The dictionary defines “invest,” as, “To put (money) into business, real estate, stocks, bonds, etc. for the purpose of obtaining an income or profit.” This is the objection many have, when advised to ’invest’ in gold and silver. “Gold doesn’t pay any interest.” True, and I am well aware of that. However, when someone ’invests’ in something, isn’t it logical to expect, as the dictionary says, to ’obtain an income or profit?’ I agree totally.
Since gold and silver pay no interest, how can they be a solid ’investment?’
There are a hundred or more ’investment’ outfits, which have promised 11% to 15% annual return on invested dollars. Lots of them! In a city 60 miles from where I live, a man has taken over $20 million from his ’investors,’ and like others, it was a Ponzi scheme. Ponzi schemes are as abundant as mosquitoes in Minnesota, and all of them are frauds; taking stupid investors’ dollars, with promises of huge returns. After all, how can anyone expect an investment to equal the inflation rate? Legitimate investment schemes, usually pay 2-4% return or yearly profit, no matter what they are. Be it a savings account, CD, or other, a top of 4% is the norm, and any larger promises, are usually fraught with suspicion. Madoff gave an 11% return for years, till the output equaled the input, and it collapsed. All Ponzi schemes work the same way. Big promises, backed by all sorts of paperwork, history, and reputation, and the gullible just can’t wait to give these guys their dollars for an 11% return. 11%, may or may not be equal to current inflation, but an honest investment broker or financial planner who deals in dollars, will give you a third of that.
If you get a third of the inflation rate for an investment, where is the income or profit? If you invest $10,000 in an investment program, at 4%, and a year later, you have $10,400. You then notice that what $10,000 bought a year ago, now costs $11,000, and you have $10,400. Where is the profit or income? In other words, to ’invest’ with little or no risk for the dollars you have, you have to take a 6% loss. If you want to equal inflation, you have to give it to a shyster, who may well be running a Ponzi scheme, and it may go bust, taking all your dollars.
At 4%, your dollars are safe, but NOT WHAT THEY WILL BUY. At 4%, your investment dollars will be utterly safe, as to their number. I’ll guarantee you that at 4%, by the end of a year, you will have 4% more dollars, without doubt. They will buy less, but you’ll have 4% more dollars. In other words, your number of dollars will have increased, but you will have been de-capitalized. Your 4% return will be based on all sorts of guarantees by banks, government, bureaucrats, the Federal Reserve, etc. Even with these ’guarantees,’ something could go terribly wrong while you are being decapitalized. Such as the buck going down the tubes in a big way.
With government spending more each year, and printing more dollars each year than the total cost of WW II, can there be any doubt that we are going to get into hyper-inflation? Hyper-inflation, with inflation not being 11% or 12%, but maybe 25%, as is the current situation in Iran? Iran has been running the presses night and day for several years now. Or more than 25%? After all, with government running the banks, tobacco, auto, and insurance industries, will these industries be run well or efficiently? Will trillions have to be printed to keep them running? With the Supremes and lower courts robbing bond and stock holders of their rightful ownership in companies, and giving it to government and unions, can Armageddon be too far in the future? With government and union operated auto companies idea of ’economy,’ being shutting down thousands of sales outlets and dealerships, can the end be far away? The end of the ’marketplace,’ as we have always known it, anyway. The end of the marketplace when mistakes were paid for by those who made them, plus those who believed them to be smart, and invested their dollars in their companies.
Business is very bad in all sectors. In my little town of 17,000, we have lost restaurants, liquor stores, antique stores, a book store, real estate brokers, etc. In America today, there are over a hundred thousand trucks idle and drivers laid off. Railroads are in deep trouble also. The BNSF (Burlington Northern-Santa Fe), has 750 engines and 35,000 freight cars sitting idle and crews laid off. At the UP (Union Pacific), there are 1800 engines and 50,000 freight cars sitting idle with crews laid off. This, coupled with an additional 20,000 layoffs from stolen auto dealership franchises at government’s behest, and millions of the unemployed everywhere, makes for a severe depression. Every week, over 600,000 new unemployed applicants apply for benefits. The White House announces that ’We have turned the corner,’ which is pure BS. The point is that with $2 trillion added to the deficit for one year alone, and infinitely more to follow in subsequent years, we are going to get into hyper-inflation. With all the layoffs, there is that much less being collected in taxes, and much more being paid out in benefits, which places the states in deep trouble, because they can’t print their way out of deficits as can the D.C. Gang. There’s no way to avoid hyper-inflation, even though the lies from D.C. will only get more exaggerated. 4% return on an investment? Not me!
What then, is a solution? What on earth, can we do with surplus dollars, that doesn’t have risk, or dependence on governments, bureaucrats, lies, and Ponzi schemes? Chrysler is now owned by an Italian company who hasn’t sold a car in America for over 30 years…thanks to the Supremes. GM is now owned by unions and government. Can we imagine what that will amount to in years to come? How about this? Get involved in something which is dependent on absolutely NOTHING, but is valuable in itself, with no backing or guarantees by anyone. Not a certificate, guarantee, or promise of anything. No holding or promises overseas. No certificates of purity, age, or condition. Just self contained value, beauty, and of historic value for thousands of years. Value when dredged up from ocean depths after having been laying there for hundreds of years. Value after having been buried for thousands of years in tombs. Just value, in your hot little hands, all by themselves, with no guarantees, promises, or controls.
Gold and silver happen to be it. As hyper-inflation sets in, the prices of all tangible things will go up in dollars. Devalued dollars. Dollars that will go down in purchasing power each year, as the dollars roll off the presses. Coca-Cola will go up in dollar prices. Lumber and auto parts will go up in dollar prices. Lemons and beer will go up in dollar prices. Gold and silver will go up in dollar prices. This is known as inflation, as I have been preaching for many years. Gold and silver are tangibles, and will go up in dollar prices as will everything else that is a tangible. All the while, your safe investments at 4%, are de-capitalizing you. Will gold and silver go up further than other tangibles in dollar prices? I think so. Why? Because there are limited amounts of gold and silver, whereas the supply of trees, lemons, auto parts, and Coke is virtually unlimited. I really do believe that as more and more people wise up and buy gold and silver, the supply may well run short again, as it did when Obama got elected.
When prices of gold and silver go way up, as they must, more dormant mines will re-open, and more exploration will begin, thereby possibly keeping prices down a bit. That’s the law of supply and demand. The mints increased their manufacturing ability of late. But most geologists say that there are very limited amounts of gold and silver remaining underground. All I know, is that when I have a few dollars left after I pay the IRS, property taxes, repairs, food, eating out occasionally, veterinarian bills for the three little woofers we have, gasoline, utilities, insurance, vacations, travel, and a few other things, I buy more gold and silver. I practice what I preach, and trust no financial planner with my surplus dollars. How about you? Is a ’safe’ 4% return on dollars, really ’protecting yourself?’