You've all heard the arguments about the debt ceiling and the government shutdown. The Republicans use the debt debate to gain power in order to cut social programs, give corporate tax breaks, and expand the military. The Democrats talk about the debt like it's nothing to worry about. They say we have to continue to spend money or the whole system will collapse in a fiery inferno, and they use cuts to social programs as leverage. All the while their solution is to spend more money on federal government programs. The political posturing does nothing to solve the real problems. Separately, most economic attention is focused on inflation and deflation, which is really just noise (for now) compared to the larger debt problems facing U.S. taxpayers. Although both inflation and deflation have a direct impact on the economy as a whole, they are not the biggest long term threat. The national debt is the real threat, but it's harder to see the consequences until they are hitting us square between the eyes. You can view the ongoing U.S. debt calculator here, U.S. National Debt Clock.
Wikipedia also has a nice page devoted to the History of the U.S. Public Debt. As you can see, unlike what the politicians tell the people, it doesn't matter who is in power. The debt keeps increasing, and so is the pace at which it is expanding. Why do you think we're talking in the trillions instead of millions or billions? Another good reference is this link to the U.S. Treasury Website for Foreign Government Bond Holdings. Some credit rating agencies have downgraded the U.S. government, including S&P, and the most prominent Chinese agency, Dagong. While other's like Fitch have put the government on ratings watch with a negative outlook. No matter what ratings agencies say about the situation, it's clear that there is a debt problem in the United States.
Like I mentioned before, I'm not an expert of technical analysis. I use common sense in most of my decisions. To say that the U.S. government is addicted to debt is an understatement. With a $17 trillion debt and only a $15 trillion annual GDP it's pretty clear the debt is a problem. It's also clear that the politicians don't have an answer. When it comes to finances, the banks and the governments aren't stupid. They know that it's a death spiral now, and it has global implications.
The wildcard in all of this is the dollars status as the world's reserve currency. China, Russia, Australia and many other governments are busy creating bilateral trade agreements that don't use the dollar (see China Busy Signing Currency Deals). The U.S. government currently has the luxury of leveraging the dollar's status as the primary reserve and settlement currency. However, the world saw this scenario before, and not too long ago in historical terms. When the U.K. pound sterling lost its status as reserve currency the world was a much different place. The implications of the dollar being removed as the reserve currency are widespread, and people need to prepare. And yes, that might mean "black Friday" shoppers can't fight over their next crock pot or tickle me Elmo doll. You can bet that the politicians and bankers who kick the can down the road won't suffer. They always seem to find a way to escape the realities that the rest of us face every day.
The global economy is based on consumption, backed by debt to fund the whole thing. So increasing the GDP simply isn't possible at this point, because the earth's resources don't have the capacity to keep up with the debt. That is why saving and owning hard assets is the best option. Land is a great investment, but what will do you use to buy that land? Owning gold and silver doesn't mean you have to live your life in fear, or that you have to use every penny you earn to own it. On the contrary, once you slowly start accumulating some physical precious metals you won't have to worry as much about the currency issues in the world. You can watch the politicians act like children, all the while seeing their lies and knowing the truth, and laughing at their ridiculous behavior. Stay tuned for Part II.
God Bless and Keep the Faith.
Sunday, October 27, 2013
Monday, August 26, 2013
Measuring The Immeasurable...Confidence
Anyone who knows me understands that I'm not in this business to get super rich or for individual political gain. I write this blog and run my precious metals broker business primarily as a service, but also as something that will hopefully make me a little money for my time. I want it to be a part of my life (as strange as that might sound). Moreover, I don't want my blog to be seen only as a platform for pushing my products. My intent is that my blog is an educational resource first, and as a marketing arm second. There needs to be a voice of truth, because the fear tactics used by many dealers and media pundits are just plain wrong. My goal was to educate anyone who would listen about the role precious metals play as money. I saw the need and an education gap, and I wanted to help fill that gap no matter a specific political persuasion. Anyone following my earlier posts knows I've spent a lot of time on the subject of money, and the reasons why precious metals are the one true monetary standard. However, I think it's time to move on. Some additional resources for more about the history of gold can be found at Wikipedia, and my current favorite site The Visual Capitalist Timeline.
