Publications, in Atlanta, where he was also the host of an award-winning radio talk show for many years. He was the publisher of several bestselling books, including Crisis Investing by Doug Casey, None Dare Call It Conspiracy by Gary Allen and Larry Abraham and The War on Gold by Anthony Sutton. Chip is well known on the investment conference circuit where he has served as Master of Ceremonies for FreedomFest, The New Orleans Investment Conference, Sovereign Society, and The Atlanta Investment Conference.

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  • http://personalliberty.com Jessica

    Bob Livingston, it didn’t take you more than a couple of hours to throw away that Molly Ivens article. Did a bunch of women get p*ssed off about it, or what?

    • http://www.boblivingstonletter.com/ Bob Livingston

      Dear Jessica,
      I have no idea what you’re talking about. Please explain.
      Bob

      • denniso

        She may mean the Maureen Dowd article.

  • http://www.rebelforiam.com michael sharpe

    You mostly deal with gold as an investment. The majority of America should Not buy metals as an investment. Since 1973 there have been many countries that have collapsed economically and some of us see the wave headed towards America. Gold and silver represent Free Enterprise or Free Markets. People can actually own what is in their possesion. The Greenback represent the Mark of the Beast. An individual cannot own the green stuff only bear it.It represents a debt based economy and must be kept moving.It is a worthless piece of paper that came from a plant.The yellow and the white metals represent Wealth.

    • http://www.inkcartridges-discounted..com Stan Thow

      I don’t think that there has ever been a Country or Civilization in the history of the world, no matter how powerful, that has not seen their money at some time in the past become virtually worthless.
      It always happens. Gold & Silver are Valuable anywhere in the world. But not Currencies. They always go up in value because more Currencies are printed than there is gold to support it and the spread of the printed currencies is increaing.
      Unfortunately Countries print money even if their productivity does not increase creating more & more inflation and devaluing their Currency.
      Gold is a hedge against losing everything that you have saved.

  • http://-------------- Allan

    Wish to purchase —- “Casey’s Gold and Resource Summit CD’s.
    Unable to bring up purchase page (via click here) on your website.
    Thanks
    Allan

    • libertytrain

      Worked easily enough for me.

  • s c

    Chip, I don’t know why anyone would give you flak over an article on gold. If they’re classic anal retentive progressives who hate free speech, that would explain most of it.
    For the most part, gold is like anything else. If you want it, buy it. If you don’t want it, don’t buy it. It is NOT a matter of permission. I’ll bet 99% of America’s progressives can’t justify their claim that “it’s not right” to buy gold.
    If I want it, I’ll have it. They can go #^&* themselves. Similarly, if I refuse to buy health insurance, it’s nobody’s frickin’ business. For many years, I have suspected that Uncle Scam and America’s progressives are obsessed with #^&**^# themselves. It’s probably the one thing they’re good at in this life.

    • DaveH

      He’s probably talking about Dumniso, who doesn’t have a clue about economics, or he wouldn’t be a Liberal.

    • http://n/a jerry hughes

      Whe it became apparent, in June of 2008, that it was going to be either Barack Obama or Clinton, in the white house, I converted 90% of my assets to gold.
      Tax and spend was inevitable, with those too, gold can’t be taxed until it’s sold.
      It will stay in gold,until Mr. Obama is an obscure, historical footnote.
      It the price of gold dropped half tommorrow, I would still realize a 100% profit, in 2.5 years.

  • Paul

    I was born in an Eastern European Country that suffered from World War II.I was a child but I learned from my mother that she and her husband were hiding gold under ground in our backyard as well as many other people at that time. After the war a bad inflation ravaged the country and they were printing new paper money every week or even days. It has gotten so bad that when people went shopping they just paid with a yellow or a blue or what ever color had more zero on it.Of course GOLD and SILVER was always accepted in a barter.

    • Al Sieber

      I agree with you Paul, I have friends with similar experiences from Europe. they would take a certain amount of their pay check every week and buy gold. gold should not be bought for investment purposes, only as a hedge against inflation. and it is accepted world wide as currency. since I work in the mining business I know the ups and downs of the gold market, and lately I’ve been swamped with phone calls, letters etc. from people that want mining property,to invest,to buy gold, etc. they use to laugh at us, thought we were crazy, yeah your 401k is safe.

