How you should buy gold or silver ? The important of gold and silver
Gold and Silver are better than money
Before the economic crisis of 2008
was only a speed bump on the weight of the main event.
I believe that before the end of this decade there will be an economic
crisis so historic that it will eclipse the crash of 1929. And the subsequent
Great Depression. I also believe that it
is both unavoidable and inevitable. Because it is merely the free market
releasing stored up energy from decades ofeconomic manipulation.
Yes bad
things are going to happen but it could be the
best thing that ever happened to you. This Guy would started out as the
top ten reasons to buy gold and silver and
was originally drafted by some very good
and well intentioned employees. But when
I
read it something just did not feel
right.
It contained all the usual reasons
that
any precious metals dealer would
point
out as to why people should own gold
and silver though they were all very
good reasons to own gold and silver.
They were not the reasons that I buy gold
and silver so here you go.
Number ten : All the world's
currencies are fiat & fiat currencies always fail.
Ninety-nine point nine percent of
the world's population is unaware that we no longer use money
we use fiat national currencies. So what
is a
fiat currency and the answer fiat
currencies are faith-based. Fiat currencies are
national currencies
that are not backed by anything of
value Like gold instead the government
just declares that they have value and as long as the people keep believing
they do have value.
So the people accept
fiat currencies
for a while but here is the thing. There
have been thousands upon thousands
of fiat currencies throughout history
and they have all failed a hundred
percent no exceptions. But there is a vast difference this time around since
1971 for the very first time in history
all
the world's currencies are fiat currencies simultaneous remember this as we progressed
through the top ten all fiat currencies fail.
Number 9 : The current state of the
global economy
Throughout history societies have swung back and forth
from quality money to quantity currency
and
back again. Originally quantity
currency took the form of debased coinage
like gold and silver that has been diluted
by adding cheap and abundant base
metals such as copper.
Then it took the deceptive form of national
currencies that were initially backed by money.
In other words they were claim checks
on gold but once these were established governments then change the laws to
make
fraud legal so they could print
claim
checks on gold that did not exist. The
next step was to sever the
connection
between money and currency entirely.
Back when we used real money gold would automatically balance all economies
when one country would experience an
economic boom they would import cheap goods
from
countries with depressed economies
and lower wage rates.
The outflows of
gold from the boom country would cause a deflation cooling the economy while
the countries experiencing gold inflows would boom causing their labor rates
to increase. Which in turn would cause
the
prices of depressed economies
countries goods to rise. This meant
that trade imbalances would always
automatically rebalance again with
gold. Government spending was also
constrained if a government wanted to spend money
more than its income, also known as
deficit Spending.
Goverment had to borrow
gold from the private sector if the government borrowed too much gold it would
cause interest rates to rise. Which in
turn would slow down the economy that in
turn would cause tax revenues to fall. But
the debt based global monetary system
has allowed deficit spending and trade
imbalances and bubbles to persist in
balloon to levels unprecedented in
all
of history.
The credit debt bubble
and the derivatives bubble threatened to
take down the world economy. The
only
comparison you could make is to take
every great bubble in history times
one
million have it burst everywhere on
the
planet simultaneously. It threatens
to be a global financial nuclear holocaust
the only survivors of which we will be the owners of gold and
silver.
Number eight : A new world monetary
system
I am a firm believer that everything happens in waves and cycles when I was writing my book I discovered that every thirty to
forty years the world has an entirely new monetary system. We have had four different monetary systems in the past a
hundred years.
The system we are on today is the US
dollar standard.
It is an aging
system that is way overdue for its own
demise. It is now developing stress cracks,
and will one day implode. Before the end
of this decade history will repeat and
just
as in 1922, 1944 and 1971 there will
be
an emergency meeting of economists
and government representatives to hash
out a new world monetary system.
It is
normal no man-made system can possibly account
for all the forces in the free market. They get old, they develop stress cracks
and they implode. But what is different
this time around is that the last three transitions were baby steps from
full gold backing to partial gold backing
to less gold backing finally no gold
backing. In
each of these transitions the system
we
were transitioning from had a component that could never fail :
Gold
this time we will be transitioning from a system based on something that has always failed : fiat currencies.
