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Archive for September, 2011

FIRST STEPS TO BUYING GOLD & SILVER

BUYING GOLD/SILVER, SECURING GOLD & SILVER, SELLING GOLD/SILVER   No comments yet

Are you on the verge of buying gold and silver for the first time?  Congrats if so.  I recall my anxiety when making my first, second, and third purchases and certainly understand your doubt.  You are wise, especially in this day, to question the decision to invest money in metal or anything else for that matter.  Today I want to breakdown the first steps in metal ownership but also mention there are many ways to accomplish wealth preservation and invest in metal.  This is simply the way I would do it if just getting started.  At post’s end I will fill you in on what, and why, I’m buying now.


STEP 1:

I’m assuming you’ve invested plenty of time and research on physical precious metal.  You agree something is not right with this whole recovery nonsense and truly believe currencies cannot be printed into prosperity. If so we are ready to embark on the oldest path of real money, gold and silver.  The first step to metal ownership is somewhat like buying a new puppy.  Where are you going to keep it while you’re at work or away?  Storage is huge since gold can walk away without any identifying features to it.  Your bank will rent you a safe box suitable for storage if physical ownership is not for you.  The key is to lockup your metal regardless if home or away.

STEP 2:

Deciding what you’re buying is the second step to owning precious metal. This is important since some precious metal dealers will sell you what is in their best interest not necessarily yours.  Most metal we recommend has low premiums and profit margins are slim for the seller.  Dealers will prefer you buy something a little more profitable (for them) but remember this is your money we are spending here.

Since you are just getting started I recommend buying bullion coins either gold, silver, or both. Gold bullion coins can be bought for as little as $200 (1/10 ounce) to as high as $1800 (1 ounce).  Silver bullion is usually sold by the ounce since silver is much more affordable than gold.  American Eagles and Canadian Maples are very popular and easy to resell when the time comes ( you will want to sell someday trust me).  I recommend mixing ownership up a little but silver is an extremely easy way to get your feet wet.  Decide what you’re buying before shopping.

NOTE:  Leave the rare coin market alone until you become very familiar with precious metal.

STEP 3:

Now we are getting to the good part.  We know where we will store it and what we want to buy, right?  Now it’s time to bring home the most universal currency ever to exist, gold & silver.  Timing the market is much more important to your confidence than your profit.  Nothing is more disheartening than buying metal only to see it tank a few days, or hours, later.  I can tell you from experience this is not as big a deal as it seems.  Soon your metal will be off and running at least if fiscal insanity continues this trend.

But we want you to get the best bang for the buck and this will require patience on your part.  Right now appears to be a fantastic time to invest in gold and silver.  Why?  Because last month both metals where nearly 15% more expensive than today.  This “dip” creates a perfect buying time since we know metal has gone beyond the purchasing threshold of today (prices move on emotion as much as anything).  Like I said, this is more about your confidence than anything else.  In the long-term the price paid will mean very little compared to the amount owned.

Great, now we need to decide where you feel most comfortable buying metal. Local coins shop?  Internet brokers?  Pawn shops?  Ebay or Craigslist?  All viable options many folks use everyday.  I like using my local coin shop for small purchases ($1000 – $2000) and online brokers for larger ones (check out Gold Shark for online bargains).  Online precious metal transactions are very safe but you will anxiously wait for your new metal.  All online metal is insured so rest assured one way or another you are covered.

WHAT I’M BUYING:

For what it’s worth I’m still buying every month sometimes paying more than needed.  My last few buys have been in silver consisting of American Eagles, Canadian Maples, and Philharmonics.  My last gold purchase was American Eagles since they seem to be very common, easy to value,  and easily traded when the time comes.


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WHY YOUR CITY IS GOING BROKE

GOLD & REAL ESTATE, GOLD & SILVER   No comments yet

Since we have new readers joining us daily let me start by saying thanks and yes we do talk about the benefits of owning gold.  In fact, not only is gold beneficial it is now necessary.  We go beyond recommending that you own gold by providing proof how current events confirm its ownership.  The last chapter to this historical economic quagmire is unwritten but one thing we know for sure is those owning precious metal will fare far better than ones that don’t.  Today we look over why your city is going broke and how this points yet another arrow of necessity toward gold/silver.


Over 30% of our nation’s cities will layoff this year alone. This reduction reminds me of a long lost friend I ran into at a class reunion.  He had lost something like 60 pounds and looked great.  He said he never felt better and didn’t miss the energy loss and unhealthy nature of a poor diet.  Our cities are on a diet but not by choice.  As libraries, parks and recreations, and other nonessential close the ill effects of declining property tax revenue shines like a new penny. Safety services are on the chopping  block as well. It’s hard to watch cities shrink but unfortunately this is only the beginning of a complete transformation into a new thinner version of itself.  The new version will consist of many volunteers and much more subcontractor work.