      • Dan Az

        Hey Al
        what do you do with your gold do you make coins? or bullion?

        • Al Sieber

          dan what I do is refine it down to .999 fine and make bullion beads from 1 gram on up, or small bars 1/10 oz on up, then sell it or trade it. I like to horse trade.

          • Al Sieber

            Also Dan, just so I don’t get in trouble, and don’t have a refiners license I can’t stamp the karat on the gold, I let the buyer have it tested themselves, that way you build up trust with people.

        • Dan Az

          Hey Al
          Thats cool we have to get together someday Id like a bullet casted for the heck of it.an maybe put it on a chain.anyway you must be making a killing now good for you buddy.It pays to stick in there!

          • Al Sieber

            Hey Dan, what caliber? I have a few bullet molds. how about a silver bullet for a ware wolf? theres a lot that work for the Govt., mostly vampires though. today is my birthday, Oct. 24, I made it another year.

          • libertytrain

            Happy birthday Al -

          • Al Sieber

            Thanks liberty train.

          • Dan Az

            Hey Al
            Happy B-Day brother! As far as caliper goes any thing is good I pretty much have them all.Its just kind of a statement for me if you know what I mean.Hey take the day off and come up to the shop monday thru saturdays 8 to 5.

          • Al Sieber

            Thanks Dan, I’ll probably take you up on that, it’s not that far.

  • FreedomFighter

    As long as humans have had gold, it has never gone out of style.

    Laus Deo
    Semper Fi

  • mike

    i dont care what anybody says I hold gold for one reason,to buy goods when no one wants to touch a greenback!

  • Daniel

    I find much of this article to be appalling and morbidly fascinating. If you REALLY believe that “mania” in a market looks like 1920′s Germany, then you have not paid one iota of attention to the recent history of the financial world.

    Just what, exactly, would you call gold in 1980? A minor peak? Or a normal fluctuation? Gold peaked at $850 in 1980–BUT, didn’t return to that price until 2008–TWENTY-EIGHT YEARS LATER! And mind you, that’s before adjusting for inflation! Here’a a chart showing the inflation-adjusted price of gold.
    http://en.wikipedia.org/wiki/File:Gold_price_in_USD.png

    I admit, gold has outperformed the stock market over the last 8-10 years. But to tout something as the be-all, end-all of investing on the strength of one 10-year period is utterly irresponsible.

    • CJ

      Only if you look at the fiat greenback (a debt instrument) as an instrument of value will you come to your illogical conclusion. As Chip pointed out, the basket of goods will cost more dollars, but be about the same weight of gold in the future. An apple doesn’t change value. If it cost .10 last year, and $1 this year, it is the dollar that LOST value, not the other way around.

      • Vicki

        Yes. Exactly. Inflation (that $0.10 apple that now is $1.00) is the direct measure of the faith in that piece of (fiat) paper we call a dollar. The the value of the apple will go up and down based on the same law of economics that governs EVERYTHING. When there is a big increase in dollars (I.E. when trillions of them are printed) there will be a change in the supply/demand ratio of apple/dollar. Inflation. The supply of apples need not change. The demand for apples need not change. The supply of dollars changed. Supply went up. Demand stays same. value against apple goes down and it takes more dollars to buy the same amount of apples.

        Of course if we were to dramatically increase the demand of apples but leave everything else alone (including dollars) then the number of dollars needed to buy apples would still go up. BUT only apples.

        We don’t say that there is inflation when 1 or just a few things take more dollars than before. We only say there is inflation when a broad range of things (can’t be everything cause computers have come way down even in the inflationary times of the recent past) that are usually necessary for survival take more dollars to trade for.

        Thus you see Inflation is the direct measure of the value of (faith in) dollar not the value of apple,gold,wheat etc.

    • GoldBugSpray

      Yes. Common sense often goes away when greed enters the show. Gold is no more unique than soybeans, Ford bonds, or shares in GE. Try to profit from the rush but know that the party has an end.

      A wiemar republic inflation is unlikly hear because the US is much larger than germany and has more conflicting interests trying to run the government. So, printing money to please the masses will not work here. Someone will be taxed heavy or supply will come forward to quench demand if inflation takes off.