I think I've established an understanding for my readers about the role gold and silver play as money. Next I want to discuss some of the questions about the investment role of precious metals, and specifically address the recent price volatility. This recent sell off in metals shook the confidence of the average investor. From the standpoint of a central banker and large institutional investor this price drop was a Godsend, because they could buy more, and that's exactly what they did. Goldman Sachs just issued a "buy" recommendation on precious metals, a few months after issuing a "sell" recommendation. I won't go into detail on how the futures market works, because it's too complicated for this post and I believe it is a small bump in the road for a long term investor. However, in their most basic form, futures contracts and short selling are based purely on speculation, with very little cash required to purchase a contract when compared to the actual value of the metal (as little as 10% down). The unsustainable leverage is not unique to precious metals. It's everywhere. You and I have very little control over these asset price swings, as extreme as they may be in some cases. There are a million articles analyzing technical charts so I won't do that here. There is plenty of data available from reputable sources like Seeking Alpha and Motley Fool. I don't feel equipped or certified to offer that kind of advice. In fact, many of the authors at those sites have primary job functions trading future's contracts, or as financial advisors.
My job isn't to analyze all of the speculative opinions in the gold and silver market. It's not a good long term strategy to regularly attempt to time the market. At some point if you've seen tremendous profits technical analysis may be more pertinent, or if you feel like we're approaching historic low prices and want to buy in large amounts, then we can address it. If you think you can trade with the big institutional investors and time it perfectly, I wish you the best of luck. However, if you are looking for some personal guidance and strategy for accumulating your physical metal holdings, then please buy from me and sell to me, because that is my area of expertise and my prices are competitive with some of the biggest dealers in the U.S. Investing in metals is not easy, and I don't have all of the answers, but I'll keep you on track. Accumulating is the only cure for volatility, in any investment.
Furthermore, accumulating your metals doesn't just mean I try to get you to spend all of your money on metals. It does involve regular purchases and timing of the market in some cases. I base it on your previous purchase history, individual needs, and current market price volatility instead of a general "buy" or "sell" recommendation. I tend to disagree with some of the extreme bullish cases for gold and silver, but I also disagree with most of the bearish cases too. So that puts me in the middle, and pretty much enemy #1 on both sides. However, that means I am looking at things from an objective lens, which is good for you. Will I promise that I can time your purchase exactly before the market is about to skyrocket higher...no. Will I be able to tell you when to sell right before prices fall...not exactly. Anyone who tells you they can do that is lying. My promise is that if you don't feel comfortable buying on my recommended timelines I won't pressure you.
My approach will empower you to become a better long term investor and a better precious metals buyer. If I can't help you I will refer you to someone who can. I work with 3 very reputable investment companies whose financial advisors sell securities, and they can help you with stocks and fixed income vehicles. I will also make another pledge. I won't recommend you buy more than your risk tolerance. If you tell me you don't like volatility or you are using precious metals for your retirement income, I will advise you to start buying a coin or two, or start collecting a few coins that you think are cool. In that case you are serving the primary purpose of diversifying your dollars in a conservative manner through slow accumulation. Plus, you are actually helping me grow my business more than if you plopped down a big chunk of money all at once.
Much of what we do in life is based on confidence for a call to action. My customers trust that I'll get them their metals on time and in good condition, and not pressure them to buy from me constantly. The entire monetary system is based on confidence. Human nature trusts an historical track record, and money metals have proven successful over thousands of years. Fiat money has a 100% failure rate through history. I want you to confidently purchase from me and understand precious metals. Am I going to lose short term sales volume because of my approach...Yes. Will it pay off for me in the long run...I hope so. I know it will be better for my customers. Call or e-mail me anytime, (920) 819-6921, argentumwealthusa@gmail.com.
I think I've established an understanding for my readers about the role gold and silver play as money. Next I want to discuss some of the questions about the investment role of precious metals, and specifically address the recent price volatility. This recent sell off in metals shook the confidence of the average investor. From the standpoint of a central banker and large institutional investor this price drop was a Godsend, because they could buy more, and that's exactly what they did. Goldman Sachs just issued a "buy" recommendation on precious metals, a few months after issuing a "sell" recommendation. I won't go into detail on how the futures market works, because it's too complicated for this post and I believe it is a small bump in the road for a long term investor. However, in their most basic form, futures contracts and short selling are based purely on speculation, with very little cash required to purchase a contract when compared to the actual value of the metal (as little as 10% down). The unsustainable leverage is not unique to precious metals. It's everywhere. You and I have very little control over these asset price swings, as extreme as they may be in some cases. There are a million articles analyzing technical charts so I won't do that here. There is plenty of data available from reputable sources like Seeking Alpha and Motley Fool. I don't feel equipped or certified to offer that kind of advice. In fact, many of the authors at those sites have primary job functions trading future's contracts, or as financial advisors.