The key component to this transition from the US
dollar standard to some new standard is, of course, the US dollar. But the US
dollar represents more than half of the
value of all the world's currency. A
dollar crisis would cast doubts on all fiat currencies. And the cascading effect
of loss of faith could cause the rest
of them to fall like dominoes. The central bankers will try everything they can think of to keep the fiat game
continuing.
But when everything they try fails they
will look around and say what worked
before and once again the pendulum will
swing back to quality money. The only beneficiaries of this event will be gold and silver and those
who own them.
Number seven : Gold & silver
come with a central bank guarantee
my book was written from 2005
to 2007. In the book I said there
would first be the threat of deflation this came
true with the crisis of 2008 - which
Ben
Bernanke would overreact with a
helicopter drop of currency. This
came
true with the bailouts and QE, which
would then cause an inflation. This
came true when the stock market's and
real estate markets were inflated. So far
the Federal Reserve has not only lived
up to my predictions, but it has surpassed
even my wildest nightmares.
They believe
that they can fix things by running the printing presses. But the tale does
not wag the dog. The free market is responsible for our prosperity. It
is the economy. Not the numbers they print
on pieces of paper or conjure in
computers. So now that they have proven that massive currency creation does not
work they are going to double down on it.
But it is the market that ultimately
rules. They are about to discover the
horrific economic consequences of their
reckless actions. As I said in my book next
there will be a real deflation a
contraction of the currency supply they can not control. This will happen when the
credit, debt, bond, fiat currency and
derivative bubbles begin to implode.
The
reaction of the world's central banks will be to print until deflation gives way. Which
I believe will cause a hyperinflation.
But a hyperinflation does not even require
a nation to print its currency into oblivion. It only requires a loss of faith but never fear because periodically throughout history gold
has revalued itself as it is bit up in
price by the free market as people rushed
back to it for safety.
This is when gold
does an accounting of all the currency
that has
been created since the last time
gold
did count. In doing so its purchasing
power Rises exponentially. It has always
done This, and I believe it always will.
Number six : Everything else is a scary investment.
By any realistic measure stocks have been in a super bubble for more than a decade now
with valuations and yields in the danger
zone while bonds are in the later stages
of a thirty year bull market and real
estate is
still deflating from the biggest
bubble
in history. Dr. Robert Shiller of
Yale
University has compiled data on the
stock market going all the way back
to
the Year 1880. His research
concludes
that by one measure the stock market
has been in the bubble since 1998 and by
his other measure it is far bigger and
more extreme than any prior bubble.
Including the stock market bubble of the
roaring 20s that led to the crash of 1929.
Further research shows that the only
reason the markets have been
levitated
to these levels is due to the
Federal
Reserve stimulus. What will happen
when increasing stimulus no longer works ? I will not want to be invested in
stocks when it finally implodes.
US
Treasury bonds have been a great investment
for more than thirty years but no bull
market lasts forever. In fact, for the
thirty seven years
after World War II bonds were such a
bad investment that by the end of the
1970s they had earned the nickname
“certificates of confiscation:
but that was back when countries were
financially responsible. Now most countries on
the planet run their finances like
Greece and the United States of America is leading the way. And as the world's central banks keep interest rates
low it's caused bond investors to take extraordinary risk in search of a reasonable return.
We are now in a global bond bubble that Dwarfs anything in history I believe that this has made
the bond market one of the most dangerous
places to be invested in right now.
Dr. Schiller is also the creator of
the
case-shiller home price index. His
data
on real estate suggests that since
the
popping of the bubble in 2007
real-estate values have bounced back
into a small bubble but what worries Dr.Schiller most is that institutional
investment firms have bought up as
much as thirty percent of the homes that
were foreclosed on since the crash of
2008.
This has the potential of making real estate as volatile as the stock
market. If these firms ever decide to sell
they can dump thousands of homes on the market all at once causing the 2008 real estate crash
to look like the calm before the storm. Personally the thought of investing
in real estate right now is downright
scary so the stock market bonds and real estate are either in a bubble or
have been in a bubble in the last decade
gold and silver however have not been in
a bubble for more than thirty years.
And
from my measure still appear to be less
than halfway through their bull market. The next great bubble will someday be
gold and silver it's just their turn.
