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Archive for April, 2012

GOLD’S HOUSE of CARDS

BUYING GOLD/SILVER, GOLD & REAL ESTATE, GOLD AND MONEY, SELLING GOLD/SILVER   No comments yet

The run to gold is not brisk nor is it calculated, not yet at least. Unlike real estate, PM (precious metal) doesn’t have the luxury of artificial support funded by taxpayers; this is a good thing as you are soon to see. Some of you are growing discouraged with silver and gold because you perceive them as declining, this is far from the case. You want metals to rise, in dollars, each day or week no less. Since silver and gold stagger sideways more than forward, at least of late, some are beginning to question the two metals. My goal each week is to restore faith for some and make PM noticeable for others.


Gold’s (I often say gold to save space but silver is usually included by assumption) organic growth is nothing like real estate past or present. Today’s RE (real estate) market has me very concerned for those banking on housing values to return in order to fulfill lifelong dreams and plans. The Reuters article below explains my concern better than I.

REUTERS: Falling Home Prices Drag New Buyers Under Water

Reuters- April 26, 2012: More than 1 million Americans who have taken out mortgages in the past two years now owe more on their loans than their homes are worth, and Federal Housing Administration loans that require only a tiny down payment are partly to blame.

It is a sobering indication the U.S. housing market remains deeply troubled, with home values still falling in many parts of the country, and raises the question of whether low-down payment loans backed by the FHA are putting another generation of buyers at risk.

Many borrowers, particularly since late 2010, thought they were buying at the bottom of a housing market that had already suffered steep declines, but have been caught out by a continued fall in prices in wide swaths of America.

“I’m at least $80,000 under water,” Opalka told Reuters. “We never expected to go under water. We never expected prices to fall like they have. We definitely didn’t see this coming. If I’d known this, we probably would have rented.”

“The overwhelming majority of the U.S. is still seeing home prices decline,” said CoreLogic senior economist Sam Khater. “Many borrowers continue to be quickly wiped out.”

“This is creating a new wave of underwater borrowers,” said Gary Shilling, a veteran financial analyst and well-known housing market bear. “We have all three branches of government trying to keep people in four bedroom houses who can’t afford chicken coops.” Read more.


PROSPECTOR: We are truly living history by fulfilling the Chinese proverb “may you live in interesting times“. But this prophetic wish is turning into a nightmare for those rushing blindly back to RE.

I have said it many times that I’m a huge proponent of housing far over silver and gold. I also perceive RE as a great asset over the long term, but. The problem is most can’t differentiate short term from long term because values are often compared to recent high water lines.

Tim Reid’s article above explains why a home once worth $400k but now selling for $275k is not necessarily a bargain. I won’t attempt to define a housing bottom and do believe market values vary greatly from region to region. What I do know is artificially supporting values with FHA low down financing is doing no one any favors, except for gold holders.

Regardless if your wealth is in gold or housing you must recognize how FHA, Freddie, Fannie, etc play into today’s scenario. All governmental efforts to backstop housing are stimulus and do add to the national debt (the debt your children and theirs will face for a lifetime).

Two questions must be answered before you invest another dime in housing.

  • Are low-interest rates reason enough to buy?
  • Can you handle paying on an asset worth less than encumbered?

The worst is not the fact housing is dropping in dollars. The worst is housing has tumbled in gold’s measure of value. This is why a home once worth 700 ounces of gold is now worth 100 ounces (85% loss by gold’s standard).

The paragraph above is why I have little concern if my pile of coins increases in dollar terms.  If your PM faith is based on gold growing in dollars then I strongly encourage you to reconsider. Think of gold as a yardstick able to measure all other asset values. Yardsticks do not grow in length.

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COMMENTS & QUESTIONS:

Hi, I have an account at bullionvault.com. Just wanted to add something. When you say in your 25th April post “Fees to resale are non-existent too”.

I have had a very positive experience with bullionvault.com but there is a commission that charges 0.082% on every transaction whether it is to buy or to sell, gold or silver.
After trading at least 30000$ the commissions drops to 0.02%

I will look forward to read your e-book.
Thanks

PROSPECTOR REPLY: Oh boy, thanks for pointing out my mistake. Also, thanks for mentioning Why Silver & Gold Will Go Higher (still looking for those interested in  receiving a free copy and willing to post a comment/review). Thanks for clarifying BullionVault commission structure.

QUESTION:

QUESTION: Thank you very much for answering my earlier query about exit strategies for precious metals. I hope all your readers are treading the path towards financial safety that you advocate. My question today pertains to the ultimate purchasing power of precious metals in the long term.

I have no doubt that the price of gold and silver will rise remarkably in nominal price terms in an inflationary scenario. However I am concerned that world governments would also raise taxes on capital gains. Mathematically speaking, in an inflationary scenario, since percentage tax rates only see nominal gains made when you sell, even if precious metals prices ascended to magnificent highs in fiat currency amounts would you also not lose a tremendous amount of your gains to the governments?

For example, if the US dollar were to lose half of its existing value and gold were to double in price then we could say that gold has preserved its purchasing power and fulfilled it’s role. However once we take taxes into account, we now have to pay a significant amount on the gain that we have made when we sell thus making us poorer in real terms. Therefore it can be argued that the higher the price of gold in a hyperinflationary environment, the worse we are taxed and the lower our purchasing power.

I have no doubt that this system is deliberately set up so as to increase tax revenues for governments while they devalue their currencies. I was wondering what your solution to this would be. Undoubtedly, those who don’t buy precious metals and keep their money in fiat currency would be far worse off mathematically speaking as their savings would be wiped out by hyperinflation. But having made a great investment decision to buy gold and silver and still come out poorer in real terms would be very disheartening I would think.

One strategy that might work alongside a precious metals investing strategy might be to use the current low interests on home loans to have long-term fixed rate mortgages on property. This way, in a hyperinflationary environment, we would be paying off our mortgages with worthless dollars for years to come and our mortgage burden would be declining over time in real terms while we acquire real assets. Furthermore, we could use the tax breaks associated with property to counteract the tax burden upon selling precious metals.

This is the only option I can see working in tandem with buying gold and silver. Unfortunately I am not based in the US and are therefore unable to take advantage of your fantastic low-interest mortgages! In most other parts of the world there are no such things as long-term fixed rate mortgages. There are only variable interest rate mortgages which can be very dangerous as your interest payments are at the mercy of banks. In Australia which is where I am based, some banks have defied the central bank and raised interest rates even as the central bank lowers them which further illustrates my point!

Anyway, I am sorry about the long post. I just thought that most of the queries on your site are related to the initial tentative steps to buying gold and silver and while I am happy that so many people are making the right decision to buy, at this point in time I’d like to get your opinions on circumstances that are likely to surround the end game for those of us who understand why we’re buying but are keen to come out on the other side wealthier than what we came in with.


PROSPECTOR REPLY: Thanks for the comment and question. Although complex, your comments are always appreciated. You are 100% correct but miss one very important aspect of your real wealth less taxation equation. I totally agree taxation will rob much wealth from gold holders (all wealth holders in fact) but rarely lose sleep over this most likely scenario, here is why.

For all the reasons you allude to, wealth will soon transfer to a few real assets or simply disappear. Let’s say the wealth that disappears equals a loss of 80% to an investor. Now, let’s say your loss from taxation equals 50%. My question, which is better off, the investor losing 80% to inflation or the PM investor losing 50% of profit to taxation?

Making money and keeping it is the ultimate team sport. Your exit strategy from PM must include a solid team that includes a like-minded tax professional. Timing this exit is a combination of monetary advancement and a period of soft taxation, at least in my opinion.