My job isn't to analyze all of the speculative opinions in the gold and silver market. It's not a good long term strategy to regularly attempt to time the market. At some point if you've seen tremendous profits technical analysis may be more pertinent, or if you feel like we're approaching historic low prices and want to buy in large amounts, then we can address it. If you think you can trade with the big institutional investors and time it perfectly, I wish you the best of luck. However, if you are looking for some personal guidance and strategy for accumulating your physical metal holdings, then please buy from me and sell to me, because that is my area of expertise and my prices are competitive with some of the biggest dealers in the U.S. Investing in metals is not easy, and I don't have all of the answers, but I'll keep you on track. Accumulating is the only cure for volatility, in any investment.
Furthermore, accumulating your metals doesn't just mean I try to get you to spend all of your money on metals. It does involve regular purchases and timing of the market in some cases. I base it on your previous purchase history, individual needs, and current market price volatility instead of a general "buy" or "sell" recommendation. I tend to disagree with some of the extreme bullish cases for gold and silver, but I also disagree with most of the bearish cases too. So that puts me in the middle, and pretty much enemy #1 on both sides. However, that means I am looking at things from an objective lens, which is good for you. Will I promise that I can time your purchase exactly before the market is about to skyrocket higher...no. Will I be able to tell you when to sell right before prices fall...not exactly. Anyone who tells you they can do that is lying. My promise is that if you don't feel comfortable buying on my recommended timelines I won't pressure you.
My approach will empower you to become a better long term investor and a better precious metals buyer. If I can't help you I will refer you to someone who can. I work with 3 very reputable investment companies whose financial advisors sell securities, and they can help you with stocks and fixed income vehicles. I will also make another pledge. I won't recommend you buy more than your risk tolerance. If you tell me you don't like volatility or you are using precious metals for your retirement income, I will advise you to start buying a coin or two, or start collecting a few coins that you think are cool. In that case you are serving the primary purpose of diversifying your dollars in a conservative manner through slow accumulation. Plus, you are actually helping me grow my business more than if you plopped down a big chunk of money all at once.
Much of what we do in life is based on confidence for a call to action. My customers trust that I'll get them their metals on time and in good condition, and not pressure them to buy from me constantly. The entire monetary system is based on confidence. Human nature trusts an historical track record, and money metals have proven successful over thousands of years. Fiat money has a 100% failure rate through history. I want you to confidently purchase from me and understand precious metals. Am I going to lose short term sales volume because of my approach...Yes. Will it pay off for me in the long run...I hope so. I know it will be better for my customers. Call or e-mail me anytime, (920) 819-6921, argentumwealthusa@gmail.com.
Monday, July 22, 2013
Accumulating, Bartering, and Buying
I attended the Bridge Point Church vendor fair this past weekend, and a young man reminded me that value takes on many different meanings. I'm sure you remember the old saying, "one man's trash is another man's treasure." In this case, he viewed my treasure as his own treasure, and I viewed his treasure as my own treasure. I suppose it would've been financially better for me if I could have unloaded some of my trash, so maybe if this whole metals business falls apart, I'll start hawking Packer memorabilia and yard ornaments. Sorry, I digress.
So after the young man approached me and asked what I was selling, we discussed qualities, history, and stories of silver and gold. He taught me a few things, and I think he also learned something from me. At first it was somewhat difficult to explain the idea of accumulating metals over a vendor table, but after we hung out for the day I think he really understood it. In fact, I think he caught on very quick and understood it better than most people do, so I hope he follows through with his investment goals. He also approached me for some bartering, which is a fantastic way to accumulate or acquire pretty much anything if you have something of value to offer someone. In this case, he had raw copper nuggets, obsidian, quartz, and a few other stones that I wanted so I traded him some silver. He was happy because he wanted silver, and I was happy because I wanted some raw copper and other minerals.
This young man was not much more than 20 years old. By the end of the day he accumulated 4 ounces of silver, or in dollar terms about $100 worth (he definitely got the better deal in that respect). How much will silver be worth in 20 years? Who knows. The more important thing to realize, is that he will be about 40 years old at that time, probably have a family, a mortgage payment, and monthly bills. Except now he has 4 real and tangible assets that hold their value over time. He also has something that is extremely liquid, in that he can sell 1 or all 4 ounces when he needs government currency to pay bills. Or maybe he will have a good paying job and won't need more government currency. So he'll just hold on to the silver, which he can use to barter, sell in case of an emergency cash crunch, or pass on to his kids/grand kids some day. Much like land it won't lose it's value, but it's a heck of a lot easier to sell or barter. Not to mention, you can easily carry coins around, and there are no property taxes or maintenance costs.
