Archive for July, 2011


BUYING GOLD/SILVER, GOLD & REAL ESTATE, GOLD & SILVER, Uncategorized   No comments yet

My recent trip through Nevada & California left a somber impression on the future of real estate.  Sprinkled among manicured lawns was yards of tall weeds and broken dreams.  Banks and politicians continue the charade of better news but waves of distressed properties tell another story.  The truth always shows its hand and unfortunately despite what we’re told the future of real estate is more devastation at least in many regions.  We could spend hours talking why but the fact is despite billions in mortgage-backed securities and artificially low interest rates decline is still the trend.  All while gold and silver sprint from the pack.

Dr. Housing Bubble posted more concern just in time to ruin my morning coffee.  California sold 38,000 homes in June but added 43,000 foreclosure filings. Even though housing costs have dropped over 50% from the peak.  Not even cheap homes can bring back buyers willing to stand in line for days not so long ago.  To say correction is taking place is understated.  The real estate pendulum has swung far beyond a normal correction and evidence of decade long decline stares homeowners right in the face.  If you are new to The Prospector Site you might be asking what this has to do with gold or silver.  Maybe more than you can imagine.

The fix for real estate appears complex but is simple.  Until jobs return, higher wages, and your dollar’s value stabilize more decline should be expected. But like gold and silver witness today real estate had a heck of a run.  The next couple of years will be interesting for gold and silver holders.  Just like real estate new gold holders will see nothing but stars as gold continues to spike breaking new highs with the latest bad economic news.  Sure we will see dip days or weeks but overall the trend for gold is straight up.

The real estate bust caught many off guard but all runs end and R.E. is not above typical asset cycles.  Gold and silver will be no different and the same ones caught by surprise will curse gold as it declines from over speculation and greed.  Like real estate, finding new buyers to unload pricey metal will be difficult but unlike real estate government help is unlikely.  Don’t get me wrong I’m not saying don’t buy gold or silver what I’m saying is realize all bull runs come to an end and locating an exit is wise.  I also feel a time to exit from gold is far down the road. Until then I’m buying just like I have over the last ten years.


BLOOMBERG:  U.S. Homeownership Falls to Lowest Since 1998 on Tight Lending

“Tight underwriting standards and the lack of a down payment are keeping a big chunk of buyers out of the market and other people are being displaced by foreclosures,” Yamano said in an interview before the report. The ownership rate may tumble to about 62 percent by 2015, he said.  Read it here.


MARKET WATCH:  The U.S. Treasury will not default

Debt is a symptom; overspending is the disease

Though the debt ceiling is getting all the attention, the real issue is the rapid growth of government debt. I believe the increase in the debt ceiling should be passed, but I also believe we have to address the more important issue, growth in government indebtedness. The Federal government is borrowing roughly 44% of what it spends. That is why we keep running into the debt ceiling. The debt ceiling is really just a technicality. The long-term issue is the size and scope of government and growing debt is just a symptom of that.

Take a look at how much Federal spending has increased in just the past few years. If you think there is any form of math in which this kind of increase is sustainable, think again.  Read it here.

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What if I told you the path to your financial future was set in motion years ago possible before your birth?  I recently had dinner with a buddy who voiced great concern over putting this debt ceiling issue to rest. His fear was something bad could happen if a compromise isn’t found soon. He is correct but his fear is misdirected regardless how this debt ceiling plays out. Your gold and silver will grow just as our dollars decline, all because of a day back in 1971.

Thanks for reading The Prospector Site. If you are new to our site let me say congrats for taking control of your financial future. If you’re looking for pinpoint gold buying advice I’m sorry but you won’t find it here. What you will find is proof how current events justify trading dollars for gold and silver. The information comes from fact without bias from someone not selling a thing. We provide knowledge and understanding of a real money source few understand, gold & silver..