You mentioned real estate’s tax advantages. I agree that real estate offers many tax advantages but don’t agree that the US’s “fantastic low fixed interest rates” are advantages. These rates only suspend housing values beyond true market value. Today’s post speaks candidly about such false bottoms of value.

Your PM knowledge is as vast as any reader I’ve heard from. In fact, I would say you’re at mile (sorry km) marker 98 when the rest are just entering the race. You have made wise PM choices so enjoy the ride, and keep commenting too.

Oh, one other thing to recommend. Try reading Daniel R. Arman’s Inflation & Hidden Gold Taxation for more info.

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WHY YOUR GOLD WILL RISE

GOLD & SILVER, GOLD AND MONEY   No comments yet

Here at The Prospector Site we take a non-typical approach to PM (precious metals). Our approach goes beyond asking if silver or gold will rise, our approach promotes an understanding of what influences PM to rise. Today’s news offers a perfect example of such an influence and I want to share it with our readers. I’ll try to keep it short, and simple, since we have lengthy comments and questions.

In typical fashion, I want to pull a news headline as one of many examples why PM will increase. If you’re one of the millions watching PM from the bleachers please pay close attention.


CNBC: Student Loans: The Next Bailout? ($1 trillion & rising)

Here’s what we do know about student loan debt: it’s roughly $1 trillion in size, greater than either auto or credit-card debt and second only to mortgage debt in the U.S.

Borrowers in their 30s today owe $28,500, on average. The debt burden has soared just as — and partly because — the recession hit, so younger graduates carrying the highest balances are hit with the double whammy of a weak job market (that still isn’t showing any sign of rapid improvement).

Not surprisingly, young, heavily indebted grads are calling for forgiveness in full or in part of their student loan burdens. Petitions on advocacy website Change.org include calls for federal student loan interest rates to be capped at 3 percent or eliminated altogether. (Indeed, President Obama is currently among those urging Congress not to allow the interest rate on federally subsidized Stafford loans, which are aimed at low — and middle-class borrowers, to double to 6.8 percent on July 1, matching the rate for unsubsidized loans.)

Levying an “education tax,” making college free and assigning students to institutions based on a lottery system? Abolishing “college” altogether for more specialized trade institutions instead, while at the same time requiring a “gap year” of liberal arts prior to entry? Offering high-school grads the choice between student loans or business loans to fund new ventures? These all seem ridiculous, but then so too is our current state of affairs. Read more here.

PROSPECTOR: I am willing to bet a bullion ounce of gold that student loans join the bailout list! My interest is to not argue bailouts or “education tax”, my opinion only relates to how this affects your hard-earned stash of silver and gold.

Let’s answer why this is so very significant now. This bailout is eminent, and planned for. The US government took over student loans early 2011 knowing this insurmountable debt wave is crashing.  The question if it’s politically motivated is one I’ll pass to you. Again, my motivation goes no further than a PM observation.

Let’s look at how such a bailout affects silver and gold since I see two major influences. We know for sure that a rising national debt also raises gold prices (both are now in lockstep, see chart below). A trillion plus of student loan debt will push our current debt ceiling beyond congressional approval. This means more room necessary for student loan debt.

Secondly, the trial balloons are afloat for all to see. College education is the next health care type government absorption, I see no way politicians will let education sink. This means more taxation for those willing to get out of bed and work, how can it not? The question is how will more taxation affect PM?

Political forces realize taxation increases must accompany creating more national debt (deficit borrowing). But economists know too much taxation stimulates an internal urge to protect individual wealth. This is why good folks in Europe are using silver and gold as savings type accounts. This trickle up taxation (inflation) will ultimately apply pressure to a very limited supply of physical silver and gold.

Not one realistic mind expects government to spend within budget, they never have. A “coming soon” taxpayer-funded fuel for education will certainly be no different. Please add student loan bailouts and eventual government sponsored education to the growing list pushing silver & gold higher.

If you have an interest in WHY SILVER & GOLD WILL GO HIGHER please read closely. I’M LOOKING FOR A FEW READERS WILLING TO READ THE BOOK AND THEN COMMENT/REVIEW (your identity protected, of course). Contact me here if interested or if you have questions, thanks for those who have responded.

COMMENTS & QUESTIONS:

COMMENT: I just happened to stumble across your site today and, since I recently decided to take the plunge into buying physical PMs, I’m finding your site very informative and helpful.

I must say, that the global economy has recently become a very scary place for me.  Until the past few weeks, I hadn’t even been aware that the situation was so dire.

However, I happened to stumble across an article about how crazy insane our country’s debt was and it propelled me to start investigating how such a thing was possible.

In short, I’ve been educating myself over the past few weeks about fiat currency, inflation and monetizing our debt.  The information I’ve gathered has ranged from wildly optimistic that our economy is in recovery to doom and gloom.

I’m trying not to let emotion and hysteria overwhelm me.  Fortunately, I had enough put by to pay off all my debt, including my house and vehicle and still have money to invest in.  At this point, I’m highly uncertain about getting into the market but have started to purchase physical gold and silver.

I haven’t purchased very much yet but this site makes me feel a little better that I have taken a good step in the right direction in protecting myself in, what seems to me, a very unstable and scary world.

I appreciate you for taking the time to give sound advice to novices, such as myself, and will make sure to visit your site everyday and keep on educating myself.

Thanks so much for what you do.

PROSPECTOR: Thank you for the nice email and taking the time to comment.  In my opinion, you are the new precious metal face. You’re no longer accepting more borrowing fixes a debt problem, no longer willing to believe the nonsensical. Congrats to you. I love your point to “keep on educating myself” since this is the key to understanding and then entrusting PM.

Each reader holds the one piece to the puzzle layered in emotion. Although I’m confident PM will rise, the one missing link is the emotional trigger each of you holds. You, by your comment, have reached the triggering point and now ready to investigate a nontraditional monetary approach. Timing this revelation is impossible.

You have come a long way in just a few weeks so keep up the good work.

NEWS WORTHY:

I want to hold the other comments and questions until Monday to make room for this interesting gold related article, sorry. It is definitely worth reading especially for those interested in rising metal prices.

Harvey Organ: Get Physical Gold & Silver!

CHRIS MARTENSON.COM: Harvey Organ has been analyzing the bullion markets closely for decades. The quality and accuracy of his work is respected enough to have earned him an invitation to testify before the CFTC on position limits for precious metals back in 2010

These guys would go around to the mining companies and say, “Listen, I’m going to pay you for your gold in the ground and I will sell it. You just pay me as you bring it out.” So that was cheap financing to the miners. Barrick, the biggest mining company of them all, went in on this and it financed a lot of Nevada projects.

So right now, people are going to say: how high can it go? And I’m going to tell you: you are going to go to sleep on Thursday night and gold may be $1,670. And then you wake up the next day and it’s going to be a banking holiday. And gold will be $3,000 bid, no offer. No offer — and it will be a banking holiday. Because there will be a failure to deliver.

You’ve got to have physical coins or bars. If all you have is a piece of paper — that’s all it is!  It will just blow up in smoke. Read more here.

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NEXT CHAPTER FOR GOLD

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

The precious metal world is changing at an alarming rate. One benefit of founding a site like the one you’re reading is the ability to see a worldwide stage, not just my neck of the woods. My goal is to provide clear concise PM (precious metals) information and then justify its worthiness backed up by today’s current events.

In my opinion, never before has silver and gold been so significant.


Most readers still wake up each morning looking for validation to buy some, or more, silver and gold. This validation is usually based on PM’s moment in time. Today we will provide several world events providing such validation with hopes more take notice how only real assets, like silver and gold of course, will hold necessary value during a time of worldwide fiat debasement.