      • DaveH

        For your own good, read about the economic history of Argentina which used to vie with the US for the second spot on the world economy (both behind Great Britain). Especially read about their 1980s experiences. US too big to fail? Don’t kid yourself. No country is too big to fail.

    • s c

      Daniel, you need to be realize that having faith in The Obummer, Congress and/or the Fed is the TRUE definition of utter irresponsible. Assuming that you have an idea as to what is at stake, it’s hard for me to think that you appreciate the extent of the economic problems America has.
      You don’t sound like a progressive, but it seems more than strange for an adult to have misplaced faith in people and institutions that are doomed to fail. The Fed, in particular, is best described as an overflowing toilet that is long overdue for an earth-shattering, economy-saving FLUSH.
      Your comments remind of people who have been trained to believe that real estate always ‘goes up in value, and can never go down.’ Surely, you’re not one of ‘those’ people.

      • s c

        [delete 'be,' and replace 'utter' with utterly. It's early, and my freshly-brewed, whole bean coffee is still perking.

    • DaveH

      So I guess, Daniel, that you are going to quit buying real estate because there was a bubble? Do you really think the 1980s bubble in gold has anything at all to do with its value as an inflation hedge? Markets have tops, bubbles have tops, that is the nature of investment. You have to be wise enough to know when you are paying too much for anything. I’m not a Gold Bug, by the way, but I do know you had better protect your cash savings with hard assets of some kind or see the value of your dollars eroded away rapidly by the coming inflation in consumer prices.
      The US was on a gold standard from 1900 until 1970 when Richard Nixon unilaterally ordered the cancellation of the direct convertibility of the United States dollar to gold. After that, the value of the US Dollar started dropping (thus causing inflation in consumer prices). From 1970 to 1980 the cost of goods (what many call inflation) increased over 100%. The investors lost faith in the US dollar (now unbacked by Gold) and thus a bubble was created in the price of Gold. It is the nature for the mass of humans to play follow the leader until things collapse. Just as so many Liberals are currently willing to follow Obama to collapse of our economy.
      What is the real value of Gold, that is how many groceries or other goods will an ounce of Gold buy? I have no idea, but I do know that the exchange value of Gold for goods will remain much more stable over time than the exchange value of the US Dollar (paper backed by nothing). Argentina had inflation of 5000% in one year (1989). Anybody who doesn’t think that can happen here with an out of control government is smoking some good stuff.

      • DaveH

        By the way, if we take the price of gold after the bubble burst in 1980 (about $350) and add to it about 150% (official inflation rate in consumer prices since 1981) we get $875. Of course, that’s if you accept the Official inflation rate. In normal times people might think $875 is an acceptable price, but these aren’t normal times, so the investors, who usually think many months ahead of the current economy, are willing to pay a premium for what they think is coming. Are they right or wrong? Only history will tell.

  • LiarsMustBeDefeated

    When you spend money you are effectively saying the object you purchase is worth more to you than what you are paying for it. A dollar spent is a VOTE against the value of the paper and for the commodity, e.g. gold. The value of gold (in U.S. dollars) is bound to go much higher. Vote with your $$$. See who is right. History shows the way.

  • Dr. Mabuse

    Even with the price of an oz. of gold slightly over the 1k mark, its still an excellent way of preserving and maintaining one’s assets.
    I predict a year from now, the price(s) of gold and silver will make today’s spot prices seem like a major bargain.

  • Rob

    The recent loss in gold was a result of the investment “herd” mentality capitalizing on high gold for profits, then running to another “secure” investment for further potential profit & security. The fundamental reasons for gold prices increasing have not been addressed: burdensome sovereign debt and excessive money printing. When these catalysts are addressed by the government(s), then gold will not be as attractive…….patience.

    • Al Sieber

      Rob, what the hell are you talking about? are you Bernank’s “butt” boy?

      • Al Sieber

        Also Rob, there was a correction in the market and elections are coming up,so they want people like you to think the dollar is strong, so read your history or prove your point.

        • s c

          Al, only Rob can answer the Bernanke ‘boy’ issue. I think it’s safe to say that Rob has never heard of Uncle Scam’s Plunge Protection Team, and he obviously has complete faith in Uncle Scam’s ability to put crap in a new paper sack and sell it in quantity to ‘true believers.’ Rob must lead quite a sheltered life, eh?