Not many understand how the 1971 gold standard reversal sent dollars into a decline still felt today. We recently posted an example of a twenty-dollar bill and a twenty-dollar gold coin and how they once held the exact same buying power. Boy have things changed because today the same gold coin has 82 times the buying power of a twenty-dollar bill. I doubt President Nixon could have known how damaging this gold reversal would be to our monetary system.  For the record a gold standard system means each dollar in circulation has a small measure of gold as security. Printing money out of thin air isn’t possible under a gold standard.  If access to a bottomless bank account is fun then our government is having a ball.  No gold standard to rein in the weak means serious trouble for the rest of us.

As tax revenues continue to decline the money needed to feed the government machine will come from borrowing. To honestly believe political leaders will decrease spending, borrowing, is misguided at best.   So in the end what will this pumping of worthless money cost taxpayers?  We know gold sold at $41 per ounce back in 1971 as gold and the dollar parted ways.  The question is what will yellow metal be worth someday when they reunite?  Who could possibly guess but if spending continues as it has $20,000 to $40,000 gold (per ounce) is not out of the question. I guess $1700 physical gold doesn’t sound so bad.

The day the dollar died robbed Americans more than most realize. The debasing of dollars is gradual and this time release of inflation is sneaky.  But the true travesty is the exchange of freedom for debt most folks gladly saddled upon themselves as dollars slowly declined.  Each day more wake up to a life of financial slavery unsure what it takes to break the chains of debt and despair.  Little do they realize gold has been there all along waiting for those willing to see the worthlessness of dollars and value of real money like precious metal.

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The news wire is cherry red with media chatter of default and credit downgrade.  I understand the thought of yet another crisis captivating America but for those willing to look deeper this is a long shot at best.  This is less about default and more about entitlement, reelection, and fiscal mismanagement.  There is one thing separating us from other debt ridden countries and today we look at what it is and how it affects your stash of gold and silver.

Washington is beginning to look like a Chris Angel trick show gone bad. We don’t call it printing money because technically it is not printed.  But something happened recently, without much fanfare I might add, with America taking over as the number one holder of our own debt.  Most folks believe this honor goes to China but in fact we now own more of our own debt than anyone else.  How long do you think a natural economy can sustain itself working both sides of free economics?

Soon the debt ceiling will be old news and new money will flow created from nothing and backed by less. As we pointed out yesterday most don’t understand the ill effects of debased dollars and more don’t care as long as their world moves along.  But the media needs a crisis and many float around these days but I can’t help but wonder when gold bubble talk will heighten?  The media are predictable but not even waves of gold bubble talk can squelch the future of your gold or silver.  It’s worth repeating that gold will continue its course as long as fiscal mismanagement continues its destructive course.

At post time one ounce physical gold will cost a buyer over $1700 but with so much debt ceiling talk few pay attention.  The real story is what $1700 gold is trying to tell us. Expect more of the same regardless of debt ceiling compromise.  Thanks for reading The Prospector Site.


SACRAMENTO CITY NEWS: Improving Mexican economy draws undocumented immigrants home from California

“It’s now easier to buy homes on credit, find a job and access higher education in Mexico,” Sacramento’s Mexican consul general, Carlos González Gutiérrez, said Wednesday. “We have become a middle-class country.”

“They’re going back home because they can’t get medical help or government assistance anymore,” Frausto said, “And when it’s getting so difficult for them to find a job without proper documentation, it’s pushing them away.”  Read it here.


THE STREET:  Gold Prices Surge on Sour GDP Data

Jeff Clark, Casey’s senior precious metals analyst, said that gold could see a 5% correction if a debt plan is reached in Washington, which would bring prices down to $1,525 an ounce.

“The gold price could easily correct once a debt deal is reached,” said Clark. “Many analysts are attributing the current run-up [in the gold price] to the debt ceiling talk impasse,” so if a deal is reached, then a lot of the impetus for higher prices will disappear.  Read it here.

PROSPECTOR:  Mr. Clark, along with other precious metal experts, feel any pull back will be temporary and the long term diagnosis for gold is bullish.


Philly Burbs:  Gold coins, worth $25,000, stolen from car

A New Britain Township resident reported that someone broke into his secured car between July 17 and 19 and stole about 14 gold U.S. coins valued between $25,000 and $30,000, said police. Police said the coins were $20 and $30 denominations. Authorities believe the person responsible for the theft knew the coins were in the car.