I realize many are new to PM thus my goal is to simplify metal as much as possible.

Everything should be made as simple as possible, but not one bit simpler. Albert Einstein

SPAIN BANS CASH TRANSACTIONS:

THE DAILY BELL: Spain Bans Cash Transactions Over 2,500 Euros … Spain has outlawed the use of cash in business transactions in excess 2,500 euros in order to crack down on the black market and tax evaders. The motivations behind the push for digital currencies is exposed as Spain heads down the road of the Greeks in combating their sovereign debt crisis. As the government scrambles for every tax dollar it can get its hands on, even though they already gave every Spaniard $23,000 Euros in debt last year alone (approximately $32,500), they are now banning all large cash business transactions. Why? So they can track the transactions and make sure that people and business are paying taxes. Being able to track the transactions is also aimed to combat the growing black market in Spain. – Alexander Higgins’ blog. Read more here.

PROSPECTOR:  It is no wonder that folks in Spain have turned to a black market economy considering the level of taxation needed to support sovereign debt. Spain and Greece are nothing more than a snapshot of America’s tomorrow. In fact, they are a worldwide snapshot as governments fix debt problems with more borrowing and government overreach. Does anyone honestly believe more taxes on a global scale are anything but likely?

Folks, these economic corrections we’re discussing today are all caused from too much spending and excluding something restraining like a gold standard. This news is sad for the folks in Europe and, soon, very sad for the rest of us.

GREEKS TURN TO BARTER:

BBC NEWS EUROPE: A few months ago, an alternative currency was introduced in the Greek port city of Volos. It was a grass-roots initiative that has since grown into a network of more than 800 members, in a community struggling to afford items in euros during a deepening financial crisis.

“We have reached the bottom of our lives and we now have to think in a different way,” says Tasos, a vegetable-seller. Read more here.

PROSPECTOR: This article is nothing short of fascinating since it validates what we have written over the last 14 months. People do not collapse even though a currency does. They find meaningful ways to trade, regardless of euros, dollars, yen, yuan, etc.

We’ve said it before but it deserves mentioning again. Silver and gold are real money. They both will return to a worldwide currency but not before governments fight taxpayers to the end. The people will win and governments will reduce themselves to a realistic portion of our society and economy.

SHOULD WE RETURN TO A GOLD STANDARD?:

USA TODAY: SHOULD WE RETURN TO A GOLD STANDARD–But returning to the gold standard also has myriad problems. On a practical level, there’s not enough gold in the world to return to a gold standard — and no one else in the world is on the gold standard. By tying the value of the dollar to gold, the government cedes control of monetary policy, making it unable to increase the money supply in times of economic crisis.

The growing U.S. debt — $15.6 trillion, if you throw in Social Security and Medicare — is one reason people fear inflation and think that the monetary system is out of control. “Never in history have we run debts and deficits to this magnitude,” says Lance Roberts, chief economist at StreetTalk Advisors. “We’ve never been here before.” More here.

PROSPECTOR:  This article is worth reading two times if you ask me.  Why, because it validates how far removed we have drifted from individual economic independence? The article above mentions, “By tying the value of the dollar to gold, the government cedes control of monetary policy, making it unable to increase the money supply in times of economic crisis.”

Yes, absolutely correct. This is why it is so important to remove aggressive monetary capabilities from government. The choice is always to borrow and spend as long as borrowing is an option. Our worlds will not fall apart if government can’t expand the money supply.

Comments & Questions:

Question: Love the site but need some help here. My wife is convinced that spending our savings for gold is a form of investing. I say it is no different from a savings account outside typical banking institutions. We both agree gold is the best hedge for inflation but less agreeable where the money should come from.

It seems our world is hell-bent on printing money until it is as worthless as post WWII Germany.  Am I correct in believing a cash savings is far more at risk than a real asset like gold? She is having a hard time letting loose of our cash savings.

PROSPECTOR REPLY: Thanks for the question, and reading our site. Boy, regardless what I say at least one of you will not totally agree, sorry in advance. Here we go. She is correct that cash today is king. You are correct that over the longer term cash will continue to lose buying power (not sure if it will go into hyperinflation as you mentioned, it certainly could).

I suspect we will hear this same question many times over the next few months as families try to decide what the best protection for assets is, including a savings. I personally view money invested in silver in gold as a savings. This is the beauty of international storage facilities like Bullion Vault or GoldMoney. This new age savings account offers physical silver and gold at near spot prices. Fees to resale are non-existent too. The only real fee is a monthly storage charge (not much different from some banking accounts).

This type of gold savings (international storage facilities) offers the best of both worlds. Trading metal back into cash is as easy as selling some, or all, as and when you decide. The money is then wired back into the banking account of your choice. Trading gold back into cash is easily exchanged online.

One final thought. You both will know when the time is right to protect hard-earned savings with PM. Trust me, it will be soon, and she’ll need little convincing.

Just a reminder:

BE ONE OF THE FIRST TO READ MY NEW eBOOK ENTIRELY FREE!!  Why Silver & Gold Will Go Higher is almost available on Amazon, Barnes & Noble, and Apple but we are looking for book reviews/comments before it hits market. If you like to read, (150 pages) and want to learn more about why PM will rise, then send me an email here. Don’t be shy; we want to hear from folks like you.

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THE US DOLLAR EXPERIMENT

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

I want to jump in head first today but not turn this into a dollar history lesson. The issue today is more than our dollar’s decline since August 1971, the issue is the trend. Most of you already know these important related dollar events.

  • No gold standard today.  Up until 1971 our dollars were literally good as gold.
  • One USD was equal to 1/35 an ounce of gold prior to 1971. Today it is worth 1/1640.
  • Today’s dollars are not money but a currency of money or Federal Reserve Notes.
  • The USD now considered the world’s reserve currency, but!

Let me be clear, my only interest in the USD is how it relates to silver, gold, commodities, and other hard assets. I don’t own large sums of dollars, one hour on my website will explain why. My motivation behind today’s post is to urge all interested, or invested, to grasp the long-term dangers in owning dollars.

Lately, the internet is buzzing causing some silver and gold holders to question inventories, value, etc of both metals. This is what I refer to as a short-term focus with long-term consequences.  A true understanding of the dollar experiment offers PM holders the peace of mind to sustain belief and continue their PM course.

USD Misinformation:

Taxpayers spend 8 to 10 hours per day working to earn dollars (or your currency). The plan is to earn enough, after taxes, to pay bills, buy food and necessities, and hopefully save a few dimes for a rainy day. Now, here is the problem.

Just over these few minutes it takes to read this post our US Treasury will print (borrow/monetize) $30,000,000 in currency. This means it is highly unlikely you will earn enough dollars to keep up with those willing to print it into a state of worthlessness.

Borrowing too much currency always devalues the wealth held in currency. But wealth devaluation is a meaningless term for most of us so I want to expand by offering examples. Remember, these are real families just like yours.

Wealth Devaluation:

  • 50% of all Americans now live in poverty or considered low income.
  • Half of those are children.
  • Our middle class has declined by 35% since the USD gold standard.
  • The USD has lost 85% of its buying power since the USD gold standard.
  • The wealthiest 1% own over half of all US wealth.
  • The US buys over 60% of its own bonds to create more currency.
  • Gold has risen nearly 5000% since the USD gold standard.
  • Silver has risen nearly 1800% since the USD gold standard.
  • Nearly 50 million are on food stamps as you read this.
  • Student loan debt topped $1 trillion dollars this year.
  • Mortgages in jeopardy topped 12 million this year.
  • Wealth in real estate holdings lost $15 trillion worldwide.
  • Average household credit card debt is over $15,000.
  • Five of Wall Street’s largest banks now control over 50% of US wealth.
  • The US national deficit is just under $16 trillion US Dollars.

