As everyone rejoices at $1,000 gold, please remember that in 1980, gold was also at $1,000. In 1980, with gold at $1,000, things then were a bit different as far as economics are concerned. As an example, in 1980. the average annual income was $17,710. In 1980, a stamp was fifteen cents, eggs ninety one cents a dozen, and a new home was costing, on average, $76,400. Also in 1980, the National debt was $909 billion. Imagine! $909 billion national debt, as opposed to gawd only knows how many trillions now. The D.C. Gang, in 1980, only spent $591 billion all year! The prime rate was 13.5%, Harry Truman was President, and the Dow ranged from 750 to 1,000. And in 1980, the gold-silver ratio was about 16 to 1. We had gold at 1,000 and silver at $54. Tell you something?
It should tell you, first of all, that silver today at $14.50 or thereabouts, is a screaming, unbelievable, break the doors down, howling, bargain! If the ratio was 16 to 1 today, silver would be about $62 an ounce! Will the 16 to 1 ratio ever return? I’ll guarantee it, but I don’t know when. As a matter of fact, since there is less silver above ground than gold, the ratio may even go below 16 to 1 eventually. The 1980 figures should also tell you that we have had a incredible amount if inflation since then, and that for gold to be the ’same price’ as it was in 1980, it would have to be about $2,000. After 1980, gold and silver went down in dollars, till silver got to about $4.25 and gold $360. Could this happen again? I think not, unless you think that everything else would resume those 1980 prices. See, gold and silver were re-acting to Jimmy Carter’s high inflation and interest rates, the hostages held in Iran, and giving away the Panama Canal, or rather paying to have it taken from us. People were deathly afraid of Carter and his gang, and they went to gold for safety. I sold mine at $650, because I knew it was a false high. I missed the top, but I knew it was too high for the rest of consumer prices.
Why then, it the dollar so ’high?’ It’s only ’high’ against all the other paper currencies, none of which are backed by your grandma’s hanky or anything else, for that matter. None are ’high’ compared to tangible things such as eggs, butter, motor oil, or grass seed, which are still far, far higher than they were in 1980. They have to be higher, because everything used to make, grow, or mine the tangibles we all use, are using decayed dollars to produce; therefore they simply cannot go ’down’ in dollar price, and as far as I am concerned, aside from normal corrections due to over-supply or low demand. It so happens that the demand for gold and silver are unprecedented, due to the near panic of intelligent people realizing that dollars are a shrinking measuring device of our wealth, and it makes sense to get out of them.
The tally of purveyors of gold and silver are increasing. Like springtime in the Rockies brings forth myriad wild flowers. The used car salesmen of gold and silver are buying mucho time on the boob tube and radio. Caveat emptor. I am reminded of used car dealers who take full page ads in the newspapers advertising their wares as being, against all the laws of probability, cheap. Now, who do you suppose pays for those full page newsprint ads or TV commercials for gold and silver? THE BUYERS. If you call one of those gold and silver hucksters, your name will be on their list forever, and be prepared to be bombarded with endless sales calls. Be also prepared to listen to a chorus of sales pitches for ’rare coins,’ or be prepared to spend a lot more than we charge for bullion. Just imagine those hacks sitting in their little cubicles all day, bothering people with their sales pitches. Bullion isn’t profitable to these sharks. “Bullion” could best be defined as ’being closest to the spot price.’
Why can’t you buy at the ’spot price?’ No one can buy anything at ’spot price.’ The ’spot price,’ is at the mouth of the mine, farmer’s field, or oil well. After the stuff is mined, harvested, or pumped; metals, as an example, must be milled, smelted, manufactured, transported at least a four times, if not more, and then distributed. After mining (’spot price’) the ore must go to the mill, where is it ground to face powder consistency, and the metals separated from the rock with chemicals, and centrifuges, plus a couple of other procedures. Then the ’sponge’ must go to a smelter to remove the rest of the impurities. There are no more smelters in the US, thanks to the EPA, so the stuff must be shipped overseas to be smelted, usually the Orient. Then, it must be made into blanks. The blanks must be shipped to a mint, where the coin or bar is stamped. The coins and bars must be shipped to the distributor, in our case A-Mark. We obtain from A-Mark, and ship to you. The chain of events from mine to finished, shipped gold or silver, is highly complex and expensive. This is the reason that nothing can be bought at ’spot.’
Obama says he is going to ’cut the national debt in half,’ after he and his henchmen plus three pseudo-republicans just tripled it! Obama is the absolutely most socialist President we have ever had, and it makes me cringe to watch him and the Gang operate. Government fails at everything it does, and they want to let government take over the rest of the economy? Looking over history, when government was smallest, America ran the best. Without wars, Social Security, Medicare, the Federal Reserve. welfare, food stamps, and handouts and bureaucrats at every turn, all went very well. America was king of the world. The more government meddled and gained power, the more topsy turvy and out of balance everything became, and will continue to be. Now look at us. Our Founders are without doubt, turning over in their graves. On NPR this morning, a Jap finance official was telling the interviewer how Japan got out of its depression. It did it by reckless spending and going head over heels in debt, which debt it still has, although the guy didn’t admit it. He also failed to admit that the Japs are still in that depression ten years later, and yesterday the Jap stock market got down to its level of 1982! That’s what the D.C. Gang are doing to us. Endless debt, earmarks, inflation, corruption, nothing solved, and everything made worse. As I said in a previous column, ’stop fixing it.’ AIG needs another $41 billion of course, Citibank will be nationalized, etc. etc. ad infinitum. Will we get out of this like FDR got us out of the great depression by having WW III?
Ever wonder about the “Krugerrand? What does that name mean? Paul Kruger, was the George Washington of South Africa, and the ’rand’ is the equivalent of the dollar. The Krugerrand then, could be said to be the South African equivalent of an American ’George Washington dollar.’ Paul Kruger died still believing the earth is flat, and I don’t think George Washington, whose birthday was last Sunday, believed that. Head up, nose down, and protect yourself.