“What do you mean? This ship is un-sinkable. It’s got every single up-date possible, to make it fast safe, and enjoyable. I king you.”
I’ve seen the three really good films about the Titanic, (the best one is in black and white and I think 1953), and went to a Titanic show a few years ago, showing all the things rescued from the sunken ship, and I followed its discovery. In spite of its modern design, sealed compartments designed to keep it afloat, and every precaution known in 1912, it went down.
I can only imagine the probable bankruptcy of the insurance firms which covered it. Many wealthy men indeed, were enjoying the lounges and playing checkers or cards as they imbibed in the Titanic’s lush alcoholic beverage availability. After all, the ship’s owners, White Star Line, enjoyed the best reputation, and the builders took pride in their craftsmanship, not missing a single detail. What could go wrong in 2012?
‘Noting could go wrong’ in 1929 either, when the stock market crashed and took the economy with it. Carl Richardson, an economics professor at the University of California and a former historian for the Federal Reserve, said that the first warning sign of a market correction, was a general consensus that the blistering pace at which stock prices were rising in the late 1920’s,”Were unsustainable.”
Today, as I write this, the average P/E ratio on the Dow’s 30 most popular stocks, is 27 87, meaning that a stock is priced at 27.87 times its profit. Richard Russell, the all time stock expert said that a good stock should have a P/E ratio of 10.
Others like Yale economist Peter Fisher, brushed off fears of a reversal, concluding that stock prices were on a par with soaring corporate profits. Fisher told a crowd of stock brokers, that stock prices had reached a “Permanent plateau.” That was on October 15th, 1929, less than two weeks before ‘Black Monday.’ Richardson said that, ”No big decline has ever been predicted.”
I am not predicting a market crash, because no one knows what will happen ten minutes from now, but smart people use common sense, and when they buy a home, even with a mortgage, they will have bought an insurance policy against inflation…literally. My home is worth now, more than a million dollars in un-backed U.S. dollars. It’s the same home I bought for $150,000 un-backed U.S. dollars, in 1991, paying cash and not needing a mortgage. It’s the SAME HOME as it was in 1887, when it was built for $8,000 in gold-backed U.S. dollars. Had I needed a mortgage in 1991, the payments would remain the same, even though the dollar had probably lost well over 50% of its value and purchasing power in the 34 years I have owned it. The payments would be the same in un-backed U.S. dollars per month, making each payment in each year, less bothersome. A mortgage would have been an inflation hedge, and the interest paid, would have been deductible from my income tax. Real estate, can be an inflation hedge, with or without a mortgage, assuming a neighborhood remains stable, and of course no one can predict anything like a neighborhood’s stability, nor anything else, other than the U.S. dollar in 1929 or 2025 is backed by nothing, and stocks may be backed by a hundred millionth ownership in a corporation. Stock ownership is gambling, in my opinion anyway.
Home ownership, gives the owner a secure place in which to live and the enjoyment owning a home offers, at least for me, my wife Bonnie, and the dog Katie. We have property taxes and insurance to pay, repairs, and yard maintenance, with water, natural gas and electricity bills to pay, but they are a trifle compared to owning a historic, brick, 3400 square foot, historic residence in a small town in America. Our home is an inflation hedge. My safe’s contents of gold and silver, are an inflation hedge, and while the video cameras and guns protecting us, are not a hedge, but a safety device, we want them. My 1941 restored truck, which is worth $30,000 in un-backed U.S. dollars is an inflation hedge, as it sold for $400 in 1941, and gives us pleasure, as does our restored 1987 Jeep, which we use a lot, and is worth three times what it sold for in 1987!
When the stock market crashed in 1929, gold was $20.67 an ounce, and after it crashed and everyone lost everything they had, just about, gold was still $20.67 an ounce. Since no one can predict what the price of anything will be if the current stock market crashes, gold can never go below its cost to produce, and throughout history, gold and silver, have always been real money, and not dependent on any government, stock market, or economic conditions anywhere. They will still be real, desirable, beautiful, non-taxable, independently, and valuable, come what may.
As opposed to insurance ads on TV, “Your payments will never go up.” There are no payments with gold and silver, and as the dollar goes down, the value in un-backed dollars of your metals hoard, keeps going up as all prices go up. Bet you’ll never find an insurance policy like this! We’re here at 1% delivered, over our wholesale cost of gold and silver. Sorry, we do no advertising, which advertising for all things, in all places, are paid by the buyer, as in Trump’s tariffs. Speaking of Trump, in November of 2016, when he was elected the first time, gold was $2012. See what it is now?
-Don Stott don@coloradogold.com