The point is that it's not hard to start investing in money metals. I hear the argument all of the time that it's too "expensive" or "it's not the right time" to buy. So you'd rather hold cash that you KNOW will lose it's value over time??? If it's because of current price volatility then don't put more than 5-10% of your liquid assets into your holdings! It's not rocket science, and most of the time it's simply an excuse to spend money on something else. That's fine with me, but don't complain when big banks, corporations, and governments destroy your hard earned savings and drive up prices on everything we buy. For as little as $2 you can buy a nice 1 oz copper round from me. For roughly $30 you can buy an ounce of silver. Call me at (920) 819-6921 and we can discuss better pricing for 20 or more ounces.
Speaking of copper, I'm going to write about it next month, but I wanted to announce that I'm adding fine/pure copper bullion to my product line starting immediately. I will carry rounds, ingots, and bars. I realized at the vendor fair this weekend that silver is just too expensive for a lot of people. Copper is one of the coolest non-precious/base metals on the planet. Ask any geologist, chemist, electrician, plumber, or doctor about the usefulness of copper and you'll be amazed. It may tarnish easier than silver or gold, but it cleans easily and shines beautifully, just like a precious metal.
Don't forget to sign up for my blog at the top of the page. Till next time. Keep the faith and God Bless!
So after the young man approached me and asked what I was selling, we discussed qualities, history, and stories of silver and gold. He taught me a few things, and I think he also learned something from me. At first it was somewhat difficult to explain the idea of accumulating metals over a vendor table, but after we hung out for the day I think he really understood it. In fact, I think he caught on very quick and understood it better than most people do, so I hope he follows through with his investment goals. He also approached me for some bartering, which is a fantastic way to accumulate or acquire pretty much anything if you have something of value to offer someone. In this case, he had raw copper nuggets, obsidian, quartz, and a few other stones that I wanted so I traded him some silver. He was happy because he wanted silver, and I was happy because I wanted some raw copper and other minerals.
This young man was not much more than 20 years old. By the end of the day he accumulated 4 ounces of silver, or in dollar terms about $100 worth (he definitely got the better deal in that respect). How much will silver be worth in 20 years? Who knows. The more important thing to realize, is that he will be about 40 years old at that time, probably have a family, a mortgage payment, and monthly bills. Except now he has 4 real and tangible assets that hold their value over time. He also has something that is extremely liquid, in that he can sell 1 or all 4 ounces when he needs government currency to pay bills. Or maybe he will have a good paying job and won't need more government currency. So he'll just hold on to the silver, which he can use to barter, sell in case of an emergency cash crunch, or pass on to his kids/grand kids some day. Much like land it won't lose it's value, but it's a heck of a lot easier to sell or barter. Not to mention, you can easily carry coins around, and there are no property taxes or maintenance costs.
The point is that it's not hard to start investing in money metals. I hear the argument all of the time that it's too "expensive" or "it's not the right time" to buy. So you'd rather hold cash that you KNOW will lose it's value over time??? If it's because of current price volatility then don't put more than 5-10% of your liquid assets into your holdings! It's not rocket science, and most of the time it's simply an excuse to spend money on something else. That's fine with me, but don't complain when big banks, corporations, and governments destroy your hard earned savings and drive up prices on everything we buy. For as little as $2 you can buy a nice 1 oz copper round from me. For roughly $30 you can buy an ounce of silver. Call me at (920) 819-6921 and we can discuss better pricing for 20 or more ounces.
Speaking of copper, I'm going to write about it next month, but I wanted to announce that I'm adding fine/pure copper bullion to my product line starting immediately. I will carry rounds, ingots, and bars. I realized at the vendor fair this weekend that silver is just too expensive for a lot of people. Copper is one of the coolest non-precious/base metals on the planet. Ask any geologist, chemist, electrician, plumber, or doctor about the usefulness of copper and you'll be amazed. It may tarnish easier than silver or gold, but it cleans easily and shines beautifully, just like a precious metal.
Don't forget to sign up for my blog at the top of the page. Till next time. Keep the faith and God Bless!
Sunday, May 5, 2013
Cash or Money Metals?
One of the biggest misconceptions about money metals (i.e. silver and gold) is that they are bundled in with the likes of stocks and commodities. A better comparison is cash. Another common misconception is that money metals are "useless" for the everyday person, because you can't spend them. I would argue that you can barter them, but a better answer to this false claim is that you don't need to or want to spend them. However, you might want to give them away for charity purposes, which I'll cover some other time. Today I will explain how to buy money metals as a natural savings vehicle, which is far more important than spending your hard earned dollars on the next overpriced consumer trend. This video link will explain how Gold is Money.