          • Al Sieber

            sc, you are the only one I’ve heard mention the “Plunge Protection Team” in at least 5 years, I just wonder how many people on this site know who they are?

          • Dan Az

            Al I dont!

        • Al Sieber

          Dan, the “Plunge Protection Team” manipulates the stock market, if the market looks bad they bring in those people to straighten it out, all illegal of course. they manipulate everything. sc can explain it better then me.

          • Dan Az

            Thanks Al I get the Idea!

  • anonymous

    Or,when/if the greenback or any paper money, ever-again becomes backed by Gold or Silver… It is stated in many valid documents that a Roman citizen could go to the Market place with one ounce of gold, he/she could purchase a very nice Toga, a belt and the most expensive pair of sandals. Today one could go to a department store with one ounce of gold (if it were accepted as a means of exchange) and purchase shoes,belt and a suite of clothes.
    Gold, for thousands of years has been and still is (for the time being) used as a ‘STORE OF WEALTH’….

  • http://www.silvercitycoins.com BoB

    Chip- Great article and advice! Everyone should be fleeing out of dollars and into gold and silver. Everything else (dollar denominated assets of any kind), are becoming worthless as we speak. Any excess money you have should be put into precious metals asap, before the price goes even higher.

  • Carl

    Dear Chip, Thank you for pointing out the truth. Those who say gold or silver are over-valued are not looking at the fundamentals. It reminds me of why the stock market has been over 11,000 points lately. Talk about over-valued! I can’t believe it. Unemployment is still high, and climbing (those who have given up looking for work, and those who are underemployed, included), consumer confidence is still down, housing purchases still down, manufacturing is down, savings are up, consumer spending is down, some States are near default, many houses are abandoned and standing empty, home foreclosures are still serious, dropping value of homes, fewer people wanting to go into debt (so fewer people wanting to risk taking out loans — personal loans as well as for small business), and the list goes on and on. It seems that the Federal government wants us to forget about those fundamental issues. The fundamental issues have not changed. Nor have the fundamental reasons why gold, silver, commodities, natural resources have been going higher. As long as the Fed keeps printing lots and lots of fiat money, and our Federal government keeps spending money we don’t have–taking on more and more debt, gold, silver, and other commodities will keep going higher and higher until we come to a tipping point where the U.S. dollar begins losing value fast. That would end up being a dark time for America.

  • http://notsurewhatyouareaskingfor-thanks Buzz, Andalusia, AL

    I believe everyone here today is underestimating the gravity of what is going to take place. When the dollar does collapses, normal commerce will cease. You are going to need realistic quantities of what money will buy and that is food. You will need enough for you and your loved ones to last 1 to 2 years for each person.

    Also buy huge amounts of caned sardines and alcohol miniatures, like those served on airlines, as a medium of exchange. It will be safer for you when things get really bad.

    BTW – My close friends at the very top of government have told me the USA is going to be forced into confessing that all of the Apollo moon landings were faked. There is NO WAY for me to know this one KEY FACT concerning this and that is the Lunar Excursion Module, or LEM, was never loaded on any of the 5 supposed missions. All that is going to come out.

    This is going to start the revolt against the tyrants of Washington and the concurrent collapse of the dollar will fuel the revolution until it is successfully completed. We are going to get our original constitutional government back. We are going to decriminalize the name, “God” or “Jesus” :-)

  • Joyce from Loris

    Although we have some gold, most of our investments have been in purchasing silver. We are not rich people, and I can buy a lot of silver for what the price of gold is. We plan to use it, if necessary, to purchase or trade items we might need. We have plenty of heirloom seeds, plenty of food stockpiled, we have ponds and lakes on our property for fishing, we have deer, turkeys, ducks, rabbits and squirrels. We will be able to eat for quite some time. We have all of our medical needs covered, gas and chopped wood, and plenty of trees if we run out of wood. We are, we pray to God, ready as we can be, seeing that none of us are really able to predict what is going to happen.