PROSPECTOR:  Not sure how safe a car is for storing coins but as values rise so will the temptation to steal.

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I can’t tell you the city or even the car dealership but on my recent trip I heard an owner of a dealership say something on the local news that just about floored me.  His comment was related to the debt ceiling and went something like, “If they don’t raise the debt ceiling, and soon, interest rates could go up and my car sales affected.  This community needs my business and our elected officials need to get with the program.”  Now I understand from running business my adult life that business owners, by nature, are in self-preservation mode but these days are extraordinary and go far beyond a quarterly financial statement.  Today we look at why many Americans still don’t get it.

Most folks, certainly Mr. Dealership above, don’t grasp what is happening nor the impact of our personal, state, and federal debt. For this businessman to cry out for compromise only proves many people are willing to compromise the future for a bottom line.  But many Americans care little about anything but themselves and their lives so if more national debt is what it takes so be it.  But even imprudent realize the debt party can only last so long and most understand a continuance will devastate our dollar and the economy.

It’s not only statements like above that tell us many Americans don’t get it. Look no further than the line at your local gold and silver shop as evidence.  Sure bullion sales of gold and silver are at record levels but still a fraction what they should be.  The most effective counter to a declining dollar is precious metals but few take advantage of their protectiveness.  This will change sometime soon and unfortunately cause many to pay far more than needed for gold and silver.

The bottom line as it relates to Mr. Dealership is “yes” he is correct in that raising the debt ceiling will likely spur fresh spending on his new cars.  “Yes” interest rates will stay lower than they should allowing customers to go even further in debt.  Why wouldn’t they since most of our economy is dependent on debt of one kind or another?  What this gentleman doesn’t realize, or isn’t saying, is every dollar of debt debases your dollars real buying power.  His dealership will have a heck of a time selling compact cars at $100k or buying $10 a gallon gas.

It really comes down to honesty folks.  Our political leaders struggle with compromise because not all are on the same boat.  If leaders around the world shared economic honesty, in a rational way, of the consequences of continued debt people would accept real change.  Until this happens conflict will grow right along with the value of your gold and silver.  Thanks for reading The Prospector Site.


WEAKLY STANDARD:  Pelosi’s Reactionary Liberalism

“What we’re trying to do is save the world from the Republican budget. We’re trying to save life on this planet as we know it today.”

Why? What’s so great about life on this planet as we know it today? Let liberals defend the status quo. We conservatives seek to improve life on this planet. If I could paraphrase Bobby Kennedy: There are those, like Nancy Pelosi, who look at things the way they are, and ask why. We dream of things that never were–like reducing domestic discretionary spending, year over year–and ask why not!

Or, to paraphrase another of Pelosi’s predecessors: The liberals only interpret the world, in various ways; the point is to change it.


MARKET WATCH:  Roubini: US won’t default but will see fiscal drag

“(Recovery) has been so weak because this was not a traditional recession, but was a recession caused by a financial crisis brought on by too much debt and leverage first in the private sector and now in the public sector,” he said.

“The problem of sovereign risk will be a serious one for many advanced economies for many years to come,” Roubini added.  Read more here.

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There are at least two gold vending machines in the US and my recent trip found us standing in front of one. I have to admit it’s kind of cool looking at a machine that spits out gold like it was a pack of gum. Two things I quickly noticed was one, the machine doesn’t accept credit cards and two, the price for a one ounce American Eagle carried a hefty premium. But it was something my teenage son said that really leads me to ask is physical gold worth it?

The day of my visit found the American Eagle price slightly more than 5% over what an online broker would sell it. I must have muttered something under my breath about the extra cost when my son reminded me of a good point. Yes the price is definitely more but possession of gold is immediate. No waiting for inventory, no excuses, no delay, nothing but 100% immediate ownership.

Most of our readers at The Prospector Site realize we are not big on paper gold. The thought of several other folks owning the same right to physical gold as me doesn’t sit well. But the truth remains paper gold can be bought for around $100 less than physical gold (one ounce gold bullion). Compared to a vending machine, paper gold is a couple hundred less than physical metal.