The problem with the naysayers is that they have absolutely no clue how to buy money metals in the first place. If anyone ever tells you not to buy gold or silver, ask them if they own any. They will tell you they don't, and that it's not a "sound investment" or that "it's too risky" or maybe even that it's "unsafe." The last one is the funniest to me, because it's like they're saying it's an illegal narcotic or something! IT'S NOT SAFE TO BUY SILVER...MY PAPER DOLLARS CAN BE BURNED FOR HEAT IF THE SH*T EVER REALLY HITS THE FAN. Ha, ha!! :) I'm being sarcastic, but you get the point. It's essentially like taking advice about purchasing a house from someone who has rented their whole life. It doesn't make any sense. And believe me, your best friend, neighbor, and maybe some of your family will have an opinion when you start buying gold and silver. For some fun, tell them you own REAL money, and watch their reaction. Oh, it's a hoot, believe me! You can tell they think you're nuts. When they finally have the guts to tell you what they think, it means that they really want to know more and just don't want to admit it. Since I started my business in 2009 I've experienced this many times, and just like anyone reading this who owns some physical bullion, it's really nice to sit back and not have to stress about a devalued currency.
Speaking of stress, let's face it, money and investments are stressful. So let's talk about the actual purchasing of physical gold and silver bullion, and how to apply this to your life. If money didn't exist we wouldn't have to worry, but that's not reality. That is reserved for a happy place after we die.
There are three primary things to remember when you start buying bullion (hopefully from me). 1) Consider your goals for saving dollars, which includes paper cash and digital cash in your bank account. The 2nd part of this is knowing how much of your net worth you want to keep liquid. I believe 5-10% in gold and silver is a good starting point as you build your total assets. I can explain this when you purchase. 2) Are you planning to trade gold and silver for short term profits? If so, you shouldn't be buying bullion for this purpose. You should probably talk to your investment adviser about ETF's and gold mining stocks. Full disclosure here, I am not a certified financial adviser and do not want to be one. I will refer you to someone if you want to buy paper contracts. 3) How much can you afford to buy on a monthly, quarterly, semi-annual, or yearly basis? This will give me an idea how to recommend your frequency and volume of purchasing. I suggest purchasing smaller amounts to begin with and use the gold to silver ratio to determine which metal to buy. The last question, and maybe the fourth thing to know, is "how much can I afford?" If you don't think you have enough dollars, I would suggest cancelling the cable for a few years, get Netflix and Amazon online, and take the $1000 per year you save and put it into silver. Now you know why some of my friends and family think I'm crazy! Who the heck do you know that would cancel their cable!
The last point I want to make on this months post, is that a truly "useless" investment vehicle is something that can not be used (hence the word use being the primary part of the word useless). What can you really do with your digital investments and paper cash? I think you and I both know the answer to that...nothing... except spend it. Gold and silver are a natural savings vehicle. If the prices on the metals go down people naturally tend to save it and miners stop mining. When prices go up people get more for their money so they spend it, and refiners look for ways to recycle the metals and buy from individuals. Therefore increasing demand for the money. I won't discuss inefficiencies with our consumption-based economy today but I'll save that for another post.
Since the metals are an asset they never lose their value in relation to other goods and services (i.e. houses like described in the above video). Most importantly metals have intrinsic value because they are always in demand for production purposes. They are used by recycling and refining companies, electronic manufacturers, medical device makers, investors, car manufacturers, banks, jewelry makers, and many other practical uses. What are those digits or paper bills used for again?
In conclusion, remember to contact me to evaluate your situation and talk about a purchasing program that works best for you. I would like to remind anyone and everyone who follows me that they can buy directly from my website, but if you want better prices please contact me. My site is http://www.argentumusa.com/apps/webstore/
Thank you as always for reading, and please don't forget to subscribe to my blog. Next month I'll be explaining how to accumulate your metals in more detail.
Keep the faith!
The problem with the naysayers is that they have absolutely no clue how to buy money metals in the first place. If anyone ever tells you not to buy gold or silver, ask them if they own any. They will tell you they don't, and that it's not a "sound investment" or that "it's too risky" or maybe even that it's "unsafe." The last one is the funniest to me, because it's like they're saying it's an illegal narcotic or something! IT'S NOT SAFE TO BUY SILVER...MY PAPER DOLLARS CAN BE BURNED FOR HEAT IF THE SH*T EVER REALLY HITS THE FAN. Ha, ha!! :) I'm being sarcastic, but you get the point. It's essentially like taking advice about purchasing a house from someone who has rented their whole life. It doesn't make any sense. And believe me, your best friend, neighbor, and maybe some of your family will have an opinion when you start buying gold and silver. For some fun, tell them you own REAL money, and watch their reaction. Oh, it's a hoot, believe me! You can tell they think you're nuts. When they finally have the guts to tell you what they think, it means that they really want to know more and just don't want to admit it. Since I started my business in 2009 I've experienced this many times, and just like anyone reading this who owns some physical bullion, it's really nice to sit back and not have to stress about a devalued currency.
