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!
Sunday, May 5, 2013
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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