I truly believe our vending machine mark up is just a small example of future physical gold at least as it relates to rising premiums. As demand grows physical gold holders will realize newcomers will pay whatever it takes to actually own gold coins, bars, and rounds. Couple this with a decline in folks willing to sell and a perfect storm for inflated premiums makes sense. Price will be a distant second to security as premiums grow and gold prices top new highs. This buying frenzy will make the 1980 run look small and my guess is it will last for some time.

What sounds like a golden opportunity to me is a vending style machine, like the one pictured, but selling silver bullion and rounds. The benefit of selling silver is a larger market compared to gold for no other reason than affordability.  Something to think about for those interested in profiting from this silver bull run beyond simple ownership of precious metal.

I strongly urge readers to take a close look at physical metal soon. The economic news of today is concerning and no one knows how long our dollar will hold what little value it still has. An insurance in physical metal can’t hurt and in all likelihood will be the best source to preserve wealth at least over the next few years.


FINANCIALLY FIT:  Most & Least Indebted States

Residents of California and Hawaii are the most indebted individuals in America, but they’re also among a group that are making the most progress in paying down the amount they owe, according to a MoneyWatch analysis of state-by-state debt statistics.

On the other hand, in states where housing prices have suffered with double-digit declines are also where consumers are making the biggest dent in what they owe.  Read it here.


BLOOMBERG:  BofA Donates Then Demolishes Houses to Cut Foreclosures

Bank of America Corp. (BAC), faced with a glut of foreclosed and abandoned houses it can’t sell, has a new tool to get rid of the most decrepit ones: a bulldozer.

“There is way too much supply,” said Gus Frangos, president of the Cleveland-based Cuyahoga County Land Reutilization Corp., which works with lenders, government officials and homeowners to salvage vacant homes. “The best thing we can do to stabilize the market is to get the garbage off.”

The lender will pay as much as $7,500 for demolition or $3,500 in areas eligible to receive funds through the federal Neighborhood Stabilization Program. Uses for the land include development, open space and urban farming, according to the statement. Simon declined to say how many foreclosed properties Bank of America holds.  Read it here.

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My recent visit to California included a long drive from south to north witnessing yet further decline of the once Golden State.  One would think with prisoner releases, massive housing value decline, job losses, and businesses leaving in record numbers one of the mentioned would be leading news but no.  To understand “why” California doesn’t get it is arguable but the real question is why leadership will not cool entitlement plans at least long enough to bury the dead and mourn.  This might sound harsh but burying the dead is what California needs but few are willing to admit defeat of liberalism.  All of this while gold continues to use reason, fear, and inflation as reasons to grow.

Thanks for reading The Prospector Site and congrats on using gold and silver as a prudent weapon against economic decline.  So many ask why a recovery can’t catch hold but the answer is not limited to one or two simple issues. What is for sure is the steps states like California continue to make will only take citizens further down the path of economic ruin.  This might sound harsh but here we deal in facts and never before has long-term borrowing and social entitlement created a strong economy.


Governor Brown just signed into law bill AB 130 & 131 better know as The Dream Act. Just by the sound of it who could possible not support something called The Dream Act?  Now we won’t take time to argue if this law is justified and for the record my stance is firmly against it.  In a nutshell, the law(s) allow illegal immigrants ( undocumented students ) to be eligible for privately funded scholarships.  In other words, citizen students will compete with undocumented students for the rights of continued education with the help of private scholarship offerings.  No doubt this is as much about politics as academics.

The fact is until state officials see true urgency states life California will continue toward decline. My concern is the balance now leans toward those who benefit compared to those providing.  If laws like the Dream Act will help improve economic uncertainty I’m all in but most cases prove otherwise.  No doubt a new layer of state government is just around the Dream Act corner even as existing government size proves unsustainable.