Speaking of stress, let's face it, money and investments are stressful. So let's talk about the actual purchasing of physical gold and silver bullion, and how to apply this to your life. If money didn't exist we wouldn't have to worry, but that's not reality. That is reserved for a happy place after we die.
There are three primary things to remember when you start buying bullion (hopefully from me). 1) Consider your goals for saving dollars, which includes paper cash and digital cash in your bank account. The 2nd part of this is knowing how much of your net worth you want to keep liquid. I believe 5-10% in gold and silver is a good starting point as you build your total assets. I can explain this when you purchase. 2) Are you planning to trade gold and silver for short term profits? If so, you shouldn't be buying bullion for this purpose. You should probably talk to your investment adviser about ETF's and gold mining stocks. Full disclosure here, I am not a certified financial adviser and do not want to be one. I will refer you to someone if you want to buy paper contracts. 3) How much can you afford to buy on a monthly, quarterly, semi-annual, or yearly basis? This will give me an idea how to recommend your frequency and volume of purchasing. I suggest purchasing smaller amounts to begin with and use the gold to silver ratio to determine which metal to buy. The last question, and maybe the fourth thing to know, is "how much can I afford?" If you don't think you have enough dollars, I would suggest cancelling the cable for a few years, get Netflix and Amazon online, and take the $1000 per year you save and put it into silver. Now you know why some of my friends and family think I'm crazy! Who the heck do you know that would cancel their cable!
The last point I want to make on this months post, is that a truly "useless" investment vehicle is something that can not be used (hence the word use being the primary part of the word useless). What can you really do with your digital investments and paper cash? I think you and I both know the answer to that...nothing... except spend it. Gold and silver are a natural savings vehicle. If the prices on the metals go down people naturally tend to save it and miners stop mining. When prices go up people get more for their money so they spend it, and refiners look for ways to recycle the metals and buy from individuals. Therefore increasing demand for the money. I won't discuss inefficiencies with our consumption-based economy today but I'll save that for another post.
Since the metals are an asset they never lose their value in relation to other goods and services (i.e. houses like described in the above video). Most importantly metals have intrinsic value because they are always in demand for production purposes. They are used by recycling and refining companies, electronic manufacturers, medical device makers, investors, car manufacturers, banks, jewelry makers, and many other practical uses. What are those digits or paper bills used for again?
In conclusion, remember to contact me to evaluate your situation and talk about a purchasing program that works best for you. I would like to remind anyone and everyone who follows me that they can buy directly from my website, but if you want better prices please contact me. My site is http://www.argentumusa.com/apps/webstore/
Thank you as always for reading, and please don't forget to subscribe to my blog. Next month I'll be explaining how to accumulate your metals in more detail.
Keep the faith!
Monday, April 15, 2013
The New Normal
For anyone following the recent carnage in the precious metals prices it is obvious there is a huge sell off happening. Some of the recent questions I've received look like this, "what the hell is happening to gold" or "why is gold dropping so much" and "did you see what was happening to gold" and my personal favorite, "when is this drop in gold going to end." These are all questions I've asked myself and there aren't any answers that appear in the crystal ball.
There are a number of theories and a number of factors that seem to be contributing to this panic. There are the rumors about Cyprus selling some gold, the Federal Reserve possibly winding down some of its asset and treasury purchases (which is unlikely since the economy is still fundamentally weak), and last but not least the idea that the great bull run and commodity cycle is over. All of these ideas might look reasonable on the surface, but the simple fact is that many speculators are selling because some technical levels were broken. The fundamentals for higher gold prices are still the same. The Federal Reserve is still buying $85 billion of treasuries and mortgage backed securities per month, and has been since October. Where do you think that money comes from? If you don't believe in inflation, how did the stock market go from the 2009 lows back up to record highs in only 4 short years? Magic isn't real is it? It sure seems like it sometimes. I'm just not quite sure I trust the central banks to be able to pull the money out of the system like a rabbit out of a hat. If you trust them to do it then you're probably bearish on gold, but if 2008 is any indication they won't know what is happening until it smacks them in the face.
The problem with the central banks around the world is that they keep distorting the value of money. Money really should be simple. It is meant to be a store of a value of work, and can be exchanged. It is no longer that. The central banks around the world use it as a tool to manipulate economies. Why are interest rates continually at historic lows? Why don't you earn anything on the money you save? Do you think your parents or grandparents would have believed you if you told them you would be getting negative interest rates on your money? But fear not, we can just keep working the rest of our lives so we can keep paying income taxes and finally pay off the federal debt!
