We had a lovely ten day cruise to the Bahamas, Aruba, Curacao, Panama, and Costa Rica. Aruba isn’t nearly as nice as is Curacao, and I have never seen such a trashy place as Panama. Rotten roads, trash everywhere, and it makes Mexico look like the promised land. We have never in our lives seen as much rain as in Costa Rica, where they get 13 1/2 feet of rain a year. I gained 8 pounds and re-read Atlas Shrugged for the first time in close to ten years. EVERYONE SHOULD READ ATLAS SHRUGGED! It’s amazing how much of it is coming true. It’s a political theory in novel form, and all 1070 pages of it is unreal when you look at today’s news. A sentence from page 663: “The inhabitants of slums were not the men who made this country.” I’ll lift a quote from this ’everyone should read book’ in future columns.
Why hasn’t gold gone literally, ’through the roof?’ Is it manipulation? I think not. Consider who buys most of the gold in the world. It’s India. In India, few people save their surplus wealth in paper money. They buy gold…in jewelry form usually. Well, guess what? When gold got over $750, Indians sort of backed off, and did it in a big way. Gold sales to India, have literally ’fallen out of bed.’ That’s as much as 2/3 of gold consumption, according to some. My kids and I get new customers all the time. I have four new ones today (Monday) already, and the day is only half gone. Investors who want to protect themselves, are coming out of the woodwork, but it doesn’t totally offset the poor showing of India, which makes the price rise go slowly. The world is in terrible shape. Iceland is bankrupt, and the Ruskies are not happy at all with their economic situation. Obama and the Democrat creeps, plus three name only Republicans, think that you can pay debts with more debts. Obama, on the boob tube the other day, said that his stimulus was going to create tens of thousands of private sector jobs in Indiana alone. Whoopee. And officially, America lost 598,000 jobs last month alone, and the total is approaching four million. Actually, it’s far worse than that. Locally, an ages old, beautiful, Hallmark store is going out of business. Are their job losses included in the 598,000? I doubt it. Things are simply not looking good at all, and the ’stimulus’ will simply make our national debt probably ten trillion dollars. Why don’t they take a survey of the citizenry to see if they approve of running the national debt up another ten trillion to bail out the banks of Wall Street?
According to the National Geographic, “In all of history, only 161,000 tons of gold have been mined, barely enough to fill two Olympic size swimming pools. Now, the world’s richest deposits are fast being depleted, and new discoveries are rare. Gone are the hundred mile long gold reefs in South Africa or cherry size nuggets in California. The price of gold, which stood at $271 an ounce on September 10,2001, hit $1023 in March, 2008. In 2007, demand outstripped mine production by 59%.” Of course, its the same gold, no matter the price in paper money. It’s the same Coca Cola which was a nickel when I was a kid. Want a quote from my lucid memory? “Pepsi Cola hits the spot. Twelve full ounces, that’s a lot. Twice as much for a nickel too. Pepsi Cola is the drink for you.” I heard that radio commercial a thousand times when I was a kid, I’ll bet. The prices go up in all currencies as they are printed to pay government bills. In Costa Rica, a tour guide passed around a bill, dated 1993, for 50 something’s or other, whatever their currency is. It was a very impressive bill with some ruler’s picture on it and fancy engraving. He said that the bill wouldn’t buy anything now, but when it was printed, fifteen short years ago, it would buy a lot of groceries, gasoline, and pay a lot of bills. Guess what happened to those Tikos who saved their surplus assets in whatever their currency is? They were totally de-capitalized, as is now happening to dollar savers. (“Tikos” are what Costa Ricans call them selves.)
The gold-silver ratio throughout history, has been 16 to 1, even thousands of years ago. Silver coins were always worth a sixteenth of what a gold coin was worth of equal size. Now, they are worth a sixty ninth of a gold coin of equal size, and I believe that will revert to 16 to 1 eventually. When? I have no idea, but it will, which makes silver a huge bargain. Years from now, if you tell someone you bought silver at $13 an ounce, they’ll say you must be crazy. Just imagine: If the ratio was 16 to 1 now, silver would be $56 an ounce. The ratio was 16 to 1 in 1980, when gold was $850, and silver $54. Why shouldn’t we expect it to repeat?
Had a client call me today and ask me if I knew of any other thing to buy to protect one against inflation. I said that there were many, including antiques, stamps, old cars, paintings, and the like, but none that I could think of which were historic money in all nations, compact, beautiful, easily stored and sold…and well you know the line. I honestly cannot think of anything as simple a protection tool from inflation, as is gold and silver.
An Idea
The morons in D.C. are staying up nights thinking of ways to increase the debt and get us out of the depression, which I think has only begun. Why haven’t they thought of this one?
Make credit card interest deductible from income taxes.
Now think of that, D.C. Gang. Want to help the poor and downtrodden? Want to not help the rich? Well, who has the credit card debts which are killing them and making the banks rich? It isn’t the rich, that’s for sure. Why not give the credit card holders a break? It would be so simple, which would give the working classes a break. Too simple? I thought of it while cruising on the Caribbean. I’ve got another idea too, on how to get out the national debt completely. I’ll tell you about it on Thursday.
Mean time, I’m glad to be back at my desk and running my mouth and keyboard. I’ll be 75 next Tuesday, and for the life of me, I cannot picture myself quitting! This is too much fun. It got so busy a year ago, that I was about the shut it down and retire, but just couldn’t do it. Talked my son into quitting his good job and joining me, and he has loved it. Then I talked my daughter into quitting her good job and joining too, and she loves it also. Melissa and David both have fancy college degrees and had great jobs, but they weren’t their own bosses and couldn’t work in their own homes. Now they are, and it allows Bonnie and me to travel a bit more. Like the new web site? David’s idea. Looks like some of the metals producers are beginning to catch up in production, so we have an ever increasing inventory to sell.
One other thing, while I am rambling. Why did metals take a nosedive last summer? Because everything took a nosedive, but metals didn’t take nearly as much of one as did other commodities. Copper and oil lost two thirds, and are staying there, as examples. Gold and silver are working their way up now, due to increased demand. Why increased demand? Because even Joe Six-pack on the street, knows that we are headed for a great inflation, only most are so dimwitted as not to realize what real, true, honest, historic money is, which can save them from economic ruin. Too bad. Manipulation? The stock market should be approaching zero now, with all the calamitous economic goings on, millions of job losses, store and chain closings, and every bad thing one can imagine coming true every day. The Plunge Protection Team (PPT) must be really buying the hell out of stocks to keep them afloat, when they should have sunk months ago. For goodness sakes, sell yours and stay out of stocks!