We must put the above information into perspective. A family relying on dollars will watch wealth decline until reaching a level of poverty. This is not my opinion. These are the facts as proven above. Wealth moved to gold has grown by nearly 5000% and wealth stored in dollars has declined by nearly 85% (over same time).

This tells all who will listen that the great fiat dollar experiment failed. The only way to continue the facade is by printing and borrowing more debt to pay on old debt. Again, percentages and numbers can be misleading so let’s put this into real context.

We know the USD has declined around 85% since the gold standard days. This means the same amount of money able to pay cash for a new 1970 car is now nothing more than a new car’s down payment. But, the same amount of 1970 gold will buy nearly 8 new cars today.


THE GREAT WORLDWIDE AWAKENING:

For those still pondering a failed dollar experiment I would like to pass along this fact. Storage services offered from GoldMoney, Bullion Vault, GoldRepublic, Global Gold, Gold Bullion International, Everbank, etc validate a transition from dollars (currency) to real money like silver and gold.

Let me explain it like this. A loss of fiat faith (currency) feeds the growing numbers using a vault service just like a savings account. Make no mistake, international vault services back up all wealth in real silver and gold. This allows each investor to hold wealth in metal until it’s time to exchange wealth back into a currency.

Investors, aka saver, from all walks of life can store wealth in Zurich, London, Hong Kong, and New York regardless where they call home. Better yet, savers can store wealth outside of government and banking establishments too.

We know the dollar experiment failed by the billions in wealth relocating into international vault systems like our examples above. What do you think will happen to a debt based economy (depending on a fiat currency) as more realize services like above exist?

If you would like more information explaining how to relocated wealth, or trade currency for silver or gold, contact me  right here to further discuss. I do not represent anyone selling or storing silver and gold.  I represent only one person, you the client.

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THE SILVER & GOLD EXPERIMENT

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

EXPERIMENT: A test, trial, or tentative procedure; an act or operation for the purpose of discovering something unknown or of testing a principle, supposition, etc. DICTIONARY.com


Very interesting news came from the Perth & US Mint regarding recent bullion sales. For those who don’t know, the US Mint is a good indicator of bullion volume within the USA. Bloomberg circulated an article assessing why American silver and gold bullion sales dropped year over year.

Their (Bloomberg) research shows gold off 15% and silver bullion (sales) off an unbelievable 77% year over year.  This is probably not news your local bullion dealer will pass along voluntarily. My interest goes no further than finding the facts since I sell neither.

Your decision to or not own precious metals is not determined by a Bloomberg article.

The article’s writer attributes this decline in bullion sales to a renewed economic optimism. The words “accelerating economic recovery” are eye catching, at least to those living in a realistic world. For the record, bullion sales are booming in most countries.

The problem is, at least my opinion, silver and gold bullion is too cheap!

Yes, you read it correctly. Silver is off the most because it is far cheaper than days of not so long ago. Gold (US bullion sales) is off around 15% because gold priced in dollar has risen in 2012 but far below its high water mark of last year.

Let me further explain. The masses view silver and gold as a monetary experiment. Sure fear gripped most of us in 2008 as we watched stock markets worldwide tumble like Olympic gymnasts.  This fear or uncertainty forced each to evaluate just how safe their wealth holding assets really are. But these days are over, right?

Americans now view silver and gold with pessimistic eyes. I find it odd that gold suffers from pessimism while fiat dollars are in great demand. This is only true because of greedy con men dressed like bankers and politicians.  Today’s media are lockstep with each overly optimistic story of recovery.

Precious metals are not good debaters. Neither silver nor gold will challenge a status quo willing to believe all is good enough to continue forward with “normal”.  I must declare PM the loser of this round, sorry.

But this fight takes places in many arenas around the world. Nearly all arenas view silver and gold differently than the US. The world views silver and gold bullion as discounted or on sale, definitely necessary.

What is up in America?

American’s will not rush into PM until prices begin to soar, again.  Why pay $34 an ounce for physical silver when you can wait and buy it for $50 plus? The great bubble economy leads most to believe an asset as valuable only when rapidly appreciating. Few think to ask what is driving an asset bubble.

Have we become a country of followers no longer willing to decide for ourselves what is worthy or not?  I’m not sure how many times we can fall for yet another Yahoo! article describing a housing/economic recovery?

The silver and gold experiment will only find validation when prices begin to climb, again.

BE SURE TO SEND OVER QUESTIONS OR COMMENTS RIGHT HERE.

COMMENTS & QUESTIONS:

QUESTION:  How much silver is enough? I have spent many hours researching precious metals and now agree endless printing will devalue a savings in dollars. What I’m not able to find is someone willing to say what percentage should be in silver or gold. Any ideas?

PROSPECTOR REPLY:  Thanks for the great question. Congrats for making what I feel is a very wise commitment to physically own silver and (or) gold.  You are correct, endless printing is now necessary to sustain worldwide economies. This punishes savers considering endless borrowing requires central banks to keep interest rates near zero.

Actually, printing our currency into worthlessness is one of only about six factors sending silver and gold higher. Regardless, let’s get back to your how much is enough question since it is one all newbies ask. There is not an industry standard, sorry. Why, because your financial situation is unlike anyone else?

Readers in Europe are replacing savings with PM. Readers in China are swapping new wealth with gold hoping to prosper even more. Readers in India buy gold understanding it will cost more in the future (prepay gold for future weddings/jewelry).  Readers in the US mostly watch the rest of the world buy PM not sure what to do.

Here is what you must ask. What level of confidence do you have in dollar backed assets? Is it worth selling something in decline (asset) using this new liquidity to buy silver or gold?  Do you view trading currency for PM as a source of saving?  If yes, how much money (PM) do you feel should be in savings? You can always add more PM to your stash, for now at least.

Silver or gold are but only one part of an overall financial plan. Are you trying to preserve wealth or build it? Is your plan to leverage metal into a home, retirement, or cash?  My suggestion, at least, is to view silver and gold as an insurance policy.  Couple hundred ounces of silver is what I consider a minimum. Hope this helps and thanks for visiting our site.

QUESTION: What about starting out with a few grand of silver bullion?

PROSPECTOR REPLY:  Thanks for the tiny question. Anxiety is a word often mentioned with PM newbies looking into a first purchase. Silver is a perfect gentle entry into PM since it takes only a few bucks to own. Starting with silver bullion, rounds, and bars builds confidence by way of experience. Don’t forget to consider using a local coin shop or a user-friendly online bullion dealer.

Start with a few hundred dollars (your currency) or a few thousand, it really doesn’t matter. Once you physically touch silver or gold only then will you truly understand real money.

Be sure to check out The Prospector Site this Monday when we address the Dollar Experiment, see you then.

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TWO FACES OF SILVER & GOLD

GOLD & REAL ESTATE, GOLD AND MONEY, GOLD/SILVER COINS, SURVIVAL & GOLD/SILVER   No comments yet

You know who you are, to be honest; I know who you are too. Well, I have it nailed down to one of two choices. There are only two faces of PM (precious metals), owners that is, and each one motivated to own silver and gold for opposite reasons. One side is more vocal, aggressive, and independent if you will. The remaining side is calculated, confident, even consuming. The one thing both sides have in common is the desire to amass as much silver and gold as possible. My view, I think both sides are very wise in the last regard.

Just to simplify let’s break each side into type one and type two. It makes sense to start with type one since I hear from this type most often.