  • James

    Chip, I essentially agree with you. I cautioned against buying gold because of past history. Back when Barack Obama was president-elect, 60 Minutes interviewed him, and after showing him a new book “The First One Hundred Days” (which referred to FDR’s first term), he was asked if he had read it. He answered ‘Yes!’ and something to the effect that FDR was his hero, whom he intended to follow. In April 1933 FDR had possession of gold outlawed. At that time, all federal banks had closed and we in the depths of the Great Depression. People were withdrawing their money from these banks and exchanging it for gold. FDR said there simply wasn’t enough gold to satisfy that market and had possession of it outlawed. Immediately thereafter he raised the price of gold, which devalued the currency in circulation.
    We are in that same situation now, and while I think gold will continue to reflect our dollar’s loss of value, I believe President Obama will have possession of it outlawed, like his hero FDR did. For that reason I suggested buying silver instead, it has a lot of catching up to do. The old ratio of gold to silver prices was 16 to 1, I don’t think it will see that again, but 40 to 1 is certainly possible.

    • Vicki

      Bring it on. I would hope that we learned from FDR and if the possession of gold is outlawed that we all rise up and tell him what he can do with his “law”.

  • hal

    if the value of gold is so sure to rise so much why are so many companies advertising gold for sale? if it is a sure thing they would keep it instead of selling it.dont be a sucker.

    • Vicki

      look also at how many companies advertise buying your “old” gold and where they advertise. They know that the price will still be going up for a while and they are simply trading commodities.

    • James

      Hal, one reason is because most gold sales don’t actually involve the transfer of gold, most buyers don’t want the hassle of handling and storing it. They just buy certificates that entitle them to the gold if and when they need or want it. The problem is, there’s not enough gold inexistence to cover all the buying. When that becomes common knowledge, the gold price will explode. When that happens, Obama will outlaw possession of it, under the guise of restoring sanity.

  • Roy

    Hal, do you know how many times they sell and buy again the same amount of gold? Of course it is arranged so they make a bit of money on each sale. When gold goes up they end up with much more gold on hand then if they had just sat on it. If you happen to have a well set up company to buy and sell gold you could do the same thing. If like most of us you do not have such, don’t be a sucker, buy gold and sit on it!

    • Al Sieber

      You got that right Roy.

  • GoldBugSpray

    If you think the dollar is dying, do not invest in gold. Invest in foregien currency. I am suspecious that some of the “gold” has been double and triple sold. If all the gold certificates, options, and other plays were made to balance in gold there would be a shortage of the real metal to back the paper just as with the dollar, no real asset to back the paper.

    Prove that the gold in Fort Knox is not just gold plated lead or another cheap heavy metal.

  • http://www.TomBlairEA.com Thomas Avery Blair EA

    I have been buying silver on e-Bay for about six months but already held a small reserve from many years ago. In September I began selling off some of my “survival silver” and was rebuked for doing so because it seem inconsistent with my view of buying more silver, not selling it. The answer is simple: I closed my IRA and my savings account and together with that my small federal income tax refund and began buying up more silver in early 2010. Today I keep only one month of my household expenditures in “fiat” (no precious metal backing of the currency…money that is money only because the government says it is) Federal Reserve monetized debt instruments…almost everything else in “survival silver” (I simply cannot acquire enough gold in a short time to meet the same objectives).

    I sell off the “survival silver” coinage that I believe will become most difficult to barter with when the American fiat dollar finally fails…and I personally believe that will be far sooner than most Americans can fatom. Kennedy half dollars range in silver content from 90% for the 1964 coin, down to 40% silver for the 1965-1970 Kennedys, and then 0% silver content thereafter and to date. Washington quarters prior to 1965 were 90% silver…then they became “fiat” coins with little or no precious metal of any substantial amount (although copper amy indeed become the next truly precious mental…but that’s another story).

    Roosevelt dimes were 90% silver until 1965…and they also ceased to have “carry value” of any substantial and truly precious metal content. Those Roosevelt dimes look way too much like those of 1964 and I expect will not work as well for barter a the so-called “Mercury” dime.

    So, in short, I am selling off the lower silver-content coins and the least desireable “look-a-like” coins and turning a few ounces of silver each month into “fiat” currency to pay those who will not (yet) accept “monetized silver-content US coins” (like utilities, the landlord, etc.) and to also acquire additional “Mercury” dimes (my favorite) and Barber, Walking Liberty and Franklin half dollars (instead of any Kennedys).