As communities try to deal with outrage and downsize I want to look further down Main Street, USA to see how the next couple of years might look. We invested a complete post recently how declining property tax revenue is the culprit to your city’s decline (Why You Will Pay More In Property Tax).  Declining property values result in less property tax.  Distressed properties result in less property tax.  Cities can’t print money to fill this shortfall so cuts or tax increases are the two options.  Few of us are ready for more taxes.  But there is a bigger concern on the horizon and if I’m correct this storm will dwarf the causes of today’s outrage.

The housing market across many American cities is reeling from the real estate bubble burst like few ever imagined.  As the number of foreclosures increase something very odd is happening.  Banks are beginning to become content to hold inventory off the market and allow nonpaying owners to stay in distressed properties.  Maybe the thinking is more inventory will only decrease each home’s value but this ripple effect is only causing more pain to cities deprived from tax revenue.  The biggest result is a trend of contentment as homeowners live in homes without paying the mortgage all while the banks formulate a plan on what the heck to do.

I’m not an economist by a long shot but I am a business man.  Issues like this are progressive. The housing bubble started when new buyers could no longer obtain credit to buy from sellers.  Prices declined and this led to the unwilling, or unable, to pay on homes worth less than encumbered ( loan amount).  The next progression appears to be folks not paying mortgages because mortgage holders can’t or won’t do anything about it.  We have all heard of families living in homes 2 years or longer without a single mortgage or property tax payment.  How long will it be until over-the-fence chatter leads to the next progressive step of complete voluntary default?  What do you think this will do for housing values?

The progressive nature we are discussing will be nothing short of catastrophic for city revenues derived from property taxes. In reality the bubble already causes pain by proof of hiring freezes, wage freezes, layoffs, and reduced benefits.  Imagine a scenario where entire neighborhoods default by choice or distress? Are we saying gold and silver can help our nation’s cities?  No, probably not but owning metal can provide something few other sources can.

The benefits of owning precious metals are vast but none more important than the independence ownership affords. We are realizing once secure jobs with secure benefits are not so anymore.  Ask any city mayor, any city manager five years ago if this type of revenue decline was possible and not one would say yes.  Owning gold and silver gives those prudent several options in times of need.  Owning gold and silver provides economic flexibility as others cling to dependency and uncertainty.  Please take a hard look at hard money soon.

Thanks for reading www.theprospectorsite.com and feel free to sign up for our online newsletter here.


WORTH REPEATING:

With cities and states required to balance their budgets, city officials see the federal government as the one entity that can spend more money now to get them through the lingering downturn. The survey finds that the outlook for cities next year was not much brighter. “The effects of depressed real estate markets, low levels of consumer confidence and high levels of unemployment,” the report said, “will continue to play out in cities through 2011, 2012 and beyond.” NEW YORK TIMES.  Read it here.

WORTH REPEATING:


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IS GOLD CRASHING?

GOLD & SILVER, GOLD OR SILVER BUBBLE   No comments yet

We track the number of readers daily here at www.theprospectorsite.com. You may find interest in some of our tracking results because they are beginning to tell us more about ourselves than maybe we care to see.  When gold is roaring our numbers are up, way up in fact.  But when gold starts to dip like it has lately our daily numbers are down, way down in fact.  Is this a coincidence?  Is gold really crashing as we settle closer to $1600 per ounce?  Maybe a closer look will answer your questions and possibly relieve a little anguish some gold holders may have.


Gold and silver markets are as worldwide as they have ever been. Less than 14% of precious metal ownership is in the USA as countries like India and China invest heavily in precious metal via bullion and jewelry.  The fact is countries with less safety nets tend to see more private metal ownership mainly because private citizens realize importance of self-preservation. It is sad to say but Americans don’t own metal (savings) because they honestly believe government will always be there in time of need.  This is a huge mistake and in all likelihood will decimate our middle class in America over the next decade.

So what is behind this big decline in precious metal? Gold went from $1900 to just over $1600 per ounce just as experts predicted $2000 gold by year’s end.  Did these usually accurate experts make a mistake in their gold predictions?  Yep, they sure did but it’s not what you may think.  The only mistake made is putting a timeline on gold’s enormous historical spike. Today’s gold experts are very good at formulating deficits compared to GDP but sometimes miss the most important driver of economic trends, human emotion.

Let’s break it down. Stock markets starting selling off over the last few weeks as nervous investors flashed back to the crisis of 08.  Not to be burned this time, stock holders sold off more dollars in stock than the 08 crash.  It was very controlled and somewhat silent as billions of dollars sold from stocks but the question is where did the money land?  It landed on the best of the worst, the US Dollar.  This transfer of money drove up the dollar as countries worldwide lost faith in stocks and the euro.  As I write, the USD index is at 78.35 when for months it bounced around 74.8.

SO WHY IS GOLD DOWN?

Gold is usually opposite of the dollar. If gold is up then you can almost bet the dollar is down.  The world’s reserve currency is the USD and nearly all have a vested interest in it.  It is no secret many countries hold USD because of a trusted track record.  It is also no secret Europe is in big trouble and the declining euro (currency) is showing nervous investors running for high ground (dollars).  Combine this with a worldwide stock sale-off and it’s easy to see why the dollar looks far better to investors than it should.  The question is how long can this dollar facade hold until investors run to the only true safe haven ever to exist, GOLD?