Type One Silver & Gold Holder:

Last week’s post Rivers of Silver found favor among this type. In fact, tens of thousands read the post and we heard from readers around the world, thanks. Regardless of location, regardless of motivation, all comments sounded similar.

In case you missed Rivers of Silver, we peeked into silver’s future and into a time when one ounce silver is no longer affordable to the masses. An age of expensive silver justifies fractional coins, bars, and rounds for trade and affordability.

Let’s get back to type one PM holders. Better yet, let’s let them speak for themselves.

“If you don’t hold it, you don’t own it”…

or

“What the future holds?…well….get ready today for the way that you want to live tomorrow.”

or

“I will only release coins to jump start the barter system and for the black market because sooner or later…”

or

…”the answer is to use real money, money that is just as good in China as it is in the USA.”

and lastly

“I wish we didn’t have checks, much less plastic, I hate paper trails… : )”

Type One metal owners see the end of this debt debacle as nothing short of a full dollar collapse (nearly all currencies). The plan is to hold something of monetary value which will someday function as money. The plan is to trade silver coins for eggs, milk, bullets, or whatever necessary.

This type doesn’t necessarily view silver as a wealth transport but a tool to barter or trade. This type doesn’t trust government and is very unhappy with our loss of liberties. They view the world as distracted, off course, maybe unwilling to accept the inevitable economic collapse.

Some still own silver they bought for $3 or $4 or $5 per ounce. This type owns fractional silver fully understanding silver trade and barter. This type is not wealthy but they are prepared, prepared for whatever comes their way.

Type Two Silver & Gold Holder:

This type views trade or barter silver as background noise, maybe necessary or maybe not. They own silver and gold with no interest in how it has appreciated but more concerned with how it will appreciate. This type includes those interested in wealth preservation and wealth accumulation. They make comments like the following.

“…your view on storing gold in Zurich?”

or

“Junior gold mining stocks are….”

or

“Please discuss transferring an IRA into silver or gold…”

They view silver and gold as part of an overall wealth building plan. They see real estate as cycling downward while PM cycles opposite. They understand wealth cycles, recessions, corrections, depressions, and eventually recovery.

This type is less fearful and more calculating, economically speaking. They want what is best for their family but themselves too. They see opportunity over protectionism.  This type will continue to buy silver and gold only until they see the next under priced asset.

WHAT ABOUT YOU?

Here is what you must ask.  Are you trying to preserve wealth or planning how to feed your family when eggs cost $65 per dozen? Aren’t both necessary?

Both sides bring something beneficial to today’s PM table that I want to point out. Type one, they are unassuming and survivalist. We all can learn from their ability to prepare for an uncertain future. They are a growing minority.

Type two offers yet another aspect we can all learn from. Unlike type one; they understand a need for cash flow or fresh income. PM used for barter and trade work well but eventually consumed. Cash flow fills the coffers like a year around stream. Type two understands leapfrogging wealth and the need to transport by way of silver and gold.

Here is what both types should also understand. Silver and gold offer many benefits to those who willingly trade currency for real money, but nothing more beneficial than a hedge value or insurance value. I truly believe both metals offer protection against monetary miscues and fiscal irresponsibility.

At this point some are asking, “Ya, so what, what does it matter as long as I’m protected with PM?” You are correct, kind of. We often hear from PM newbies and all ask the same questions on what, when, and where to buy. Just as necessary is the need to pinpoint your PM objective.

Just like a percentage of wealth should rest in silver AND gold, so should a plan include preparedness (type one) and wealth preservation (type two).

The final question is one only you can answer. Where do you fall?

WE WANT TO HEAR FROM YOU. SEND YOUR COMMENTS AND QUESTIONS TO US RIGHT HERE. DON’T FORGET TO SIGN UP FOR OUR FREE ONLINE NEWSLETTER TOO. THANKS FOR FOLLOWING THE PROSPECTOR SITE.

COMMENTS & QUESTIONS:

COMMENT (Regarding Rivers of Silver post):

I think you’re right. Fractional silver could very well become a necessity before we know it. Which reminds me that China’s currency used to be silver. I wonder how much they hold now?

You answered very well the argument of why gold and silver will be important when the current system fails. I get a lot of people who say to me you can’t eat gold or silver and live, so it’s better to stack no perishables and learn to grow. But those people in the big cities, in the apartment complexes, they are not going to be able to grow enough to live on other than some herbs in a window.

PROSPECTOR REPLY:  Thanks for the comment, and observation. Correct, most no longer have option to farm, raise cattle or chickens. This has changed over the last 100 years as folks migrated to the comforts of big city life. This migration also created an assumptive nature as we find ourselves dependent on passive services.

Silver and gold offer a fresh level of independence. Like our big city migration, our wealth has migrated too. Unfortunately, this wealth migration has allowed those less than trustworthy entrusted with our savings and retirements. It is now estimated that 56% of America’s economy rests in five Wall Street banks, the same ones too big to fail (joint bank assets compared to a percentage of US economy).

A wealth migration into silver and gold could come quickly or not, we just have no way of knowing. It will arrive and when it does the premium for PM will rise beyond what most can imagine. Now might be a good time to plan for such a time.

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RISING RISK OF HOME INVASION

BUYING GOLD/SILVER, GOLD & SILVER, SECURING GOLD & SILVER, SOCIAL UNREST   No comments yet

We spend a great amount of time discussing PM (precious metal) security/storage. One glance at today’s headlines show why.  I will not approach today’s topic as an alarmist, this does little good. The objective is to provide several options making you as comfortable as possible storing PM at home. You are forewarned, we will provide disturbing examples of exactly how brazen home invasion is today.


We are long past the age of solely relying on a gun safe to protect in home valuables.  Although part of a plan, stand alone PM protection can no longer be viewed as one dimensional. Of course, the odds are you’ll not be victimized by home invasion, but do you really want to chance it?

The facts are home invasion crimes are a growing problem thus requires a progressive plan of protection.  Here are but just a few facts.

  1. Home invasion crimes are not limited to big cities.
  2. Home invasion crimes are not limited to elderly or single women.
  3. Home invasion crimes are not limited to evening hours.
  4. Home invasion crimes are on the rise.
  5. Worsening economy equals more risk.
  6. Rising PM values equals more risk.

ROMEOVILLE, Ill. (CBS) April 12, 2012 A 99-year-old woman was duct-taped in a chair and attacked in her own home in southwest suburban Romeoville on Wednesday (along with her son).

Ann Budzinski, who turned 99 on Saturday, talked to CBS 2’s Dana Kozlov on Thursday about what the three attackers did to her and her disabled son over the weekend.

She said one of the attackers grabbed her forearm and pushed her down.

“Then I noticed I was bleeding,” she said. “I figured I better not scream or nothing, because you don’t know what they’re gonna do.”

He said one of the attackers had come to their door around 1:30 p.m. Wednesday, claiming he needed to check the water pressure at their house. When he tried to shut the door on that man, two others helped the stranger barge into the house.

“I had a stick there with me that I use when I go out, and I was going to hit the guy with it,” Ann said. “That’s how he grabbed me, and he pulled me. Then I almost fell down, then he pushed me on the chair.”

James said the robbers threatened to kill them if they didn’t tell the trio where they kept their safe or jewelry.

“I said ‘We don’t have any, we’re on Social Security,’” he said.

“It scared me, but it didn’t hurt, and I guess I felt kind of numb,” his mother said.

The Budzinskis said the intruders were at the house for about 25 minutes, ransacking the home for valuables, stealing some plastic costume jewelry and cash from a recent garage sale.

Ann’s arm was cut in the attack, but – even at 99 years old – she said “I feel fine.” Morehere.