    All you really need to know is what “monetized debt instruments” do to your wealth retention efforts and why both gold and silver remain the very best “the very ideal bartering and wealth transfer currencies” as true “hedges” against the soon-expected hyper-inflation in the USA, the Northern hemisphere, etc., etc.

    In my 63-plus years on planet Earth so far, I’ve developed some expensive habits, like eating regular meals, living indoors and seeing a doctor and dentist, and having my medications on a regular basis. I’m not yet ready to do without those “luxuries” just yet, so I’m looking to silver for my “wealth transfer” currency over the ruinous use of “monetized debt” Federal Reserve “fiat” money.

    Respectfully submitted,

    Thomas Avery Blair, EA

    • GoldBugSpray

      Unless you are in the mining or industrial metals business, grow your money not your metal. Getting more than the face value for a silver coin is going to be a long way off in the future of Wal Mart or any other retailer or bank. Unless there is a complete collaspe, I do not think the metals are a wealth builder. Hyperinflation is not a high probability outcome either. There is a difference in government debt which is “high” now and hyperinflation which is driven by mass mentality which is hoarding now as evidenced by your comments.

      But, do as you please, enjoy your efforts, and I hope you come out ahead as you are getting on in years and a loss at your age is bad.

      • DaveH

        “inflation is always and everywhere a monetary phenomenon” – Milton Friedman. That is, Inflation is caused by excessive printing of fiat currency. Don’t think our Federal Reserve wants inflation? Read this:
        http://www.bloomberg.com/news/2010-10-15/bernanke-sees-case-for-further-action-on-economy-with-too-low-inflation.html

        • Old_Money_Bags

          I had seen the summary of this earlier. Worth the look to see what Mr. T has to say on gold, the naked water polo team, steve jobs changing the game, and so on in the videos. I did not watch them though tempted.

          I suggest that inflation is low because people in general are trying to maintain pre-repression standards of living and meet their personal expectations. Also, the poor lot that ended up without a job and reduced cash flow is not spending as in days of old. A shift to a government run economy is also under way with a lot of people on the dole. Money has no return or velocity now. Inflation is low because the people are broke, trying not to go broke, or are afraid to spend because they fear spending might break them. Inflation is happening in essentials. Dog food is out of sight. Few people will starve their dog. Maybe the kids but not the dog.

          WalMart knows when the government checks are sent out. The prices rise and the aisles clog just before the checks arrive. Towards the end of the month, prices fall. No way to run a country.

          • libertytrain

            Old Money Bags – re your: “WalMart knows when the government checks are sent out. The prices rise and the aisles clog just before the checks arrive. Towards the end of the month, prices fall. No way to run a country.”
            You’re correct HOWEVER that is true in many businesses – like an auto dealership had to make it’s quota assigned by Ford, Chrysler, whomever by the end of the month – or a furniture salesperson to meet his/her requirements to get a commission – get the best deal for the customer – particularly at the end of the month- standard operating procedures for many years – end of month equals better deals — Walmart doesn’t seem to be any more unusual – my confusion is why in 2008 it changed names from Wal-Mart to Walmart – but I get confused by little details… :)

      • James

        GoldBug, buying precious metals doesn’t create wealth, it preserves the wealth one has. When the price of gold and silver go up, it doesn’t mean the metal has become more valuable, it means the paper dollar has become less valuable. All prices go up when the dollar loses its value. I would buy silver bars, not coins, there’s no premium on bars.

    • http://gunner689 gunner689

      I do own some silver and would like to buy gold as a hedge against inflation. My biggest fear in that is gvt. confiscation of precious metals. The buyers list is probably not secure from federal supena.
      When the feds grabbed private gold in the 30′s did they reimburse the owners? if so, with what? I also believe at this time it is a good idea to lay in a supply of weapons, ammo, and long shelf life food. These bastards now control about every aspect of our lives so survival could be a real circumstance.

      • James

        Gunner, they were paid the government fixed price for gold, which was around $20/oz. Then after all the gold was purchased, FDR raised the price of gold to $35/oz.

