A common question asked of myself and my kids, is: “Do gold and silver pay any interest?” The answer is “No,” but that is a question, which means absolutely nothing.
Does your computer pay interest? Does your bed or sofa pay any interest? Does your car pay interest? (If it isn’t paid for, you pay the interest!) Does your home pay any interest, or do you pay interest if you have a mortgage? The answer to whether physical something pays interest, can go on endlessly. They don’t.
Another question, if you please. If you have bought an insurance policy, maybe on your life, auto, or health, and as the years pass, and you have made payments for decades, do their benefits go up to meet the obvious dollar de-valuing, which even the government says should be 2% per year. Your policy states that it pays benefits, at whatever dollar amount is on that policy, even though those dollars may have lost most of their value or purchasing power, when that policy pays.
Another question if you please. If you have a life insurance policy and you took it out at maybe age 20, which is normal, say for $5,000, and you are now 80, does that policy have any real value, even though you have been paying on it, for many decades? Of course not, because inflation has destroyed any value it may have had at age 20, however 60 years later, when you may be 80, what will it buy, if you die? Answer: Little, if anything.
Getting back to the subject of interest. Isn’t “interest,” the fee you pay when you borrow dollars in the U.S.? You go to a bank and borrow dollars, and you assume that bank is loaning you dollars other customers have saved? Sounds great, but it isn’t that way. The bank, simply loans you the money, not from savings of other customers, but the bank has created that money out of thin air. Why do you think “bank failures,” are so common, when an economy goes bust? All the reason not to store your surplus assets in a bank. I know, the bank has an insurance policy which guarantees you if the bank goes down. That FDIC has a nickel in store for every dollar it ‘insures,’ and when the remaining 95 cents is needed, the presses print the rest, thereby automatically increasing inflation.
If your credit card issuer charges you 21% interest on your balance, and it pays the entity which charged you, maybe a 2% fee, why the 19% charge? The answer is that it pays for all the deadbeats, who have not paid the credit card charges, for paying the restaurant, department store, electrical bill, or gas station, which merchandise you consumed, and they have been paid, plus huge paper work, lawyer’s fees, etc, and of course a huge profit for the credit card company which issued the card. You’re paying for the deadbeats, which the credit card outfit foolishly gave credit to, without checking the credit rating of those to whom they issued the card! Your 21% interest, is the credit card’s insurance against their foolishness. I always pay my credit cards in full every month, never bought anything ‘on time,’ have no mortgage, and pay no interest to anyone for anything, at any time, so ‘interest’ doesn’t really concern me.
There is a difference in terms between “interest,” and “renting.” Rents, are for the use of something belonging to someone else, be it an apartment, or a car rental. When you rent something, the person owning it, is getting paid for its use, and I have no problem with that, but the object ‘rented,’ is a physical item which must be cared for and returned in good condition, or there will be a fee charged for your careless use of it, or the item had self degraded because of age or being out of date. The renter must take that into consideration when they rent to you. Renting, is different than borrowing money and paying interest for its use for anything you choose to buy with that credit. Interest charged for un-backed paper dollars, created out of thin air, is different than renting something from an owner who has bought something physical, and wants a return on is or her investment. I, occasionally rent a power tool, space on a cruise ship, or fare on a flight, but the purveyor of those goods, has a lot of capital tired up in them. A legitimate use of capital.
Getting back to the lack of interest paid on your purchase of gold and silver: Gold and silver, increase in dollar value, virtually as fast as the dollar self-degrades, thanks to politicians. You buy silver at $80 an ounce, and in ten years, it may be $800 an ounce, and the same silver you bought at $80 U.S. dollars, are now worth $800 U.S. dollars, and it just sat there in your safe or secure place to store a valuable, and have had no monthly payments to make, and no capital gains taxes to pay. No one even knows you have it! You are secure anonymously and don’t have to have a garage, maintenance, or taxes on it. What could make any more logical sense than that? We’re here at 1% over our wholesale cost, delivered to you. 1%, because we have little overhead, do no advertising, and work out of our own homes, and do a nice business!
-Dont Stott. don@coloradogold.com