According to a major piece in the Journal for Monday, September 8th, there are “Three alternatives to U.S. Treasuries that give you safety and yield.” Below are the three with my comments and observations for each.
Municipal bonds: “Triple-A-rated Munis with 10-year maturities are yielding about 3.2%.” The 3.2% yield, is assuming that the cities which issued the bonds don’t go bankrupt. The 3.2% also is assuming that the 3.2% yield is higher than the inflation rate, which under Biden got to over 9%. This also is assuming that you don’t have to pay taxes on the 3.2%, and since all of the three mentioned are denominated in U.S. Dollars, which have continually declined in value or purchasing price by probably 95% in the last few decades. Government also knows what you are buying and how much you paid for them, so if you sell at a profit, they will know. (Coloradogold doesn’t want your Social Security number). Since the current interest rate for a mortgage is 6.8%, how does taxable 3.2% interest make anyone a ‘profit?’
Agency mortgage-backed securities: “These bonds, issued by quasi-government bodies like Fannie Mae and Freddie Mac, are effectively backed by the U.S. Government, making them almost as safe as Treasuries as most investors don’t believe the government will let them fail.” (Governmemt didn’t keep the stock market from crashing 95 years ago). I assume that ‘Agency mortgage-backed securities,’ have a commission to buy attached to them, like the above mentioned ‘Triple-a-Rated Munis,? How much do brokers of such things charge? I don’t know, but I’ll bet it is far higher than Colorado Gold’s 1% which includes delivery. When FDR was elected in 1932, he raised the gold spot from $20.67 to $35, and the world followed it. Both have gone up from there, in dollars, making both, superb inflation insurance. Now gold approaches $3700 and silver $44, for one ounce or more bars or coins, with the contents and purity stamped on them, and which are self backed and not dependent on ‘Freddie,’ Fannie,’ or the U.S. Government.
Gold and silver have no need for ‘backing’ or ‘guarantees’ from any government, since they, by themselves are historic money in all nations in all of history.
Preferred Stocks: “While preferred stock isn’t as safe as government-backed bonds like agency debt, these securities out-rank common shares in a company’s capital structure, so if there’s ever a bankruptcy, the preferred shareholders would be ahead of the common holders.” I don’t know what ‘agency debt’ is, but never having owned a single share of stock, I have no idea of how a buyer of a stock, would know the ‘capital structure’ of a company would be. If an investor paid for his gold and silver with cash or check, his or her ‘capital structure,’ is just fine. Those are the three recommendations by the financial staff of the Wall Street Journal.
Gold and silver cannot possibly go ‘bankrupt,’ as they are not a business or corporation and there are no shares, premiums, profit and losses, yearly statements, professional ratings, or financial advisors to charge for their advice. Unlike paper money, which can be produced by a flick of a switch, which will eventually be worthless, as all such have in recorded history, at least you have a pile of paper with printing on it, as opposed to bit-coin, which gives you nothing but a computer entry. With physical gold and silver, (no computer entries, flammable paper, or empty promises by governments), you posses the beautiful, tangible, historic wealth, which you can hold in your hands and feel ever so secure when everything else fades.
Underneath the three recommendations above, on the same page, is an article telling which has higher returns, “Tax-Exempt Munis or Taxable Bonds.” You decide, as I have never even had a savings account. Before I started doing metals 48 years ago, I was busy starting businesses, having a great time doing it, selling one and starting another, till I got wise and realized that pieces of un-backed paper money around the world, all ended up being worth zero, with the U.S. currency approaching that, since when I first began with gold and silver, gold was $250 and silver $1.25 per ounce. I well remember wondering if gold would ever get to $400!
Stocks?
Hundreds of millions of Americans own stocks in their IRA’s or some retirement device. (You can place gold and silver in an IRA, but I don’t recommend it). I still remember the late Richard Russell, who wrote probably America’s finest stock analysis in his “Dow Theory Letter.” He noted that a stock’s value should be determined by its “PE” ratio, which means a stock’s value should be based on its cost and its profit. Russell insisted that a stock’s PE ratio should be 10, and never more than 12. As of Friday, the Dow’s 30 stocks had an average PE ratio of 26.8. Does this mean anything? Are stocks over-priced as they were in the twenties when they were much higher? You decide. I own none!
My life seems to have a lot of ‘wonders.’ I wonder why some men beat women. I wonder why people get drunk. I wonder why people smoke or do drugs. I wonder why stupid males love to make their vehicles make a loud noise, but I realize they must have a very low I.Q., which explains it. I wonder why some home owners don’t maintain their properties. I wonder why there are trillions of dollars of consumer debt, with the lenders of credit card debt charging over 21% interest. Why not cease buying until you have the dollars to pay for it? Having been born and raised in D.C. and having lived in Philadelphia and Phoenix-Scottsdale, I wonder why anyone would live in a major city. I wonder why fake science, has proclaimed that cow farts, and auto and truck exhausts have caused a one degree temperature rise over the last hundred years, when the Earth has had lots of temperature changes over the last million years? I wonder why everyone thinks we should waste money going to the Moon and Mars, thinking that man will eventually live in those cold, waterless, no oxygen worthless places. And lastly, why would anyone in their right mind, save in any currency anywhere, rather than in gold and silver, which have and always have been since Biblical times, been real, beautiful, self backed, money!
-Don Stott. don@coloradogold.com