To declare gold and silver winners is not that simple.  So many factors in your life affect the value of your metal and one of them is fiscal irresponsibility in states like California.  Now you might think this doesn’t affect readers outside the Golden State but this is not true.  If you think a state with over 30 million citizens (who knows how many non citizens ) will be ignored, aka bailed out, I have bad news for you.  One way or another, someway or another, states like California will continue fiscal mismanagement until enough say no more.  Until then more printing will lead to more inflation.  Until then your gold and silver will do what they do best leveling the playing field for all those willing to trade dollars for precious metal.

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Sometimes as a writer I get caught up in analyzing fact when I should let facts speak for themselves.  That is exactly what we will do today just as gold, again I might add, raises its own bar to a new high.  The only significant news other than gold and silver zooming is a story getting little press.  The dollar turned 150 years old this week but like an aging actress few care to count the years anymore.  Why should anyone care?  The dollar is no longer based on anything but faith and faith is great for the soul but terrible for the pocket-book.  Today we let gold do the talking. Again, thanks for reading The Prospector Site.


FINANCIAL TIMES:  Greenback’s birthday

The US dollar, which turned 150 this week, is finally starting to act its age. After a stormy childhood, it spent much of its 20th century prime as the unquestioned linchpin of global finance, particularly during the Bretton Woods era, when it was tied to gold. Today, the greenback is the primary reserve currency, largely due to tradition and lack of alternatives. With traders unwilling to bet on the troubled euro and unable to bet against the renminbi, gold’s nominal record in dollar terms this week shows unease about the dollar’s long-term strength.  Read it here.


MARKET WATCH:  Gold hits record as U.S. debt talks grind on

SAN FRANCISCO (MarketWatch) — Gold futures traded in record territory Monday as U.S. debt-ceiling talks to avert a default continued, with little to indicate progress toward a deal.

Adjusted for inflation, gold would have to settle at around $2,400 an ounce to supplant a record around $850 an ounce reached in January 1980.  Read more here.


BLOOMBERG:  Copper, Oil, Grains Drop as U.S. Debt Talks Falter; Gold Jumps to a Record

The collapse July 22 of the quest by President Barack Obama and Boehner for a deal to slice as much as $4 trillion from the long-term debt through overhauls of entitlement programs and the tax code left all sides staring at a crisis with no clear path forward and little time to spare

“We see classic risk-off mode, and they’ll certainly be selling commodities, gold the exception,” said Paul Deane, an economist at Australia & New Zealand Banking Group Ltd. in Melbourne.  Read more here.


KUWAIT SAMACHAR:  Asian investors stricken by gold fever on record

“The case for gold in the longer term is still very strong. Gold may appeal to new classes of investors who previously avoided the market in favor of more mainstream investments like bank deposits, bonds and equities,” said a Singapore-based trader.

“Potentially there’s a whole new market for small-sized physical gold bars if these investors lose faith in paper.”

Technical charts point to gold hitting as much as $1,940 by the end of the year, given the strong bullish momentum in the past two weeks, Reuters market analyst Wang Tao says.

Even central banks, until recently keen to disperse some of their gold holdings, could soon be sniffing around for more of the precious metal, analysts say.

In 2010 central banks became net buyers of gold for the first time in 21 years, as developed nations of Western Europe and North America reduced selling in the wake of the global financial crisis while emerging economies tried to diversify their holdings of foreign currencies, especially the dollar.  Read it here.

PROSPECTOR:  As you can see the mainstream media is abuzz over gold repeating the same news for sometime now.  What they didn’t mention is gold is only reacting, as always, to investors concern, people’s fear, and the declining dollar.  Who knows how far gold will run up but my guess is a slight retreat is expected when a temporary fix to a long term problem is reached related to the debt ceiling.  Until then we can all watch metal zoom.

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Will 2011 go down as the beginning of the next Great Depression?  If it doesn’t we can thank politics since we are on the hills of yet another presidential election.   The damaging affects of debt, deficits, are kept hidden for only so long before societal symptoms boil-over making themselves obvious even to the unbelievers.  As economist try to define “economic depression” prudent individuals like yourself accept fact as fact and prepare to weather this economic storm.  Owning gold and silver certainly play a major role as protection but two other issues are beginning to surface as concerns.  Today we compare this Depression to last.

