Not to brag about my age or experience, but I started dealing in precious metals in November, 1977. At that time, I was selling one ounce gold Krugerrands for $350. I bought two Hart Schaffner & Marx suits about that time, because there was a good men’s store in Phoenix, where I lived. I wonder if Hanny’s is still there?
I well remember telling customers that an ounce of gold will buy a good men’s suit and a couple of silver dimes will always buy a gallon of gas. That was 45 years ago. I have not changed my mind about the purchasing power of silver and gold, and this column may be brief, because my 45 year old comparison of gold and silver to the purchase of a Hart Schaffner & Marx suit with an ounce of gold, or two silver dimes buying a gallon of gas, still holds true.
As write this, a Gold Krugerrand is a bit over $2,000. Recently, In Grand Junction Colorado, an upscale department store has opened, and guess what? They Sell Hart Schaffner & Marx suits. And guess again, they are priced at virtually the same price as a gold Krugerrand. Krugerrands were all we had then, since the gold Maple Leaf didn’t come out till 1980, and the Gold Eagle in 1986. So, 45 years later, an ounce of gold will still buy a good men’s suit.
Now let’s check gasoline. As I write this, the cheapest and most popular once ounce silver coin, the Buffalo, is $29.75. Dividing that by ten, each tenth ounce is $2.98. The more expensive one-ounce silver coin is the Silver Eagle at $33.50, (They’re made by union government employees at West Point N.Y.), and a tenth ounce will be $3.35. Multiply either silver, one ounce coin, by two (silver dimes) and you get $5.96, or $6.70, and a gallon of gas, in my town is $3.75. I didn’t price the gas in silver dimes, because two silver dimes, would be a lot more than two tenths of an ounce of a silver one-ounce coin. If silver dimes were listed on our web site, a ‘bag’ would have 10,000 silver dimes in it, and each one would be a lot more, which would even more prove my point.
45 years ago, I told people that gold and silver were an inflation hedge, and 45 years later, I was correct. Next year, or 45 years from now, regardless of what paper currency is in use, the same comparison will apply. If there is no more gasoline, because everything is electric, gold and silver will still be an inflation hedge, and inflation now is listed at 8.5 %, if you believe government’s figures. You decide which is the best way to store surplus assets.
Why in the world, would anyone store surplus assets in dollar denominated anything? All the millions of financial advisors, who usually charge 1% a year of your assets for their services, shun gold and silver. If you buy from us at 1%, that’s it! No yearly service charge for bad information. They just sit in your safe, holding their purchasing power, year after year. How boring!
Don Stott
-don@coloradogold.com