The cold truth is each gold dip only rebounds with an increase in which more and more folks can’t afford to protect themselves. We would have to go back to the gold bubble of 1980 to see otherwise.  Gold certainly is not crashing but it is playing left field compared to the USD.  The global path to gold has many stops before reaching the precious metal destination and today the stop is on the dollar.  Tomorrow, who knows?

WORTH REPEATING:

“Since 2009, the 111th Congress, held between 2009 and early 2011, added over $3.2 trillion to this debt-more than the first 100 sessions of Congress combined.”

“Not only is the United States spending more than ever, it’s doing so at a greater rate.  It’s no wonder the Fed needs to keep interest rates at zero!  If rates were higher, it would cost hundreds of billions more to simply make the interest payments on our national debt.” ANDREW PACKER & THE FINANCIAL BRAIN TRUST/ AFTERSHOCK’S HIGH INCOME GUIDE

WORTH REPEATING:

“Gold is one of the few assets that remains in positive territory this year, in a sense it is one of the last assets standing, and because of this as investors head for cash they sell the assets that have performed. Essentially gold is a victim of its own success as liquidity trumps,” wrote UBS analyst Edel Tully in a note.  REUTERS.


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REAL REASONS MOST AREN'T BUYING GOLD

BUYING GOLD/SILVER, GOLD & SILVER, GOLD AND MONEY   No comments yet

As I write, the Dow Jones is selling off just like all other foreign equity markets.  Oil is down, gold is down, and silver is pushed around like the last nut just before winter.  Europe has all but accepted defeat as the euro looks even worse than the USD.  The average Joe got up and went to work this morning without paying attention to what history will show as the beginning of the worst economic period in modern times.  The culprit, if you don’t know, is debt derived bubbles on many asset levels.  The end game you ask?  Trillions in wealth pushing and shoving trying to fit onto a limited supply of physical precious metal, metal stock, and metal ETFs.

But most are not and will not buy gold regardless how dire and today we look at three reasons they won’t.


REASON #1:  ASSUMING

One of the most alarming facts I see with lower, middle, and even upper America is how assuming most of us have become. We assume when we flip a light switch power will come on.  We assume when we turn a plumbing fixture water will flow.  We assume everything from government to a long healthy life will always be the case but this is only wishful thinking.  We assume because we’ve been blessed we will always be blessed.  Why buy the insurance policy of gold when layers of safety nets await the downtrodden?

What really happens when we assume is we trade liberty and freedom for protection.  It certainly is a good time to establish independence, self-reliance, and preparation.  Please don’t assume a life of debt and growing deficits is sustainable, even in a great country like the USA. We assume everything is OK when it is as far from okay as it has ever been.

REASON #2:  CONFUSED

I can tell by the emails and comments some understand the power of gold as real money but most find precious metal very confusing. Friends tell of horror stories and crooks associated with gold/silver but the fact is metal has never been as safe to buy as today.  We are so afraid of being different we continue to repeat the same old investing ways that lose over and over again.  Think about this for a second.  The stock market plunged by half just a few short years ago yet the herd sends money back into it like there was no other option.

We listen to those proclaiming financial superiority when we know down deep the same old same old no longer is safe.  In this internet age there is no reason to rely on others to control your financial future.  Sites like this one and so many others provide information and facts exactly how precious metal can protect all economic classes.  Take control of your financial life and quite worrying what others will think.

REASON #3:  WE TRUST THE DOLLAR

This one scares me the most of all three. We’ve been taught since childhood our dollars are as safe as anything possible. Heck the US Government even guarantees our dollars.  The entire world trusts our dollars so much they accept the USD as the reserve currency investing trillions in our debt.  The fact is our dollars have never been as debased, bubbled, or volatile as right now.  My father was born in 1941.  A new home back then cost $4100, the average yearly income was $1770, and a gallon of gas was $.12.  Gold was $35 per ounce and private ownership was illegal.

Now let me ask you.  Has a home changed that much since 1941?  Didn’t homes then, like today, have a foundation, plumbing, electrical, and roof.  Didn’t folks in 1941 work 40 hour work weeks?  Wasn’t a gallon of gas the same as gallon today?  The only difference is the inflated price we pay because it takes more dollars to buy what less used to.  The Fed’s plan is to continue to inject more phony dollars into your economy in hopes of sparking growth. Each time they do this it takes more money to buy bread, milk, GOLD, and everything else we buy.

The thought of trusting gold/silver over dollars shouldn’t sound odd since our country’s original source of money was precious metal.  The only reason we went away from metal as money is so governments could grow without accountability. Why trust something that can be printed valueless over precious metal that is unreproducible?