#1 Difference:  Personal & Property Crime

The New York Times just ran an interesting article on agricultural crime in the Central Valley of California. Even as commodity prices soar packing pounds of profits into farmers pockets something is happening in the darkness of San Joaquin skies.  Copper thieves have long been a problem but lately stealing precious metal is taking back seat to other ag crime.  Thieves have replace wire cutters with grape blades stealing crops in the cover of darkness.  Local law enforcement contribute this rise in diesel, metal, fruit, even solar panel theft to the rise of economic despair and drug abuse.  Read it here if you like.

The part that stands out to me is the “drug abuse” statement. The Great Depression of yesteryear had its problems but drug abuse certainly wasn’t at the top of this list.  Today, years of addiction, cheap drugs, and fat paychecks helps fuel an addiction unwilling to go down without a fight.  Drug counselors warn today’s drug dependent have low recovery odds only compounding the addiction problem.  If the addicted can’t earn enough income to keep up with drug costs the natural conclusion is to steal your assets.  A simple fix to this problem does not exist.

#2 Difference:  Cyber Crime

Recently my wife’s family enjoyed a week of rest and relaxation at South Lake Tahoe in California while a thief 1800 miles away removed $50k from their equity line account. You may be thinking cyber crime has little chance of affecting your lifestyle but this is not true.  Not one person living on this earth is unaffected by the cyber world we live and this new age brings golden opportunity for those with above average intelligence.  Just because someone is smart doesn’t mean they are honest.  The fact is no longer do thieves need disguises to mask identity.  A thief can part you from your money from miles away and from their basement.  Cyber crime is the new “stick up” and most Americans are unaware of its devastating possibilities.

Experts agree the next trend for law enforcement is internet crime and those looking for a fresh career are wise to look into this area.  Never before have so many been so vulnerable and my concern is our senior aged population.  Most of these folk have little understanding or protection from internet related crime.

Both modern-day depression differences described above have one thing in common.  Major cutbacks in staff and budgets means fertile ground for those willing to take assets from you. The New York Times article above describes challenges of scaled down agencies to control a growing business of agriculture crime.  Unfortunately the Central Valley doesn’t have the exclusive on this as similar stories across America unfold.  I won’t pretend ownership of gold or silver is enough protection in this age.  Of course owning precious metal gives a person options but the next few years will present challenges on many levels even for metal holders.  A keen awareness could be your best defense.  Thanks for reading The Prospector Site.

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Some of you remember sitting in front of a boring television watching Walter Cronkite tell us the day’s news.  Seldom did America miss evening news and less doubted what we heard as fact.  If someone would have said the mainstream media would play a major role in bringing down the dollar I would have laughed. The news back then was “reported” and most in journalism left opinion to viewers.  But somewhere along the way something changed within our media and I for one don’t like it.  Mainstream media turned news into an agenda supporting big government and left leaning policy causing conservative and independent types to wonder what happened.  Today we prove how the mainstream media is helping destroy the dollar.

The majority of journalism is left leaning politically and this is not my opinion but their admission. My guess is this left leaning nature started during college days and only tilted more as journalism careers blossomed.  But this left leaning nature of journalism is costing you and I money and most don’t even realize it.  Ask the person on the street about liberalism and they will mention issues like redefining marriage, global warming, political correctness, and Palin assassination.  Little do they realize the newest victim folds in their back pocket.

Few understand a foundation for liberalism is big government and social programs. Compassion makes so many feel warm and fuzzy causing programs to grow out of control and now to the point unaffordable.  Yep programs grow so large advertising is needed to bring in new recruits and guarantee more funding for the next fiscal year.  It would be unthinkable to pull the rug on these programs and those asking for downsize obviously dislike children and the needy.  No one wants to be branded unsympathetic toward the less fortunate so we ignore the constant humming of freshly printed money.

But the times they are a changing and now jobless, homeless, and soon to be hungry are questioning all this generational entitlement wondering what it will take to right the ship. 2010 was the first year to see 50% of Americans paying no taxes.  This means the other 50% are pulling the entitlement wagon asking how long can this go on?  There are only two choices to keep the entitlement party going,  generate more revenue ( taxes ) or continue to print money. I bet you can guess the choice of a liberal and bias media.