  • Jim

    Been buying silver bullion (.999)(the “poor man’s gold”) for over a year, got some of the rest of the essentials…food pantry full, some seeds, fishing and hunting equipment, hand tools, a clean H2O source, and a close circle of friends that can be counted on to “watch your back”….Hope it won’t hit, but got that feeling it will. The “snap back” to get the gold/silver ratio closer to historic levels (16 to 1) might happen, might not, either way, both will go much higher, just based on scarcity and demand. Unfortunately, I don’t think this event can be avoided, but if it can, I still feel it’s better to be prepared…..If Obama tries to follow FDR’s footsteps,we will see the SHTF, and I’ll just sit back and watch how FEW people will follow that edict!

  • Joel A Whitehurst

    Obama will soon be our last black president, (That’s GOT to be perfectly politically correct. After all, many were exhuberantly calling him our FIRST black president, weren’t they?) but the horrible, vicious damage he is doing will live long, long after him. By the time his boy Bernanke is through with “Quantitative Easing”, the politicians will have used his tawdry ploy to pay the country’s debts, but we, the people, are going to have enough worthless greenbacks to paper the White House and the halls of congress with….
    I predict that those of us who own silver or gold will be a lot more secure than the idiots who are investing in the already-hyper-inflated, absolutely worthless paper that Wall Street is selling, or treasury notes. If the DOW goes to 30,000, stock will still be arguably worthless if the dollar is worth a penny, and the corporations of this poor nation will still be producing little, selling less and paying miniscule, if any, dividends.
    We may not see a repeat of the Weimar crisis, but it ain’t gonna be pretty. I think that, as awful as it may seem, gold, silver, canned foods and bullets might be our best investments right now….
    Joel Whitehurst
    Los Banos, CA

  • Tom

    I just stumbled in to this web site–have been reading all the messages. It seems there are 2 groups. Group 1 thinks obama will save the day–gold will drop and ABC will happen (very few). Grp 2 thinks obama & co will make things even worse, gold will go even higer and XYZ will happen (majority). Just for fun–all of you may want to look at a 3rd view. Not ABC or XYZ—if so just punch up familyradio.com & take a look at their material–you cannot BUY anything there–you can only get their material free. CDs DVDs printed material or download it–all freee-they even pay the postage—no obligation ever. No pop-up ads on their website either!! Take at look at what they say is going to happen in 7 months from now. (PS I used to belong to grp 2 & believed in XYZ–actually still do at least for the next 6 months)

  • jopa

    Joel; After President Obamas eight years are up we may have a president related to Juan Valdez.Or if the Republicans take control we may have a president from China, Bahrain, or even India.Whatever happened to the articles on this site about the US chamber of commerce and the teabaggers.Too close to elections and too much of an embarrassment to the republican agenda or what???

  • Joel Whitehurst

    Jopa:
    After Obama’s eight years are up, he will have been four years out of office, for the good, logical reasons I cited, and a number of other understandable reasons.
    I wasn’t discussing the teabaggers or the chamber of commerce, and those things are in no way related to the government-induced hyper- inflation that appears imminent which is due, directly, to the stupid fiscal policies of Mr. Obama and his minions.
    If you wish to divert the discussion into an emotional diatribe, that proves only that you are not able to present a logical, coherent argument against my statements.
    Thanks for the endorsement from the left!
    Sincerely,
    Joel

  • jopa

    Joel; When you say our last black president don’t include me, I plan on being around for a long time.Perhaps you are not feeling well and should seek medical help.At the same time stop in to see the shrink he may do you wonders and perhaps you might even get a grip o reality.

  • Joel Whitehurst

    Well, maybe I was a little hasty. Obama will definitely be the last black president for a good long while, but a black person who is truly qualified for the job would certainly present a welcome and truly refreshing alternative to our present confused, disingenuous, overwhelmed, unsuccessful leader.
    It’s really odd that you should suggest I see a psychiatrist. My friend, Fred, a doctor of psychiatry and an M.D., says that Obama is an “arrogant ass” (His words, not mine). I suppose it would do me some good to get an appointment soon.
    Best Regards,
    Joel

  • http://gunner689 gunner689

    The color or sex of an American citizen has nothing to do with their qualifications to be President. It’s the person’s belief system and dedication to OUR country that is the foundation for a good president. Next to BO, our worst presidents were Carter and Clinton. One was just an outright boob and the other was a manipulating ego-maniac. There are many blacks and women who I would support for president because they are true patriots. None happen to be Demorat.