Gold doesn't pay dividends, it doesn't generate income, and it doesn't pay you interest. It should never be compared to stocks. It is an alternative to paper money plain and simple. The smart people accumulate the metals the same way they do with cash. Why do you think central banks hold a majority of their currency reserves in gold? They don't do it because it's fashionable. They do it because they know the real confidence people have in their monetary authority depends on it, and because it is a true store of value. The United States reportedly holds 8133 tons of gold in Fort Knox, and it is estimated that amounts to 76% of currency reserves. Italy holds 2450 tons for 72% of its currency reserves and France holds 2435 tons for 71% of its reserves. These are some of the biggest debtor nations. The biggest buyers of gold over the last few years have been Russia, China, and India. India holds less than 10% of its reserves in gold. Russia holds less than 5% of its reserves in gold. China has 1000 tons in its currency reserves amounting to only 2%! These are the nations without unsustainable debt. The Chinese hold our debt and are stuck with dollars, so if tiny Cyprus wants to sell a few of its 14 tons (which amounts to roughly 58% of its currency reserves), I'm quite sure the Chinese would be happy to take some off their hands. Or yours too if you need to sell. Actually, call me first so I can buy it. Don't sell it to the Chinese. I happen to think a true accumulation strategy is what is really needed, and diversifying a small percentage into your own personal currency reserve is the best solution.
In conclusion, is gold volatile? Yes. Are we getting punched in the stomach on prices? Yes. Does it change the real reason central banks and individuals hold gold? No. Should you invest all of your money in gold and gold stocks. NEVER! Gold is an asset and is subject to the same unfortunate whims of speculators that any other commodity is, but it is the only real alternative to a weakening dollar and paper currencies. After the dust settles on this sell off, some might even suggest this is another buying opportunity. I'll let you be the judge of that, but I know what I'll be doing.
There are a number of theories and a number of factors that seem to be contributing to this panic. There are the rumors about Cyprus selling some gold, the Federal Reserve possibly winding down some of its asset and treasury purchases (which is unlikely since the economy is still fundamentally weak), and last but not least the idea that the great bull run and commodity cycle is over. All of these ideas might look reasonable on the surface, but the simple fact is that many speculators are selling because some technical levels were broken. The fundamentals for higher gold prices are still the same. The Federal Reserve is still buying $85 billion of treasuries and mortgage backed securities per month, and has been since October. Where do you think that money comes from? If you don't believe in inflation, how did the stock market go from the 2009 lows back up to record highs in only 4 short years? Magic isn't real is it? It sure seems like it sometimes. I'm just not quite sure I trust the central banks to be able to pull the money out of the system like a rabbit out of a hat. If you trust them to do it then you're probably bearish on gold, but if 2008 is any indication they won't know what is happening until it smacks them in the face.
The problem with the central banks around the world is that they keep distorting the value of money. Money really should be simple. It is meant to be a store of a value of work, and can be exchanged. It is no longer that. The central banks around the world use it as a tool to manipulate economies. Why are interest rates continually at historic lows? Why don't you earn anything on the money you save? Do you think your parents or grandparents would have believed you if you told them you would be getting negative interest rates on your money? But fear not, we can just keep working the rest of our lives so we can keep paying income taxes and finally pay off the federal debt!
Gold doesn't pay dividends, it doesn't generate income, and it doesn't pay you interest. It should never be compared to stocks. It is an alternative to paper money plain and simple. The smart people accumulate the metals the same way they do with cash. Why do you think central banks hold a majority of their currency reserves in gold? They don't do it because it's fashionable. They do it because they know the real confidence people have in their monetary authority depends on it, and because it is a true store of value. The United States reportedly holds 8133 tons of gold in Fort Knox, and it is estimated that amounts to 76% of currency reserves. Italy holds 2450 tons for 72% of its currency reserves and France holds 2435 tons for 71% of its reserves. These are some of the biggest debtor nations. The biggest buyers of gold over the last few years have been Russia, China, and India. India holds less than 10% of its reserves in gold. Russia holds less than 5% of its reserves in gold. China has 1000 tons in its currency reserves amounting to only 2%! These are the nations without unsustainable debt. The Chinese hold our debt and are stuck with dollars, so if tiny Cyprus wants to sell a few of its 14 tons (which amounts to roughly 58% of its currency reserves), I'm quite sure the Chinese would be happy to take some off their hands. Or yours too if you need to sell. Actually, call me first so I can buy it. Don't sell it to the Chinese. I happen to think a true accumulation strategy is what is really needed, and diversifying a small percentage into your own personal currency reserve is the best solution.