WORTH REPEATING:

“As the bubbles pop, gold will not be treated as a commodity, it will be in a class by itself.”  AFTERSHOCK (revised 2011 edition)

WORTH REPEATING:

“In five years the dollar will have lost its reserve status completely. It could be less – two or three. I hate to put such a near-term time frame on something that’s so momentous, but that’s the way I see it.”  DOUG CASEY-CASEY RESEARCH.

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WHY POLITICIANS CAN'T SAVE THE ECONOMY

BUYING GOLD/SILVER, GOLD AND MONEY   No comments yet

One of my favorite stories is the true tale of a teenage boy caught in an early season snow storm while riding his horse home.  Panic set in as the storm went from bad to worse and total whiteout was all the young man could see in desperate search of shelter.  Less than a mile separated him from his country home but without vision the cold and night would claim his life.  Finally, out of pure desperation, the young horseman gave up control of his horse and tucked low and tight into his entrusted companion.  Ten minutes later his horse stopped less than five feet in front of the boy’s lantern lite barn.  Only submission saved the boy’s life.  Today we look at why politicians can not submit to natural market forces.


Would you agree an economic whiteout has blown across nearly all the world? My phone conversation yesterday with Trent Henkaline, founder of Gold Shark, summed it up best when he said, “most people realize something is very wrong even if they don’t know what.”  Very astute observation Trent and from the emails we both receive you are certainly correct.  What folks are realizing is futile political attempts to “fix” the economy are no longer working.  Promises of jobs, security, and control no longer seem possible.  They certainly aren’t working to reverse the decline in real estate, nor the volatility in stocks, nor the unrest in Europe.

Even in this day of more government involvement than ever we can’t seem to put our economy back to normal. Most of us realize this but are not sure why or what to do.  Think about this for a moment if you will.  When you pull out of your driveway think about how many of your neighbors are someway dependent on our government.  17% are dependent on government to eat.  Over 15% of Americans now live in poverty.  This number jumps to nearly 41% in households headed by woman.  The sad part is these numbers are increasing as unemployment becomes a household word for 10% to 20% of us.  Is the answer a change in the political flagship?  I’m sorry but it’s not that easy and here is why.

Far more than most Americans believe a change in Washington will improve our economy. Conservatives believe their type of change will lead to improvement and liberals believe their type of change will improve.  A closer look shows the challenge far bigger than most imagine.  Government has strangled capitalism to the point it’s nearly impossible to see the difference between the two.  Imagine if a truly conservative president is elected in 2012 vowing to not borrow another dime.  What do you think will happen when he speaks the truth when saying social security is so underfunded major reform is necessary?  Wars no longer affordable and military spending reduced drastically?  Programs across America cut leaving millions looking for income, housing, and food?  Can you imagine the outcry even if this is what it would take to not borrow money, grow deficits, and live within our means?

My point is the level of dependency, derived from deficits and continued debt, has created a majority wide dependency few are willing to give up.  Please don’t misunderstand me because ultimately we will have to give up government help.  The economic wrecking of our currency, all fiat currency, is too far down the path to turn back at least in my opinion.  It would be political suicide if a true fiscally responsible leader tried at this point but I hope I’m wrong.  The answer has and will be to continue to print more money leading to a debasement of your hard-earned dollars.  History is repeating itself and this time will be no different unless prudent people convince those dependent on government otherwise.

So 600 hundred words into this post and we haven’t mentioned the number one fix for these problems, GOLD!  Gold owners win regardless what way our economic path leads.  If governments continue to spend ultimately destroying the dollar gold wins.  If fiscal sanity leads to a new gold standard gold owners win.  Gold is always the last asset standing as governments historically spend themselves into poverty and this time will be no different.  Our economy will eventually flush out big government and those holding gold will prosper most. Unlike the lost child mentioned above, few governments are willing to submit to untethered market forces.

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Contact us here for your comments, stories, suggestions anytime.

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BUYING PLASTIC GOLD!!

BUYING GOLD/SILVER, Uncategorized   1 comment

Are you ready to buy gold but don’t have the money?  One of the fun parts of writing for The Prospector Site is digging up new tools helping good folks like yourself own gold and silver.  The very reason we named ourselves The Prospector Site is because we are modern-day prospectors looking to unearth the best bargain around.  One tool I often use to stay current with gold/silver pricing is Gold Shark. What I have noticed lately, on Gold Shark, is they list not only physical metal prices but also list the additional fee if I use my credit card.  Today we see if buying plastic gold is for you.


On June, 2011 we discussed the risk of buying metal on a card with a post called Before You Buy Precious Metal on Credit. Please read it if you have questions on risk. I won’t spend time on risk today but will say if you struggle with credit card debt please skip this post.  I understand these are tough times and many folks use credit to cover monthly budget shortfall.  Now is not the time to use credit to buy metal for these folks.

If you bought physical gold one year ago today congrats because each ounce is worth over $500 more than paid. More than dollar value your gold’s buying power is up even more as gold relates to other assets.  But what if one year ago today you couldn’t afford to buy yellow metal without short-term credit card help?  No doubt today is much better for those owning gold, regardless how bought, than ones who don’t.  In this case credit card use was a gold buying tool necessary to aid in securing your financial future.  Few will argue this fact.