Below is one last example of home invasion risk. Please be warned this one is disturbing and some readers will find reading very uncomfortable.

Second Example:

Source: COIN CRIMES February, 2012Robbery of a gold coin collection worth an estimated half-million dollars was the apparent motive when intruders slit the throats of three people, killing two men and critically wounding a woman in their Gonzales home over the weekend, the Ascension Parish Sheriff said Sunday.

Businessman Robert Irwin Marchand, 74, and his stepson Douglas Dooley, 50, were killed in their home at 39122 Babin Road, said Ascension Parish Sheriff Jeff Wiley.

Marchand’s wife and Dooley’s mother, Shirley Marchand, 72, was “clinging to life” Sunday as she underwent emergency surgery at a local hospital, Wiley said.

The brutal slayings probably occurred between 12 a.m. and 10 a.m. Saturday, Wiley said.

 

Sheriff’s deputies went to the home about 10 p.m. Saturday to check on the Marchands after Dooley’s wife, who lives in Tennessee and speaks daily with Dooley, had been unable to reach him for more than 12 hours, Wiley said.

When deputies received no response at the door, they peered through the windows, Wiley said, noting nothing out of the ordinary — and no signs of a break-in — until they came to an office on the far left side of the house where they saw three bodies covered in blood.

Deputies forced open the door and realized Shirley Marchand was still alive, Wiley said. All three victims were fully clothed, and each had signs of trauma on their bodies, indicating the intruders used a “blunt object” as well as a knife, he said.

“This department is working non-stop to identify and capture the killers,” Wiley said.

Though Marchand’s critical condition prevented her from being able to speak with police, investigators are reviewing footage from three surveillance videos in the area, Wiley said.

“We’re not at a standstill by any means,” Wiley said of the investigation.

There are a few clues that lead police to think the intruders may have known the victims, he said.

One clue is that the house had no signs of forced entry, which could either indicate the door was left unlocked, or that the victims had willingly let the intruders in, Wiley said.

The sheriff said that detectives believe there was more than one attacker, particularly because Dooley was a large man and would not have been easily subdued.

But the primary clue, Wiley said, was that the intruders had known to take Robert Marchand’s safe, which contained hundreds of thousands of dollars’ worth of gold coins, while a desktop computer, laptops and cellphones in the house were left untouched.

Robert Marchand’s gold coin collection, which included coins that dated back to the 1800s, was divided into five “groups,” Wiley said. One of the groups was known to be worth $104,000, he said.

An outsider would have never known that the Marchands’ modest home contained an estimated $500,000 in gold coins, he said.

“It was clearly not random,” Wiley said. “We think it had to be planned.” Read more here.

YOUR PRECIOUS METAL DEFENSE PLAN:

DISCRETION:  Think about this for a moment. Someone else always knows when you store PM in home. This person, or persons, is usually trust worthy but an acquaintance, cousin, relative of a cousin, or friend, possibly not as reliable.  Your first step against home invasion begins with discretion when buying, storing, and selling.

Never buy face to face unless trading at a trusted coin shop or show. Never use social networks or sites like Craigslist to buy or sale PM.  Always use prudence before, during and after the sell.

STORING:  We are soon to release an e-book called STORING SILVER & GOLD (June 2012) here at The Prospector Site. The research invested in preparing for such a book release was nothing short of worthwhile.

Your storage plan must include multiple levels of safe storage practices including three or more storage options. We have no way of knowing for sure but our suspicions are over 75% of all physical silver and gold stores in owner’s homes.  If this includes you please read closely.

Thieves, home invaders if you will, all have a few things in common. They want to leave with something perceived precious as quickly as possible. Your storage plan must allow both if your home victimized. This means decoy metal stored in a decoy safe is recommended as a necessary part of your home storage plan.

Home security experts all agree around 70% of intruders do so by way of doors or windows. This includes everything from kicking in a door to impersonating a trusted professional. Doors and windows are easily secured with minimal cost (email us for more information). Knowing who to trust (at the door) is more challenging especially depending where you call home.

The truth is no one should expect 100% protection . Homes are where we live and raise our families. They are NOT security vaults or fortress like compounds. This requires each PM owner to have realistic expectations about home security. In my view, you must realize three or more storage options carry less risk by providing multiple levels of security that your home can’t.

Many of our readers are against storing PM anywhere outside their property (home). They feel the risk is just too great by trusting banks, vaults, or international storage. This is not necessarily true and certainly wasn’t the case for the victims we described above.

FIRST MINUTE OF A HOME INVASION:

I want to disclose that I’m not a security expert by any means. I have researched endlessly and can honestly say the first minute of a home invasion is critical. The time to prepare for such an unlikely occurrence is today.  Here is what my research reveals as prudent.

  • Assess their goal. Why are they in your home? Are they professional or drug addicts looking for something to turn into cash? Are they agitated or calculated? Do they know the home (floor plan, family, etc)? What is their goal RIGHT NOW!
  • What will it take to immediately get them to leave? We know their goal is to steal something of perceived value. Do they know you have PM in home? If not, they will accept decoy metal without question, at least in most cases.  You must decide if offering up decoy metal is wise UNDER YOUR SITUATION. This last point is most important. Silver and gold are replaceable (yes expensive but replaceable), family is not.
WE WANT TO HEAR YOUR OPINION AND VIEW. FEEL FREE TO COMMENT OR ASK QUESTIONS RIGHT HERE.

COMMENTS & QUESTIONS:

Comment (regarding last Friday’s post called Rivers of SilverThis question has already been answered – junk silver! Pre-1965 US minted coins, primarily dimes and quarters, but including half dollars, are 90% silver. Called “junk” silver (no numismatic quality), American silver coins are less than an ounce and readily available by the roll or the bag ($100, $250, $1,000).

Picking up a $100 bag of 90% junk silver quarters or dimes (71.5 oz, FDR or Mercury) is easy at most coin shows or shops. Look into junk silver!

PROSPECTOR REPLY:  Thanks for the comment. You make a great observation by mentioning how relevant junk silver will soon be. Junk silver coins are fractional silver and do offer small silver denominated trade. The problem arises when we consider only a limited amount of junk silver is available (they are not making more junk silver). This is great for those owning junk but not for the masses new to silver and gold. Great point, I think I’ll buy another bag of junk someday soon.

COMMENT:

I pity the poor/rich people who bought Gold & Silver off TV ads and the internet. They should have known that the government will order the names, addresses and the amount of gold or silver they purchased / and then go to their doors and demand it or go to JAIL.Just like all those dummies who registered their firearms / they too will be tracked down and their guns taken or go to JAIL.

PROSPECTOR REPLY: Thanks for the comment. I agree most forms of government are to the point of overreaching but doubt silver and gold is atop the list, as you mention. Why, because silver and gold are far less relevant today? Let me explain, gold once was the anchor of most currencies. This “gold anchor” (gold standard) limited reckless spending and fiscal insanity. But this is no longer the case and hasn’t been since 1971.

The overreach you mention is likely but far more likely via taxation of more common assets (compared to confiscating PM). It is much easier to raise property taxes, capital gains taxes, etc, than go door to door looking for ounces of silver or gold. This doesn’t mean PM holders should expect exclusion because I’m sure some “creative” means to levy your PM is possible, maybe probable.

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RIVERS OF SILVER

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

At first I thought the retail clerk was joking when he hesitantly accepted the $100 bill from my hand. This is when his reply validated his hesitancy, “Great, a hundred-dollar bill, second one this week.” I must have looked surprised when I asked if there was a problem with the bill. He said, “No, they ($100 bills) create a problem making change and guarding against counterfeiting, no problem sir I’ll have your change shortly”.