Number five : Market psychology
Nobody can really understand the
markets or the economy but you can get an inkling of what they are about if
you understand what drives them greed
and fear. And the most entertaining part
of monetary history is the study of
their byproducts manias panics bubbles and crashes. When you study these you
quickly learn the meaning of the old saying.
“ The bull climbs the stairs, but
the bear jumps out the window.”
What it means
is that it can take years to create a bubble but only days or weeks for it
to burst. This is because when it comes
to greed and fear fears by far the more powerful emotion. Gold and silver
are sometimes the exception to this rule because they can rise as fast as lightning in a panic.
In the golden bull market of the 70s
it took 9 years for gold to rise from thirty
five dollars to four hundred dollars. But once a panic out of
dollars to the safe haven of gold
began
to develop it only took thirty three
trading days for it to more than double rocketing
to eight hundred and fifty dollars. But
actually it was only a
very small percentage of the
population
that was panicking out of dollars in
the
70s. This time I think it will be everyone. Where do you think gold and silver
would be headed if my reasons ten through
six come to pass top ten reason.
Number 4 : this time it really is
different
The differences between the precious
metals bull market of the 70s and the great gold and silver rush of today are
vast. In the 1970s only 2 major exchanges one in London and one in the U.S.
set the price of gold. So it was only
North America and Western Europe about ten
percent of the world's population that could participate in that great Gold Rush.
But this
time it's the entire planet in the
1970s
the number of investors in state-run
economies like Mao's China or the
USSR was zero.
Now those countries are
home to
more than one hundred billionaires
each much of the rest of the world lived in
extreme poverty. Today there are almost one
thousand and five hundred
billionaires in the world living in
more
than fifty countries. Every country
on the planet has expanded their currency
supplies about tenfold since the
1970s.
So each potential investor has ten
times
the currency and within each population.
There has been the extraordinary
development of the investor mindset.
In the 1970s we were a planet of savers
but then as nations around the world
abandoned gold and silver as money
and adopted fiat currency inflation
raged punishing savers and rewarding
investors and speculators. Then we had the
tech bubble of the 90s and everybody
became a stock trader then we had the global
real estate bubbles and everyone became a real estate investor or flipper.
For
more than thirty years saving has been
punished, and investing and speculating has
been awarded. The result is that there
are many many times more people likely
to invest in gold and silver this time around. The number is very hard to project, but I would guess it's
somewhere between ten and one hundred. But
possibly even as many as one thousand times more
people with an investor mindset.
Remember that in
the state-run economies (more than half
the
world's population) there were no
investors. And today China is in the
midst of an investor driven real
estate
hyper bubble so that's ten times the
people each with ten times the
currency
and within each population there is
somewhere between ten and one
thousand times the number of people with an investor mindset.
That's somewhere between
one thousand and a hundred thousand times more
currency. That will someday come chasing gold and
silver this time around. Yes this
time it
really is different.
Number three : gold and silver should
buy a whole lot more
a toga sandals and a belt and that
today
a man can still clothed himself in a
suit shoes and belt for the price of
an
ounce of gold. People claim that
this has always been the case. Nothing could
be further from the truth.
Before the Federal Reserve was created you
could buy an outfit with an ounce of gold
but by the end of the Roaring Twenties
due to inflation you could not. Then by
the beginning of the Great Depression because of deflation you could but
by 1970 an ounce of gold would only buy
the Shoes. Then just 10 years later it
would buy a top-notch suit very fine shoes
and a great belt but by 2001 it could only buy a shoddy suit cheap shoes and a crummy belt.
Yes, gold has always
been worth something, but it has always zigzagged in a range of purchasing
power.
However, this myth is based on a
true
Fact. Humans mined gold at about the
same rate that they make babies. So there
is relatively the same amount of gold
per person on the planet today because
there was an ancient Rome.
So let's dissect the myth of the
Roman suit to see why Gold's purchasing
power has varied, and what it could be in
the future. The gains and efficiencies
made since ancient Rome are mind-boggling.
To make a toga required cotton to be planted, tended, picked and
separated from the seed by hand. then the cotton
had to be hand washed combed and spun
taking
someone weeks to make enough thread
for a toga.