Not all precious metal brokers accept credit cards and some limit the amount of purchase far below your credit limit. The ones that do take plastic will pass the card fee to the buyer (you) because gold margins are thin with most competitive precious metal brokers.  Should this extra fee discourage you from buying on the next dip?  I would say no if you can swing the debt as a short-term loan with plans to pay off in less than 6 months.  Please keep in mind, gold is volatile so my advice is wait for a dip to offset credit card fees.  The most important point is the need to physically own metal, regardless how or how much paid, to protect your families assets as we approach this modern-day economic depression.

CREDIT CARD QUESTIONS:

The founder of Gold Shark, Trent Henkaline, took time to answer a few common question regarding using plastic to buy metal.  Thanks Trent and keep up the good work at Gold Shark.

QUESTION:  Why is it only some precious metal brokers accept credit cards?

ANSWER: When a broker accepts credit cards they are taking a risk of charge backs.  Larger dealers have many full-time employees monitoring every purchase, for a smaller dealer the risk and cost is simple too high.

QUESTION:  How big is the fee for using a credit card to buy precious metal?

ANSWER: Credit card fee is set by each dealer, fee’s range from 2.5% to 4.25%.

QUESTION:  Will using a card speed up my order?

ANSWER: A credit card would not be faster than a bank wire.  A check would be the slowest form of payment.  On small orders a card would be the best method (as the fee is minor and a bank wire cost around $15 to send).  On orders over $4000 I would recommend a bank wire (at 3% credit card fee you save $105, this is defiantly worth going to the bank and paying the $15 wiring fee).  Also wire payments are sent within 24 business hours.  Bank wire payments would be faster shipping in my opinion.

QUESTION:  Will using a credit card provide another level of security to my order?

ANSWER: I would recommend using a credit card with an unknown dealer or Paypal when purchasing on Ebay.  I see no risk with reputable dealers.

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SPENDING GOLD WITHOUT SELLING

BUYING GOLD/SILVER, SELLING GOLD/SILVER   1 comment

One of the unfortunate aspects of owning precious metal is its lack of cashflow or passive income.  As your stash of gold and silver grows it will be tempting to sell off pieces for one reason or another.  Life changes, kids go off to college, children marry, the list is long and endless.  The Prospector Site is constantly looking for the next trend to help direct holders like yourself.  Today we look at ways to spend your metal without selling it.


A few years ago my wife and I had a credit card that worked off our home’s equity (equity line). Now as most of you know the days of $400k lines of credit are over ( not coming back anytime soon) but for years this equity was at our finger tips when,if, needed.  As gold quickly earns respect as a solid asset of real money there is a real possibility gold could replace real estate as a credit worthy asset.

Before we get into how something like this could be structured let me dive into the benefits of putting your gold to work. Many gold holders started small but are now seeing  sizable accumulations of gold but don’t like the idea of selling.  I understand this.  As other assets, like real estate, decline real bargains will surface at least for those with cash or willing to part with precious metal.  Remember, gold is quickly becoming a worldwide universal source of real money.  As traditional assets decline lenders are hesitant to loan against these declining assets regardless of your credit worthiness, but gold is another story.

Eventually other assets than gold and silver will decline to a point metal holders will find creative ways to take possession.  Some will trade gold to dollars then use the dollars to buy the discounted asset.  I see another option.  The option is moving some of your metal into a loan companies vault allowing it to be collateral.  The collateral is your gold so credit worthiness is a non issue.  Loan to values can be high maybe 20% to 25% below the metal’s worth and interest on the borrowed money could be negotiable.  Borrowed money isn’t taxable, at least not yet, unlike typical capital gains associated with most gold profit.

The money borrowed could then buy discounted  cash flowing assets completely unencumbered. Rental property, discounted stock, the choice is yours because your gold’s equity is as liquid as possible.  Yes you will pay interest on the money but look at it this way.  Gold and silver’s trend is growing appreciation as more currencies trade into gold and silver.  Look for creative individuals to come up with ways to spend gold without selling.

Sounding far-fetched?  It’s already happening in small doses each time someone takes a gold necklace to their local pawn shop. A company called Scottsdale Loan Company advertises 90 day loans on gold bullion now.  No credit check, no questions.  Who wouldn’t want real money (gold/silver) in exchange for declining dollars?  Donald Trump just took $175k in gold bullion as a deposit on a lease.  Times are changing and gold is the next currency of real money!!


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GOLD RISKY? NOT AS RISKY AS DOLLARS!!

GOLD & SILVER, GOLD AND MONEY   No comments yet

Yesterday I heard a guest of Fox Business Channel say gold was too risky and he is advising his client’s money move into dollars.  I could almost picture the guy swirling his glass of brandy all while holding a $100 cigar. The guest also said historically gold has been a moderate to poor investment and is certainly overpriced at $1825 per ounce.  How confusing it must be for folks trying to understand what gold is, or isn’t, when conflicting experts chatter crazy talk like just mentioned.  Let me clear the air why gold is not risky, again.