The world is changing quickly if you haven’t noticed. My dresser top empty change jar proves this each morning when I put my hat on. Our money went to a currency in 1970 (paper/coins) to now digital. Few of our youth carry cash these days, not in a debt card world.


One of the many benefits of founding a business like The Prospector Site is the ability to see behind the monetary curtain. This provides a peek into our future by tracking the path of silver and gold. In an odd way, one ounce silver bullion coins are soon to travel the same path as our paper dollars. Unlike paper dollars, silver won’t be replaced but unaffordable.

Someday soon traditional one ounce silver coins will be too expensive for the majority to own. This seems hard to imagine today since physical silver ounces cost less than $40.

I know this to be true because I understand silver and gold’s ability to keep par with currency values. This rise is nothing more than accumulation of currency devaluation and demand for a very limited source of real money (PM).

Each reader must at least consider importance of owning fractional silver sometime soon. By the way, fractional metal consists of coins, rounds or bars broken into denominations less than one ounce form. Fractional coins are common in today’s gold market but uncommon in our silver market. This is soon to change.

There are two good reasons why we expect to see this change in physical silver.

  1. Affordability (more can afford things when priced less).
  2. Trade value.

Think back to my $100 bill introduction. What if the store clerk couldn’t make change for me? What if I didn’t have a credit or debit card backup?  The answer, the store would’ve lost my business.

Let’s talk about fractional silver affordability first with a brief history on gold. Readers are quick to mention how today’s gold market continues to price them out. I will not argue that gold seems pricey especially when compared to prices I paid many years ago. But fractional gold still provides an option (1/10 ounce to 1/2 ounce) for buyers reluctant to pay full ounce prices.

Just because gold is available in fractional coinage doesn’t sooth the sting of expensive PM, it does provide an opportunity for those on limited budgets.

But silver’s move to fractional coinage is different. Silver (and gold) are soon to be realized not only as real money but necessary. This time, or era, will come only after illusionist winds of economic recovery subside. Such silver demand will justify the cost and trouble to mint fractional silver making 1/2 silver coins, bars, and rounds as common as one once bullion today.

Now, this brings up silver’s future trade value.  Few who follow the PM market argue the fact both silver and gold is transitioning into a currency. This is nothing new seeing both metals started out as money many centuries ago (history repeating).

But this time is different. No longer do families grow or raise things of necessity, they buy them. This means currency plays a larger part of our economy than ever before. I doubt that folks living on the 5th floor will find space to grow or raise things anytime soon, if so, this means they must buy from someone who does.

This takes money, currency, or an asset of equal value (barter).  But we already know currencies worldwide are progressing toward printing themselves more worthless each day. Again, the chart below proves this better than I can describe it.

Please notice how the chart line turns vertical as of late. This means we must earn more dollars to buy what less used to. But this is not the same for silver. The same amount (grams/ounces) buys equal or more.

Now here is the problem if you don’t own silver.  The same “weight” of silver buys equal but will cost those not owning silver much more to buy. This is why it’s very important to investigate silver ASAP.

Please stay with me here. Fractional silver will soon buy the things we all need regardless of size/weight.

Think how a fractional 1/10 ounce gold coin now buys one week worth of groceries. Look closely at the 1/10 ounce coin below noticing the $5 denomination. This means $5 used to buy a week worth of groceries but barely buys a sandwich today. Silver will follow the same fractional path if our dollars continue today’s course!

Does this mean we could someday need fractional coins of silver just to buy everyday necessities? YES, especially when we consider the possibility one ounce silver could be too valuable for most items!

COMMENTS & QUESTIONS:

QUESTION:

Good day…….how are you doing today ??
…I AM LOOKING TO BUY 100 OUNCE SILVER BAR,Like
MAPLE LEAF, 1oz Silver Eagles, Krugerrand. ANY OTHER GOLD COIN  that are Numismatic in Nature. Kindly get back to me with your availabilities and Prices. Awaits reading back from you soon.

Sincerely

PROSPECTOR REPLY: Sorry but The Prospector Site doesn’t sell silver or gold. I recommend visiting www.GoldShark.com to find competitive pricing on all your PM needs.

COMMENT:

Just wanted to drop an email letting you know how much I enjoy each article. I’m new to PM but realizing importance of silver and gold especially in today’s world. Wanted to pass this along and say “hi”.

Prospector Reply: Awesome, thanks for passing nice words along. You have no idea how nice it is to receive several emails (like yours) now and again. I urge you to continue to study PM until fully confident they are the right choice for you. You will develop a new-found confidence that will last a lifetime.

The goal is to provide unbiased PM information and then let folks like you decide if silver or gold is the right choice. Silver makes a perfect gentle entry into the PM arena so please keep this in mind. Feel free to email us and be sure to register for our free online newsletter recapping recent posts and note worthy PM news. Thanks again.

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THE WAR ON WEALTH (what every gold holder should read)

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

With tax day rapidly approaching I thought it wise to see if blame the wealthy has kicked in yet. Not to my surprise one of the largest California papers stayed true to my blame prediction.  If you own or soon will own silver or gold please pay close attention to today’s post. We are about to enter an age of blame that will with all certainty include folks just like you. Your plan for 2012 must include precautionary wealth.


The Sacramento Bee is the proud originator of this article. I want to hit the high points before adding our two cents.

If California taxpayers paid up, state’s deficit would disappear. THE SACRAMENTO BEE

As Californians put the finishing touches on their income tax returns, tax collectors say the state’s $9.2 billion deficit would drop to zero if all taxpayers submitted what they owe.

That means every resident claiming the market value of tattered jackets donated to charity. Every business reporting every dollar of income they receive even when paid in cash. Every service worker reporting every tip. And every resident paying use tax on Internet purchases.

But full compliance does not occur.

In a new estimate, the Franchise Tax Board says that $10 billion in state income taxes go unpaid each year, often when workers receive payments under the table, businesses skirt reporting requirements or people take deductions for which they do not qualify. The state Board of Equalization says an additional $2.3 billion in sales and use taxes go unpaid.

“It’s our way of investing in society for the various benefits we receive,” said Jerome Horton, who helps oversee the state’s two major tax agencies as chairman of the Board of Equalization and board member at the Franchise Tax Board.

Horton is pushing Senate Bill 1185 with Sen. Curren Price, D-Los Angeles, to create a “Centralized Intelligence Partnership” that would coordinate data across state agencies to flag tax evaders and people selling illegal goods and services. It would incorporate data from agencies ranging from the DMV to the Department of Consumer Affairs. READ MORE HERE.

PROSPECTOR: I want to make full disclosure from the start. I’ve owned multiple businesses in California and very familiar with the state’s monetary miscues. I read this article two times just to make sure I didn’t miss anything, I did not. But what the article should have said I’m saying right here.

Articles like the one above must serve as a giant red flag to PM (precious metal) owners.

We mustn’t view this as an alarmist but realist. The article screams “look out” loudly and all with wealth must understand what is not written into the article. It is quick to continuously point out the need for all to pay fair share echoing the same tune from DC. Personally, it only validates my savings in silver and gold.

There is no mention of massive regulation and the multiple layers of bureaucracy necessary to administer business busting policy. No mention of millions illegally manipulating a welfare system, health care system, and multiple other programs too. Nothing mentioned of swollen entitlements imploding from an unsustainable system regardless of tax revenue.

So what is the truth?

The truth is some taxable revenue always falls through the cracks. Not everyone completely stops at a four way. Not everyone drives the speed limit, not everyone pays taxes on 100% of their taxable income, sorry. The truth is most business owners (independent employees) are simply trying to survive.

