I have never owned a single share of stock, and don’t intend to. This column is not intended to get you to buy or sell stocks. What you do with your money is your choice, not mine. I know many have made a lot and many have lost a lot, buying and selling stocks. For years, I subscribed to Richard Russell’s “Dow Theory Letter,” which was a gem on markets in general. Russell died in 2015 at age 91. RIP. In one of his letters, he stated that ‘there were three good places to buy precious metals in America.’ One of them was a company he controlled in La Jolla, Ca., another, I can’t remember, but Colorado Gold was one of the three. I thanked him, and I got a lot of new business from that letter. That was decades ago, when I was doing this business by myself, and couldn’t handle it all, so brought in my kids. David first, and we couldn’t handle it, Melissa was next, and then Morgen. It’s still a great business with no advertising. Is there anyone out there who came to us because of that Dow Theory Letter? If so, e-mail me.
Why don’t I own stocks? One reason is that Russell constantly wrote that the mark of a good stock, was when its P/E ratio, (price-earnings) was 10-12. I haven’t seen that in a coons age, but years ago, a 10-12 P/E ratio, was not unheard of. Currently they are far higher than that. The largest group of stocks, “The Russell 2,000,” had a P/E ratio a year ago of 36.74, and today it is estimated to be 74.25. I wonder if the ‘Russell 2,000’ is named after Richard Russell?
As I’ve said already many times, a share of stock, means that you own a miniscule part of a company. Here’s three examples. There are 127 million GM shares out there, 71 million Ford shares, and 41.9 million Walmart shares being bought and sold every day. Times must be getting tough, because many brokerages are now charging nothing for their services. I have been tempted many times, but I never gave in. Formerly, you got physical paper shares when you bought, but now you are just an entry in a computer. If the world’s computers crashed, and there was no back-up, would hundreds of trillions be lost? I don’t know, and don’t care, because I am not a computer entry. With gold and silver, you have the physical stuff in your hands or in a safe place, so it doesn’t matter what happens to the world’s economic mess. It really does matter of course, but you would not be involved in it.
We often talk about what happened to Germany’s Reichsmark after WW I, and how a loaf of bread cost millions of marks. They were worth a U.S. quarter in 1914. That war ended in 1918, but it took six years for that inflation to make the Reichsmark worthless. I am certain, that under Biden, if he makes it, the inflationary spending will escalate, as it did under Obama. In 2008, gold was $872, less than half of what it is now. Similar to Hitler? In the 1930’s, under Hitler, Germany again went through huge inflation. It was so bad, that the Reichsmark ceased to exist, and Germany’s money became the Deutschmark. Everyone saving in paper money with miniscule interest, loses their shirt, if that doesn’t sound too crude. Obama doubled the national debt, and Trump with his sane economics, did a bit more than add a couple of trillion. For decades, people will look back on Trump’s administration, and marvel at the great things he did for the American economy, besides not acting like a politician.
Will stocks crash eventually? Like the dollar and all paper monies, I think so. Tomorrow? I think not. Years from now? Depends on the politicians, but look what eight years of Obama did to the price of gold, and I am sure, to every other tangible thing. Will Biden, if he makes it, do any better? Doubtful, and probably worse, as he has a running mate that’s a virtual communist, from her voting record.
Getting back to Germany’s inflation: As it progressed, and prices got higher and higher, gold and silver were unobtainable. Why would anyone sell, when a day later, the price was higher? It got so bad, that a trolley trip across Berlin, may have cost a hundred million marks, and a return trip a couple of hours later, may have been a hundred ten million marks. The crazy part of it was that Germans were so used to the Reichsmark, that they kept on using them, saving in them, and demanding for more. Presses were running night and day, many of them. Store your water in a leaky bucket? Similar. The more Reichsmarks printed, the less they bought, and gold and silver finally became impossible to get, as were most tangibles. As inflation in America creeps up, and later jumps up, will Americans still save in dollars? They’re so used to them; can they possibly go bad??? I remember when a half gallon of milk was 99 cents a few years ago. It has happened to every nation on earth that used paper money, which is virtually all of them. You keep on saving those dollars in your savings account, and watch them buy less and less each year, as gold, silver, pickups, milk, lumber, et al, go up with the dollar’s decline. Probably 90% of Americans still trust dollars, save in them, and think all’s well. I don’t, but I’m in the 10% who know better.
– Don Stott
-don@coloradogold.com
P.S. the phone number of Bill, who owns the 38 acres I mentioned last week is 1-970-527-3015. He’s close to blind, but he still talks on the phone.