Let me ask you a common sense question. Do you honestly think gold is over priced compared to dollars when dollars can be printed on a whim, based on nothing, intended as an IOU for the only source of real money, gold? Of course gold could drop 5% tomorrow as volatility becomes the norm but the fact is gold is becoming a worldwide currency of real money.  Below is how the US Constitution defines gold as money.

” (No state shall).. make any Thing but gold and silver Coin a Tender in Payment of Debts.” US CONSTITUTION


We, as a country, went from arguing if paper money is constitutional as printed by the federal government ( Legal Tender Cases) to gold risky as money? Have we drifted so far from common sense we trust fat cats with formal educations telling us something is real when it’s not? Let me take it one step further.  If gold is risky it can only be because our monetary policy is so corrupt and manipulated that gold’s true value is hidden beneath guilt and greed.  Below is what Fed Chief Bernanke told Congressman Paul the value of gold is.

Rep. Paul: Do you think Gold is Money?

Bernanke: No….

Rep. Paul: It’s not money? Even if it was a precious metal for 6000 years somebody reversed that, eliminated that economic law?

Bernanke: Well…it’s an asset. Would you say treasury bills are money? I don‘t think they’re money either.

Rep. Paul: Why do Central Banks hold it?

Bernanke: It’s a form of reserves.

Rep. Paul: Why do central banks hold it? Why don’t they hold diamonds?

Bernanke: Tradition, long term tradition…

Rep. Paul: Some People Still think it’s money….


I’m getting a little worked up here so let me clear the air. Gold is not only money, it is now the only true form of money on earth.  All other currencies are no longer pegged to gold meaning those with the power to print can answer all budget shortfalls by printing more useless money!!  Time will prove all current currencies true value and for the dollars we hold in our pockets they are worth around $.05 each.  This is approximately what each bill costs to print.  For the record, gold is money. Dollars, yuan, yen, etc are currencies. Please understand the difference in the two.  Your money is not safe invested in currencies!

Folks what is happening here is we have drifted so far down the river of debt our own Fed Chief can’t be honest about real money in fear you, and others, will bail on the dollar. Once your dollars move to gold they won’t be coming back into circulation anytime soon.  I will take a chance on gold and silver any day.

UPDATE:

Our recent post Why You Will Pay More In Property Tax created a few interesting comments so I thought it would be a good idea to see how other countries are handling budget shortfalls.  Below is an example how Greece is attempting to fix budget shortfall by adding a new property tax on all real estate holders.  Notice how the government stops just short of saying it’s the duty of citizens to pay more taxes.

Finance Minister Evangelos Venizelos said the new property tax will be levied over the next two years and will cost citizens an average of euro4 ($5.53) per square meter (10.76 sq. feet), tapping some euro400 billion ($546 billion) worth of real estate.

“It is better that we all lose something than lose everything, forever,” Prime Minister George Papandreou said at a news conference in Greece’s second-largest city of Thessaloniki. CANADIAN BUSINESS.  Read it here.

PROSPECTOR: For the record something like 85% of Greek wealth is in real estate.  As I understand it the new taxes are collected in the form of a utility bill due immediately.  This new property tax is about $500 -$1000 per property.  It is not unusual for middle-income Greeks to own several income producing properties.

P.M. Papandreou stops short of saying it is his citizen’s duty to pay more when he said, “It is better that we all lose something than lose everything forever.” I personally find it hard to believe the riots in Greece are over. How long will it be before blue states in the US pass a similar property tax increase?

For readers asking why Greece doesn’t simply print more money, like America, the question is valid. The reason Greece doesn’t is because they are now part of a 17 country currency called the euro.  This “eurozone” is in danger of collapse and Greece, among others, pressured to control out of control spending. The word being thrown around is “austerity” and my guess is we will be hearing it often and closer to home.


READER QUESTION:  I guess I don’t understand how gold helps keep cities or states from going broke.  Should they be invested in gold?  Little confused but do enjoy the site.

ANSWER:  Thank you for reading. Ya it can be a little overwhelming so let me explain.  Not only is gold real money but it is the best inhibitor ever created.  When currencies, your dollars for example, are backed by gold this means only so much money can be printed into circulation based on a reserve of gold.  Gold inhibits governments from living beyond the means of tax payers.  Cities, states, and federal governments are broke because there is no gold accountability.

The simple answer to your question is not long ago a percentage of gold was held in storage for each dollar in circulation. We convinced ourselves in a civilized society like today we no longer needed the gold inhibitor to restrain spending.  We were, are, wrong. Your city, like so many others, is broke because uncontrolled debt expanded the need for local government that can no longer be paid for. The only fix is to take the pain of downsizing all forms of government then restructure a new monetary policy back to something like gold.