A renaissance is forming across America as independent free thinkers question bias nonsense of yesterday.  Look no further than the decline of major newspapers and networks replaced by online blogs and websites. The internet gives a voice to all and many are now finding untainted news refreshing.  This silent majority is realizing there are plenty more like themselves and I’m sure the result will be conflict on several levels.  No doubt how your money is spent will come up.

This battle will be fought on many fronts over several years but in the meantime a good protection is gold and silver. The Titanic didn’t stop, or turn, on a devalued dime and this conflict will take some time to play itself out.  Dollars will continue to be debased even as programs shrink.  Accounting games should be expected as more watchdog organizations demand accountability.  As for me, I’m enjoying the freshness of unbiased information as more truths point straight toward gold and silver.  Thanks for taking the time to read The Prospector Site.




Last weekend my bride of 23 years and I spent the evening resting comfortably on hard metal bleachers watching bull riders try to earn a living.  I noticed something soon after each rider hit the ground I hadn’t realized before but relates to the money in your pocket.  As soon as the rider did his thing, clowns (bullfighter) took over the arena not to control the 2000 lb. beast but manipulate it into an open chute thus leaving the arena.

What happened to the bull after that I have no idea but as I sat watching what few others couldn’t care less about something dawned on me.  The US Treasury isn’t attempting to wrangle inflation or bring back the value of the dollar.  They are content to run it out of the monetary arena after it’s no longer worth anything.  Today we find an understanding of money and your financial survival.

As I write this post I have a fresh new twenty-dollar bill on my left side and a $20 gold coin on my right. I will admit the twenty-dollar bill is nice looking and it is so new and crisp it kind of pops when I hold it.  As I inspect it I notice careful planning went into making this bill.  If it’s held up just right I can see a watermark and odd characteristics that I’m sure intended as a deterrent for counterfeiting.  This bill has the same $20 value marked on it my gold coin to my right has and at one time they were both worth exactly the same amount.  But something happened you must be aware of because it affects your future as much as anything I can think of.

Most understand the twenty-dollar bill and the $20 gold piece no longer hold the same value but really don’t understand why.  If later today I take my new twenty-dollar bill to my local Albertsons for fresh apples I would walk out with around 12 lbs. of fruit.  But if I take my $20 gold coin to my local coin shop and convert it into dollars, my trip to Albertsons would be much more fruitful.  In fact, my local store wouldn’t have enough apples to convert my gold piece into fruit unless they had around a 1000 lbs of apples.  My gold coin, that was once equal to, is now worth 82 times the value of a twenty-dollar bill.  This should be very concerning to those still working hard and investing in dollar related assets.

There is a bigger problem than my Albertson’s apples so let me explain.  I wasn’t exactly truthful about the counterfeiting statement earlier when I mentioned the effort the US Treasury has taken to prevent it.  The preventive measures aren’t really about counterfeiting as much as competition. The only agency in the world allowed to print money, based on nothing I might add, is the US Treasury.  If funds run short the answer is simply print more money.  But what does this have to do with your wealth and gold?

This next sentence might sound odd at first but with careful thought it is an eye opener.   The same folks who refuse to pay $1600 plus for physical gold will work their head off for worthless cash.  Someday history will describe 2011 as a period when dollars were rounded-up and herded out of the arena of monetary value.  Who knows what currency will replace it but for sure Mr. Bernanke’s fix for our financial problem is to run the dollar off a cliff.  But what about gold? The gap between gold and your dollars is widening with every layer of worthless money rolling off the printing press.  This means next year we can take our apple example and instead of 12 lbs. I might buy only 8 lbs with twenty bucks.  Instead of 1000 lbs for gold I might buy 1300 lbs of apples.

The only difference between dollars and gold is replication.  Gold holds the value of yesterday because the same relative ounces of gold exist today as yesterday.  Dollars, your money, will continue to decline (regardless how hard you work and save) until the printing stops.  Your gold will continue to climb until the printing stops.  Yes it really is that simple.  Thanks for reading The Prospector Site.


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