Then the thread was dyed
with
colors that were hand mined or harvested the cloth was then hand-woven, cut
and stitched into a toga the shoes and
belt were equally labor-intensive. Today
with factory farming cheap fuel modern irrigation and pesticides it is
possible to ten thousands of acres planted at
densities never before imagined.
Giant combines drive through the fields plowing the dirt and sowing the
seeds in one pass at harvest time specialized combines pick the cotton and other machines separate the seed. With
factory ranching efficiency is the same
story with thousands of sheep being tended
and shorn in production line fashion,
then trucks deliver the cotton or wool to where it's washed combed and spun
into miles of thread in minutes, then
dyed with cheap mass production dyes and woven into miles of cloth by
machines.
Again in minutes then the cloth is
stacked many layers thick and a
computer-guided Shearer cuts out
dozens of each of the parts of the suit in
a single pass. The parts go to an assembly plant where workers who specialized
in making the left sleeve or the right
leg and such do so at amazing speed
workers that can turn out dozens of suits
per day do the final assembly also at a blazing rate.
Then it is shipped to
a store where you can pick from dozens
or even hundreds of styles colors and
sizes
and it's a similar story at the shoe
factory that spits out a pair of
shoes
every few seconds and the belts that
come off the production line by the
thousands the end result is that the
time value. The Roman outfit most likely
measures in months of human labor whereas the
modern suit contains only a few hours.
This
is true of all the other stuff in
society as well when it comes to the time
value contained in stuff everything today
is on sale for a tiny miniscule
fraction of what at once cost. And, as proof to support my thesis I offer this. Today
a good percentage of the world's
population has maybe a hundred times
more stuff than ninety nine percent
had two thousand years ago.
Think about it you are surrounded
with Furniture, cellphones, computers,
TVs Refrigerators, grocery stores, cars,
planes, Hotels, restaurants a great bed to
sleep in at night and just about anything
else you want. By contrast two thousand years ago
with the exception of the ruling class most people made a subsistence living
barely able to afford the things they
needed to survive.
In many cases a great bed
or a
pair of shoes where extravagances
they
would not experience in their
lifetimes.
So, if this is true and it is then
why is
gold's purchasing power so low. If
there is so much more stuff per
person
but the same amount of gold per person should not an ounce of gold buy many
many many times more stuff than it does
today. Absolutely, emphatically, yes it
should.
Then why does not it? Because of the other big factor in busting this myth.
In ancient Rome if you wanted to save
some of your wealth for the future there
was only one asset available for you to
save your purchasing power in. Real money
the gold and silver coins that made up
their money supply. Today if you want to
save some of your wealth through the
future you do so with financial assets such
as stocks and bonds and maybe a tiny portion of currency in a checking account.
These highly liquid assets actually compete with gold and
silver as a place to store your wealth they
all dilute each other's purchasing power.
In ancient Rome there was only one
place to
store your wealth today there are
thousands. So that is the answer
with technology machinery and super
cheap energy we've become a thousand
times more efficient at producing
stuff
and at the same time we've created a
thousand times more ways to store.
The gains in purchasing power that
gold should have made due to man becoming
so much more efficient at making stuff
have been almost exactly offset by the proliferation of alternative liquid financial assets in which to store
that wealth. If it were not for all those
competing currencies and alternative
financial assets gold would buy many
many times more stuff.
So what
happens to those alternate financial assets and
the
inevitable market crash that lies
out
there in the future. Those trusted
financial assets suddenly become
hocus-pocus voodoo financial assets
as
their value evaporates just like those AAA rated mortgage-backed securities did in
the crash of 2008.
What happens to fiat currencies in the coming currency
crisis all those currencies become hot
potatoes that nobody wants causing hard assets like gold and
silver to be bit up to the moon. Either way
gold would buy a whole lot more stuff
someday in the near future.
Today there is about forty thousand
dollars worth of liquid financial assets per person versus only two hundred dollars
worth of investment grade gold.
That is a two hundred to
one ratio. That means that in a crisis if just ten
percent of the wealth invested in those
alternative financial assets were to come
chasing gold its price would rise twenty
fold. The moral of this story is, if you want
to buy twenty suits shoes and belts a
few years from now you better buy an ounce of
gold today.