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THE WORLD WAR OVER MONEY

GOLD & SILVER, GOLD AND MONEY, SOCIAL UNREST   No comments yet

Most conflicts derive from love, money, or both.  The average person on the street doesn’t realize it yet but a worldwide conflict over money has begun and your financial future is at stake.  To underestimate this volatility is dangerous and unfortunately if history is an indicator bloodshed should be expected.  This war is hidden because unlike something obvious like your favorite product increasing its price, currency devaluation is subtle and less obvious.   If you think this doesn’t affect you please give me 500 words to prove otherwise.  If you’re not a believer in gold it shouldn’t take long to give solid evidence why I hold my savings in real money like gold and silver.


I like to explain things in simple terms, shocking right? Let’s say you are a business owner in a small town doing very well and well-respected.  One day you see a new business pop up across the street selling the same products you sell.  As the week progresses you notice fewer customers but masses visiting your new competition.  Curiosity and concern lead you into your competition’s business as you realize your competition is selling for far less than you are.  You call your suppliers asking how your competition can sell for so much less when you hear something very odd.  Your neighbor doesn’t buy its products in dollars but euros or francs.  The reason they trade not in dollars but in foreign money is because they can buy more for less money.

Countries are in the same competition as the business example above.  The difference is each country is trying to sell cheaper than the next since many economies are export-driven.  Desperation has replaced competitiveness as countries battle just to keep social unrest under control.  The Swiss are a perfect example of a currency, franc, holding a strong value but “priced out” when selling exports.  To make it simple too many investment dollars have flooded into the franc making it too valuable ( Swiss National Bank went as far to set a ceiling for the franc ultimately leading to a sell-off of the currency).  The Swiss National Bank said, ” the overvaluation of the Swiss franc poses an acute threat to the Swiss economy.” Can you imagine this?  If you are a Swiss saver being prudent and responsible you just witnessed your country attempt to devalue your wealth!!

The entire world is in a race to devalue its currency to stay competitive in a worldwide market. No different from businesses on Main Street, USA trying to sell a little cheaper than competition just to keep doors open.  Now here is where your money comes into play.  Most of us use US Dollars to spend and save.  It’s no different in Japan, Europe, or China.  Each citizen uses it currency as a way to buy, sell, and save at least in most cases.  But the problem is all countries have developed so much debt trying to keep economies moving forward they are now in desperation mode.  Countries, currencies, have no choice but to devalue money, and private wealth, right along with neighboring countries.  Building a strong dollar or yen or yuan is no longer an option in this age of currency competitiveness. War and riots as one country devalues its currency over another should be expected.

So what does all this mean to the average Joe trying to just get by? It means this decision to devalue currency will create great conflict among countries, citizens, and neighbors.  The result is a currency war, at best, and worthless dollars we all work so hard for.  But how does gold play into this worldwide conflict?  Those holding gold find themselves as spectators to this horrible currency conflict.  Gold is the only universal currency unaffected by dollar, yuan, yen, pound, etc devaluation.  The more currencies decline the higher gold grows in each respected currency.  The more currencies decline the counter result is more investment money landing on gold and silver.

A general understanding how worldwide currencies work together is not that complicated.  This same type of conflict intensified the Great Depression ultimately leading to WWII.  Watch how often the word “austerity” is used as this conflict intensifies. Conflict should be expected as gold holders take cover behind the world’s oldest form of wealth.

Yesterday we posted Why You Will Pay More In Property Tax receiving a few interesting comments from readers.  One caught my eye as a common example how ordinary folks are growing tired of useless spending and unproductive attempts at improving our economy. Here it is.

There is such an outcry on high property taxes now… officials can try… but if they don’t want good old fashioned BOYCOTT being formed, they won’t provoke and punish the good folks still able to pay a mortgage and taxes. Because, they will simply stop and join the rising masses of good folks who cannot pay cutting off the money tap to city coffers. No taxes, no paychecks, no enforcements…

The American public has a HUGE VOICE called MONEY!!! We vote with it in the stores, online…etc. We keep good businesses open and shut down bad businesses by what we buy. If banks & counties are smart… they will renegotiate loans to start getting more money in (and taxes) at a greatly reduced level… tell the stockholders… too bad… little money is better than none. And leave people alone trying to do the right thing.

And this is smart for banks… because those losing their homes have NOTHING more to lose… and banks have a lot to lose! If former evicted owners strip down homes, rip them apart and make them worthless… the bank loses. If they help the owners lower mortgages and keep the home… BOTH WIN.

The heyday of never ending rivers of money have hit the mother of all droughts. And two outcomes are for certain… homeowners & banks work together to survive… or they both will go down hard and fast… everyone loses. -Choose : ANONYMOUS

Well said ANONYMOUS.  If you comment and we post it we’ll send you a free 1/2 ounce silver round just for responding.  Shipping on us too.