In conclusion, is gold volatile? Yes. Are we getting punched in the stomach on prices? Yes. Does it change the real reason central banks and individuals hold gold? No. Should you invest all of your money in gold and gold stocks. NEVER! Gold is an asset and is subject to the same unfortunate whims of speculators that any other commodity is, but it is the only real alternative to a weakening dollar and paper currencies. After the dust settles on this sell off, some might even suggest this is another buying opportunity. I'll let you be the judge of that, but I know what I'll be doing.
Friday, March 15, 2013
Money is Simple
All too often people think that I'm advocating for gold or silver to be the only form of money. I'm actually an advocate of a free and competing currency system. That way individuals can choose their currency, without government coercion or control. The government doesn't want that though, because when they aren't the money creators they lose power over the people, especially on taxes. If people want to use salt as currency, I could care less. My preference just so happens to be gold and silver. Let the market determine what is valued, and let people decide how they want to trade value for value. Keep the government out of it.
Anyways, moving on. Let's consider the U.S. dollar and bonds. They are currency and debt backed by the U.S. government. Their value depends on people's confidence in the government to pay back that debt. People compare gold and silver to our currency. First of all, there is no comparison. Gold and silver have been, and are, the only form of money that the world has ever used. Governments think they should decide the value of money, and it's really only about power and control over the money supply. Fiat money robs the people who save the most because of inflation. The money makers inevitably destroy the value by regular increases in the money supply. I'm not saying that gold and silver will make a perfect world, and money in and of itself is simply a distraction from what really matters in life. However, only God and mother nature control the supply of gold and silver. Not some bankster or government official contending with their own egotistical desires for power or greed.
Thousands of years ago money wasn't so complicated. Did government's levy and collect taxes? Yes. Did people and businesses exchange goods for money? Of course. The difference in today's world is that money has become so complicated that it barely serves the purpose that it was originally intended. It should be pretty straight forward. "I'll give you this coin for that widget." That is how an economy works. Of course that is not what our monetary system is anymore, and I would argue that is because of central economic planning and intervention. My website explains this in more detail, www.argentumusa.com.
The true nature of money was meant to be an easily exchanged store of value. Value for value, something divisible, and preferably something that didn't carry germs (that is why silver's antimicrobial properties were so appealing). If I didn't have something you wanted in our trade, I would give you money instead so that I could purchase that good or service. The same idea was used with labor or work. If I couldn't trade you something of value, or I didn't have money, I would work to acquire that product. One of the reasons our centrally planned economy is so driven by consumption is that our monetary and tax systems are set up improperly and discourage saving. This results in an unnatural response of unsustainable debt and spending, resulting in an unhappy society favoring people who are very rich and people who are unproductive.
In summary, the role of money is simple. It has to be a store of value, divisible, and easily exchanged. Our digital world can make the latter two very easy, but value depends on humans survivalist needs. The choice to me is clear.
Anyways, moving on. Let's consider the U.S. dollar and bonds. They are currency and debt backed by the U.S. government. Their value depends on people's confidence in the government to pay back that debt. People compare gold and silver to our currency. First of all, there is no comparison. Gold and silver have been, and are, the only form of money that the world has ever used. Governments think they should decide the value of money, and it's really only about power and control over the money supply. Fiat money robs the people who save the most because of inflation. The money makers inevitably destroy the value by regular increases in the money supply. I'm not saying that gold and silver will make a perfect world, and money in and of itself is simply a distraction from what really matters in life. However, only God and mother nature control the supply of gold and silver. Not some bankster or government official contending with their own egotistical desires for power or greed.
Thousands of years ago money wasn't so complicated. Did government's levy and collect taxes? Yes. Did people and businesses exchange goods for money? Of course. The difference in today's world is that money has become so complicated that it barely serves the purpose that it was originally intended. It should be pretty straight forward. "I'll give you this coin for that widget." That is how an economy works. Of course that is not what our monetary system is anymore, and I would argue that is because of central economic planning and intervention. My website explains this in more detail, www.argentumusa.com.
The true nature of money was meant to be an easily exchanged store of value. Value for value, something divisible, and preferably something that didn't carry germs (that is why silver's antimicrobial properties were so appealing). If I didn't have something you wanted in our trade, I would give you money instead so that I could purchase that good or service. The same idea was used with labor or work. If I couldn't trade you something of value, or I didn't have money, I would work to acquire that product. One of the reasons our centrally planned economy is so driven by consumption is that our monetary and tax systems are set up improperly and discourage saving. This results in an unnatural response of unsustainable debt and spending, resulting in an unhappy society favoring people who are very rich and people who are unproductive.
In summary, the role of money is simple. It has to be a store of value, divisible, and easily exchanged. Our digital world can make the latter two very easy, but value depends on humans survivalist needs. The choice to me is clear.
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