Taken separately any one of these
reasons is a compelling case for
gold
and silver. But if you look at them
all
together and you take into account
that
for the very first time this gold
and
silver rush is going to be global
you
realize that these reasons are not
just
additive but they multiplied upon
one
another.
Number two : is it's all happening
at once & this time it's global
So there is more stuff per person
than at any time in history but the same amount of
gold and competing currencies and other assets have diluted Gold's
purchasing power. Today there is two hundred
times more
wealth stored in these compete assets than there is in gold. And if
only ten percent of that wealth comes
chasing gold its price will rise twenty fold. And
in the crisis I see coming it is going to
be a lot more than just ten percent.
The
world is now in uncharted territory budget deficits, trade deficits and government debt have ballooned to
lethal levels. Real estate, stocks and
bonds are all in bubbles and the credit debt
and derivatives bubbles threatened to
take down the world economy. It took
years to create these bubbles but it will
only take days or weeks for them to burst
and all bubbles eventually burst.
In the inevitable crash and currency crisis that are bearing down on this most trusted investments will probably evaporate while gold and silver are pushed into hyper bubbles. Because
when it comes to greed and fear, fear is
by far the more powerful emotion and in
a crisis fear is what drives investors. Today there are ten times the people
each with ten times the currency and
somewhere
between ten and one thousand times
the number of people with an investor mindset than
in the last great gold and silver rush.
That is somewhere between one
thousand and One hundred thousand times more
currency that will
around. For the very first time in
history all the world's currencies
are
fiat and fiat currencies have always
failed couple that with the facts
that
every country on the planet is
creating
currency on a suicidal scale never
before imagined that every thirty to
forty years the world has an entirely new monetary system.
That we are overdue
for the transition to a new monetary
system
right now and you now have the
recipe
for a cataclysmic economic event
that
will be the greatest wealth transfer
in
history. It can either impoverish you, or it
can enrich you beyond your wildest
dreams.
Knowingness you think I would take
every spare unit of currency I can get my hands on and buy gold, so why don't
I because silver is undervalued
compared to gold so I buy both but I buy
mostly silver.
Number one : I sleep better
As I said at the beginning of this
article I believe that an economic
crisis of historic proportions is
headed
straight at us and there is no
avoiding.
It never before have all the government's on the planet
simultaneously laid down the foundation for the perfect economic storm. I
believe that there will be a global fiat currency crisis that will cause the bubbles in stocks, bonds and real
estates to burst simultaneously.
This will
result in the greatest economic crash the
world has ever seen. Things could get pretty bad the
possibilities range from my being
completely wrong to total economic
collapse and a financial Armageddon from which we never recover toward the
bad end is the possibility of the
failure of the monetary system which could
cause rioting and a disruption of the food supply.
But in any range of
possibilities
there is something called a bell
curve
of probabilities. What that means is
that either of the extremes also called
the tail risks are very unlikely to
happen but that something in the middle is
very likely to happen. Believe it or not
I am NOT a doomsayer but nor do I believe
the government when they tell me
everything is going to be alright I think it is going to be something in the middle.
Yes, I believe it's going to be the
greatest crash in history but I have great
hope. Man is an amazing species we have a resilience and ability to adapt and bounce back from anything. Yes,
banks could fail but new more
efficient
ones would take their place yes, the
world monetary system could collapse
but this could be a good thing. If we
could just make fraud, theft and conflicts
of interest illegal for the financial sector like it is for the rest of us
and if we could just leave the free
market alone and stop manipulating and
meddling with it.
It would quickly provide us
with
a new, efficient, stable and honest
monetary system that would increase
the prosperity and standard of living
for everyone. Yes, the stock, bond and
real estate markets will probably crash
and for those who are unprepared it will
be devastating.
But if it is going to
happen anyway and if there is nothing I can
do about it then I may as well try to figure out how to turn this
catastrophe fie into the best thing that has
ever happened to me. As I have said many
times there are these brief moments in
history where the safest asset class gold
and silver the safe haven to protect
your wealth for the last five thousand
years.
Simultaneously become the asset
class with the greatest potential gains in absolute purchasing power. In
periods of crisis gold and silver are the asset class that outperform all others
this decade will see the greatest
financial crisis in history. That means it
will also be the greatest wealth transfer
in history and that means it is the
greatest opportunity in history.
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