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WHY YOU WILL PAY MORE IN PROPERTY TAX

BUYING GOLD/SILVER, GOLD & REAL ESTATE, GOLD AND MONEY   2 comments

Please raise your hand if you have extra money to pay more property taxes.  I have bad news in saying I’m 99% sure most of us will see an increase in property tax for two reasons.  If you’re reading this site asking where is the insight on buying gold and silver I understand the confusion.  For the record, The Prospector Site not only discusses the benefits of metal ownership but exposes why the old normal is driving the new normal into existence.

Owning gold and silver is not only prudent it’s necessary to keep wealth and possibly prosper.  As city, state, and federal governments see declines in revenue new sources of money are to be expected.  Today we look at two reasons why you will pay more in property tax.


I don’t want to waste space explaining what your property tax dollars do. The condensed version is your money funds public schools, roads, police & fire departments, and local government agencies.  Some counties also use the money on school lunch programs and other social entitlements. The truth is tax revenue is vital to keep government employees paid and programs moving forward.  But no agency can make you buy more stuff ( sales tax income), no agency can make you drive more ( gas tax income), and no agency can make you build more houses ( property tax income).  But what tax assessors can do is raise the amount payable for those still paying, aka you.

REASON #1:  HOUSING BOOM & BUST

The housing boom will go down in history as the largest economic expansion in US history. Trillions of dollars created as folks from all walks stood in line to buy overpriced housing.  Farmland turned into multiple phases of new home developments nearly overnight as America enjoyed wealth and prosperity like it would never end.  New city halls, more plan checkers, more building inspectors,  and more city/county vehicles all needed to service the new housing gold rush of our century.  Fees and tax money flowed like two dollar wine as all America grew drunk on cheap and borrowed money.  From Wall Street’s mortgage-backed securities to Main Street’s prosperity the shoe quickly dropped leaving no one unaffected.

Just as some asked if it could last it didn’t leaving millions of folks owning homes far less valuable than encumbered. What once looked like a solid source of saving turned into an unpaid liability sinking further in value.  But all the above agencies still need fresh revenue to fund payrolls and pensions.  Government agencies expand quickly but decline slowly leaving you targeted for more revenue.  You will need to pay more or risk branded as in compassionate and unpatriotic (not opinion but fact).

REASON #2:  REAL ESTATE OWNED (REO)

I hadn’t heard the term shadow inventory until a couple of years ago.  The definition, as I understand it, means homes owned by somebody but not being paid on.  This odd transition between bank owned (foreclosed) and owner occupied leaves millions of houses lived in but not paying taxes or mortgages.  Nearly every city in America is experiencing record levels of homes owned by banks or in shadow inventory but not paying property taxes.

With fewer paying property taxes the answer is obvious at least for those willing to admit it.  You, unless you walk away, are expected to take part in the revenue shortfall by paying more property tax. But before you write another check let me ask you something.  Isn’t it true that city and county assessments are based on property value?  Isn’t also true property values country-wide are in decline?  How can your property tax bill increase if your property is in decline?  Get ready for another new word, for some of us, called supplemental property tax.

You may be thinking all this doesn’t pertain to you since you gave up home ownership and now rent.  Well not so fast as landlords realize cash flow is only positive if someone else is paying expenses.  Expect your rent to increase to offset all supplemental property tax increases soon.

So many of today’s economic obstacles point to the value of gold and silver ownership.  Of course owning gold will not keep your property taxes down but what owning metal will do is stabilize your wealth in uncertain times.  The majority of those working for cities and counties are good people caught in a trap of economic correction.  Most only want what was agreed on in the first place.  The problem is the agreement is not an option anymore because we are broke. As the size of government contracts all Americans should expect creative ways for government to tap into your wealth.  It is imperative to preserve what wealth is left by owning real assets like gold and silver.


READER QUESTION:  Why is gold going up and real estate values going down?

ANSWER:  Great question.  Real estate should not have gone up like it did.  Only because of cheap and easy credit did values grow at least in most markets.  This false appreciation is causing a huge over correction leading to an undervalued real estate market.  If you can buy far less than you can build the market has over corrected at least in my eyes.  I have no idea how far down the real estate market will drop but it still is in decline in most markets.

Gold is another story.  Gold has an increasing interest as a source of real money.  People worldwide are realizing printed money like dollars, yuan, yen, euro, pound, etc are becoming more worthless as governments answer budget shortfall by printing more money.  Gold and silver cannot be printed therefore they are becoming the benchmark of asset values.  Please look into owning gold or silver or both sometime soon.

Thanks for reading The Prospector Site.  Feel free to sign up for our online newsletter here if you would enjoy more articles like this one sent straight to your email.


NEWS WORTHY:

Continuing a theme that is being repeated in counties across the country, Pinal County is joining the ranks of other counties that are raising property tax rates in a declining housing market.

Pinal County officials placed most of the blame for this year’s property tax increase on the state and federal governments for putting the county on the hook for unfunded mandates – programs the county is required by law to implement but does not receive adequate funding for from the State of Arizona or from the federal government. VALUE APPEAL BLOG.  Read it here.


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