But this is a prime example how bigger government or states like California don’t get it. To focus on the 10% unpaid and not on real issues is ridiculous. Why? Because to squeeze hard enough to juice the remaining 10% requires driving out thousands of compliant taxpayers and businesses. This is exactly why I’m not writing this from California.

But this goes beyond what most see as apparent!

This is about taking sides. This is about us against them. This is about if only the ones not paying fair share paid more. This diverts attention away from state level monetary miscues and puts the blame on the tax payers. Who needs to shrink government if we can milk a few more billion from captive Californians?

This is where we must tie today’s post into silver and gold.

We are now entering an era where all wealth targeted. Do you actually think the big squeeze stops with the guy mowing lawns for cash? Look around to prove my point. How much wealth do you store in indefensible assets? Your home targeted by property taxation, all your vehicles too. Your savings fall victim to inflation. Washington now has big plans for private retirements. The list of defensible assets is short.

The freedom to own silver and gold provides an opportunity to practice precautionary wealth.

Let me explain. Silver and gold provide hidden savings and wealth, few assets can say this. Here is a list explaining the benefits of hidden wealth (precautionary wealth)

  1. Precious metals still offer unrecorded ownership.
  2. Precious metals are a worldwide universal currency.
  3. Precious metals can be stored outside of country of citizenship.
  4. Precious metals ignored as a store of wealth.

Not a day passes without someone mentioning silver or gold confiscation. To me, this is less likely compared to confiscating more traditional assets via inflation and government overreach.  Articles like today must serve as a sign of what’s to come.  “Yes” it’s time to turn up the savings in silver and gold.

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US DOLLAR BUBBLE

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

It is now estimated somewhere around $15 trillion (to date) lost in real estate wealth. This wealth is not coming back regardless what 24 hour nonstop news reports. Losses like those from the RE bubble burst are painful, even devastating to some, but nothing compared to a USD bubble burst. Gerald Celente recently referred to our dollar’s burst as a “monetary tsunami”, I certainly won’t argue with his years of economic accuracy.  Very few are prepared for the monetary wave of devastation such a bubble burst will wreck.

Those holding silver and gold will experience anything but devastation as scads run in search of real money.


The US economy continues to find itself in checkmate fashion and my goal today is provide several examples as proof. Even conclusive proof can’t sway the masses away from dollars which leads many PM forecasters the feeling of preaching to the choir.

Here is a huge part of the problem. All currencies (US dollar by example) have the same printed number(s) regardless of declining value. This creates a monetary chameleon like appearance all while hiding devaluation. The need for more dollars to buy what fewer used to hides well in a time of multiple credit options.

Higher gas and food prices are now clear to all but the true epicenter of the problem eludes most.  To be honest few give lasting thought to rising prices that is as long as credit fills the gap.

Evidence of a coming dollar bubble presents itself like the last five minutes of a Perry Mason episode. One glaring piece of evidence lie at the feet of silver and gold. Gold has consistently appreciated 19% year over year and over the last decade. But this rise comes at a big price even for those not buying PM.

Please reread the two sentences above if not 100% understood. Gold’s rises while our dollar’s buying power declines. This has nothing to do with questioning PM as a good investment. This is nothing more than a slow calculated erosion of your dollar’s buying power.

But this doesn’t strike a necessary cord to those holding soft wealth in dollars; it certainly should. What gold is trying to say is each victory for gold is a loss to the USD (all currencies in fact).

Maybe an aeronautics analogy can best explain silver and gold’s ascent while our dollars decline.

Critical mach is an aeronautics term describing the maximum mach number which an aircraft can attain while still remaining controllable by the pilot. Anything over critical mach leads to an unhappy ending.

Below is a graph showing the USD supply over the last few years. Our dollar’s path is now reaching a point similar to our critical mach analogy above.  The problem, if the Fed reduces spending, printing dollars, then our economy sputters leading to economic adversity. This certainly complicates the ability to finance old debt with new debt.

The Fed act like all is in control but something recently proves opposite. The US is now buying 61% of our own debt just to sustain a bad economy. As you can imagine this also requires massive amounts of new money printing.

Here is what The Wall Street Journal had to say about buying our own debt.

The Federal Reserve is propping up the entire U.S. economy by buying 61 percent of the government debt issued by the Treasury Department, a trend that cannot last, Lawrence Goodman, a former Treasury official and current president of the Center for Financial Stability, writes in a Wall Street Journal opinion article published Wednesday.

“Last year the Fed purchased a stunning 61 percent of the total net Treasury issuance, up from negligible amounts prior to the 2008 financial crisis,” Goodman writes.

Goodman also warns that U.S. economy and markets are “at risk for a sharp correction” if conditions aren’t “normalized.”

“This not only creates the false appearance of limitless demand for U.S. debt but also blunts any sense of urgency to reduce supersized budget deficits.”

Fed intervention in the government debt market makes demand for Treasury bonds appear higher than it really is, as foreign creditors and other investors have fled U.S. government debt instruments and are looking elsewhere until the government makes serious attempts to curb spending and narrow its gaping deficits. More

Let’s go back to real estate for a moment. Do you recall the era just prior to the housing bubble a few short years ago? That’s right, the bubble burst when new buyers refused to support (buy) over inflated homes. New buyer’s reluctance to pay higher prices exposed and popped what today we refer to as the RE bubble of 2006 and beyond.

The WSJ article above makes my point perfectly when it mentions “foreign creditors and other investors have fled U.S. government debt…”.

So what does a dollar bubble have to do with your stash of silver and gold?

Let’s recap before we tie PM into the coming dollar bubble.

  1. The US is buying its own debt like never before.
  2. Less buyers willing to buy US debt than ever before.
  3. The US is dependent on currency printing like never before.
  4. Nearly all currencies are printing like never before.
  5. Less wealth stored in silver or gold than ever before.

My point is this. Investor confidence diminishes in the USD just when our economy needs it most. This “mach speed” race to devalue the dollar hides itself well since the numbers printed on each bill stay the same (even though they buy less).

This charade only lasts so long before folks lose trust in the USD and pilgrimage for a real store of value. Yep, you guessed it, silver and gold will greatly benefit from this decade’s dollar bubble. Think about a gold bullion coin for a moment. An American Eagle one ounce coin is a $50 legal tender coin but no one in their right mind view its value as fifty bucks. This coin has ability to absorb the value lost in USDs.

This is why your gold stash grows in value every time the USD declines.

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COMMENTS & QUESTIONS:

QUESTION:

I love reading TPS (The Prospector Site) and want you to answer a question please. My situation is uniquely different from questions I commonly see asked. I’m thinking about parking money in gold or silver but only for a short term. I say short term because my plan involves eventually investing the money is cashflow property and a start-up business (around 12 to 18 months). In your opinion, is silver best for short term compared to gold? Thank you.

PROSPECTOR REPLY:  Thanks for the question, and reading TPS. Okay, let’s break this down just to make sure I understand the plan. You have cash now but your long-term plan is to reinvest the cash into a start-up and rental property. You’re asking if trading cash for PM is wise considering it’s only for a year or two (or if silver is better than gold). I’m not sure I would buy either to be honest. PMs are not ideal short-term options at least how I view them. I’m concerned 12 month appreciation might not offset the cost to sell back 12-18 month old silver or gold.

Have you considered parking the cash in a money market account? I realize they pay little or no interest but they are relatively safe for the short term. I’m all about owning silver and gold but don’t view it as a short-term investment by any means. Please give it some thought regardless. Oh, one other thing. I too love business and rental investing, but. Consider holding 1/3 in PM in case the new business doesn’t take hold exactly as planned.


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