    • Denniso

      No accident that you just picked 3 Dems as worst presidents,since you’re nothing but partisan and blinded by it. I might guess that you love the crook and liar Nixon,since you didn’t include him in your worst presidents list.

  • Old_Money_Bags

    One anti-inflation mechcanism that impacts the US more than weimar germany or argentina or even zimba…. whatever they now call Rhodesia is the flow of dollars overseas to China and the rest. That loss keeps inflation lower here. I think this is not being pointed out too often. Yes, fiat money is made but it soon is consummed and leaves the country. Hugh debt is being created and bought with some of the money that was spent. US bonds, bills, and notes are still desired to the extent that interest paid by them is low.

    Gold is bought world wide. With all the dollars overseas where gold is coveted, it is no wonder that gold has risen. The arabs, asians and subcon indians are buying and driving the price.

    Gold rising should not be taken as a leading indicator of inflation, dollar devaluation, or pending doom. A rising price for gold means that gold is in high demand by buyers who hold dollars or can convert to dollars. I hold 2654980 yen. If yen keeps gaining on the dollar, I will cash in and make a dollar profit. I bought at dollar to yen of 121. Should I then buy gold? I rather invest in nat gas which is way lower than it should be because industrial use is down. Gold will not rise faster than the currencies that are buying gold are accumulating dollars. The rise in gold is more complex than a hedge against inflation here in the US.

    Soon, if the dollar keeps falling, industrial production here in the US will have a reason to start back up, the increased cost of imports. So, natural gas is the ticket, not gold.

    Hope I am not wrong. I have been before. Can cost a ton of dollars. Not to worry, they do not buy what they used to buy.

    • Al Sieber

      Old Money, why is natural gas the ticket? all you get is a piece of paper telling you how much gas someone is storing for you. gold is real money, bought and traded world wide, accepted any where. it would hard to carry tanks of natural gas around to sell. what’s your knowledge of the Weimar Republic?

    • James

      Old-Money, “Gold rising should not be taken as a leading indicater of inflation.” Are you kidding? Gold has always been the leading indicater. Gold has gone from $20/oz.(1930) to $1339/oz., that’s inflation. back then real ice cream cones were a nickel, gasoline was 10 cents a gallon, movie tickets were 15 cents, haircuts were two bits, and most new cars sold for less than a thousand dollars. That’s inflation.

  • Old_Money_Bags

    I have historical knowledge of the Weimar Republic having read about that time in Germany’s history before WWII. I did not live it nor can I spell it sometimes. An accqaintence of mine actually lived through WWII in Germany. She is on up in age and has personal knowledge of that time either from her early childhood or from her parents. Germany just keep producing money to satisfy the desires of the people and industry. At first, the idea seemed sound but then inflation and devaluation of the currency struck hard. I do not think it will happen here because all our money goes to China and never comes back. Rather, a collaspe of the Federal Reserve is more likly because the Federal Reserve has been buying bad paper all over the nation.

    If you and others wish to buy gold go gold go. A premium is paid for the actual metal. I thought you were all speculating in gold certificates, options, or futures. In my mind, and I have a huge experience with theft of industrial, residential, and commercial properties I own, my problem would be where would I store the gold. I noticed some of the commenters were afraid to store the gold in bank safety deposite boxes because the government might make a call for the gold at some point. I cannot see storing it at home. Not where I live. So, I do not own any gold or gold certificates.

    Gas is just a speculation to make money at a rate approaching or surpassing the inflation rate. You cannot carry gas, bales or cotton, orange juice, or any of the commodities around in less than truck load quanties. Natural gas is normally pumped around in pipelines and sometimes in ships.

    • Dan Az

      Old money bags
      It sounds more like short term investment rather than long term your right in your thinking that its going to sky rocket but its something that you have to gamble on when to get out.

    • Al Sieber

      Old Money Bags, my friends lived through the Weimar Republic, and the rise and fall of the 3rd Reich and the destruction of Europe, his father spent time in a Russian concentration camp, and his mother was repeatedly raped by Russian soldiers, they finally got away by buying their way out with a little bit of gold they had stashed. thats why I believe in the power of gold. the transwestern gas pipe line runs across my property, wish I could tap into it.

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