I do hear this all the time, and especially from newcomers. They are afraid to invest in fgold and silver because ’it may go down.’ That’s not a stupid worry, considering what has happened to real estate of late, and what will probably happen to the stock market when it re-opens tomorrow (Tuesday), and for that matter gold and silver, as I write this on Monday morning, are down also. Not a stupid worry or question. Consider the facts however.
First of all, gold and silver, and especially gold are in huge demand all around the world, with silver certain to catch up in the future, bringing the ratio down to its normal 16 to 1. Unlike stocks, which can be issued and re-issued till the cows come home, gold and silver cannot be produced endlessly. Homes were over-built to extreme, and un-creditworthy allowed to buy them. That disease has infiltrated banks and financial institutions all around the world. Paper money, including the euro, are being printed endlessly, causing them to lose purchasing power or value. Examples are not hard to find. Zimbabwe currently, is a classic.
Rhodesia used to have a marvelous economy, and it exported food around the world. White owned farms were marvels of efficiency, and the nation was prosperous. Now, it has become Zimbabwe, white farms seized, and a tyrant runs the nation. The usual outcome of such a thing has now reached its final stages. Government grew, bureaucracy dictated things, hideous laws were passed by puppet legislatures, and terror rules. Mugabe has soldiers at his convenience, and lives like a king while people starve. Other nations will no longer lend, so Zimbwe prints and prints and prints. Inflation now is 10% a day. A loaf of bread is the equivalent of a million dollars in Zimbabwe currency. Paper money in Zimbabwe now is worthless, due to there being so much of it. Now think of a loaf of bread being a million dollars, and you can see what printing press money brings to a nation. Similarities in ultra small scale to us?
In 1980, gold reached $850 and silver $54. In 1980, gas was $1.25 a gallon, a new home cost $76,400, eggs were 91 cents a dozen, the national debt was $900 billion, and the government spent $591 billion a year. Ask yourself the simple questions of, “Will we ever return to those prices again? Based on 1980 prices, shouldn’t gold be $3500 and silver $200? Will government debt ever return to $900 billion, when it is now $9 trillion short term and $40 trillion long term? Will government spending ever return to $591 billion, when we have already spent twice that much in Iraq alone? Will we ever again be able to buy gas for $1.25 a gallon or eggs for less than a dollar a dozen?” The answer is a hearty NO. Why not? Because our currency has decreased in value and purchasing power by that much due to its proliferation. Like Zimbabwe, government, since 1980, has also grown and grown and grown, with no one being able to stop it. Have we reached 10% inflation per day? Of course not. The point being made is that unlike paper money and government growth, gold and silver simply cannot be multiplied by votes, politicians, government edict, or force by bureaucrats. No law can possibly increase the supply of gold and silver, nor decrease its demand and attractiveness. Make it illegal? Drugs are illegal and vastly overpriced. If gold and silver were made illegal, their prices would be unbelievable and could be bought on street corners, so great would be the demand. Government knows that. Drugs and prostitutes are illegal, and very expensive.
Right now, in South Africa, not only are the gold mines producing a third of what they used to, but the power supply is intermittent, making mining even more dangerous. In America, the EPA and other bureaucracies have made mining virtually impossible or extremely expensive, with but a couple of exceptions. America isn’t the only nation with inflation worries, unemployment problems, housing declines, and general unrest. Asian stock markets plunged deeply over the weekend to degrees only rarely experienced, and this has brought gold and silver down a few bucks, making a great buying opportunity.
But no political cabal, manipulation, law, or force, can stop people around the world from seeking protection and safety in precious metals. As currencies become weaker, prices in those currencies go up, and this includes the costs of mining gold and silver. Those prices must go up, just like the cost of gasoline and eggs. As I have said before, governments can do nothing but print their way out of the mess they have created, and this won’t work. Currently, the Bush outfit has proposed tax cuts and sending everyone a check for $800, plus all sorts of other mumbo-jumbo, which merely amounts to turning on the presses, decreasing the value of dollars ever more, and naturally running up the prices of everything, including of course, gold and silver.
Why not invest your dollars at 5% or 3%, and stay in dollars? Because the inflation rate is at least twice or three times that, regardless of the lies propagated by the D.C Gang. They have to lie, in order to try to maintain the status quo. They have to lie, so there isn’t mass rebellion. Social Security recipients are getting a 2% increase every year, while the cost of living goes up at least 10%. If true figures were released, there would be big problems, and the presses would have to run even faster. Just imagine the utter fear that runs through Helicopter Ben, realizing that it is all closing in on him, his Federal Reserve, and the economy of the nation as well. He knows that printing press money is his only solution, so he disguises it in various terms, such as ’stimulus package,’ or other nonsense. He hasn’t yet dropped hundred dollar bills from Helicopters yet, but I am sure he has thought of it.
One needs to get the hell out of failing paper currencies everywhere, and into something tangible. Tangibles which cannot be reproduced inexpensively. Tangibles which can be desirable, beautiful, compact, and of historic value everywhere. People with a sense of logic, whose brains have not been dulled by decades of TV and public schooling, need to stop and think about simple economics. Even the most simplistic of dullards should realize that storing your wealth in the Titanic like dollar, is utterly stupid with a capital S. Protect yourself.