Real Money

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Say what you will, paper always loses 100% of it's intrinsic value, always. Paper money can go on for awhile, but eventually reality always catches up. Gold and silver suffer dramatic swings, but never lose all their value.

Paper is only as good as the authority that issues it, it is merely a promise, not a store of real value. Gold and silver may be decried, and they are, but have been so for over 5,000 years.

I have lots of very pretty pieces of paper money in my collection, some valuable because it is scarce, but most of it lost intrinsic value long ago. Look at the Colonial notes in the USA for instance, no value today except as a collectable.

 

I've never called Federal Reserve Notes "worthless paper." They have value when received that is completely fair compared to the labor or goods given in exchange for them. My problem with them is that they are not a good store of value, and become less valuable [not worthless] as time goes on under an expanding fiat currency system. Hence the need for people to invest in things that include gold and silver, because simply saving is a loser's game with a fiat currency.

I also completely agree that those who fail to learn from history are doomed to repeat it. Gold was about $22 per ounce at one time, and now it is $900+. It is highly probable that it will be much higher in the future. The dollar has lost 90%+ of it's purchasing power since 1913. History teaches that this trend is likely to continue because the same conditions are in effect. Yes, history is very very important.

You are correct that gold is not everywhere at everytime a good investment. I am not a goldbug. Someday it will be the right time to sell my bullion and just keep the numismatic coins that will never be for sale. I expect the hype around gold and silver to reach the same level that it was in 1979-80 and become similar to the excitement over internet stocks at the beginning of the year 2000. We aren't there yet.

 

97% devaluation since 1913 with the establishment of the Federal Reserve. And we got off the gold standard in 1971. When fiat money is not backed by anything I read that it takes 40 years before the currency fails. We are almost there.

I don't see how if they are not printing the M3 numbers anymore (stopped in 2006) how we can determine how much liquidity is out there due to quantitative easing. How are they going to pull it back in.

The Austrians define inflation as too much currency chasing to few goods. If you look at history as we are doomed to repeat it as one poster wrote above you can look at the period of the early 80's to see that silver and gold hit all time highs.

With all the spending going on and the printing presses running who's to say we won't get a repeat performance of inflation and then price increases in PM's. Interest rates will rise and we will have inflation. It's a matter of not if but when.

Like the poster mentioned above Ted Butler poses really good arguments for the investment in silver.

 

97% devaluation since 1913 with the establishment of the Federal Reserve. And we got off the gold standard in 1971. When fiat money is not backed by anything I read that it takes 40 years before the currency fails. We are almost there.

I don't see how if they are not printing the M3 numbers anymore (the amount of currency in circulation, they stopped in 2006) how we can determine how much liquidity is out there due to quantitative easing. How are they going to pull it back in?

The government is currently engaging in a shell game to buy its own treasuries through foreign countries and credit defalut swaps. HFT (High Frequency Trading) controls the stock markets and is falsely inflating it. The extra liquidity the banks got from TARP, the Fed, the treasury is being used to pump up the market as well. We are living in dark times.

The Austrians define inflation as too much currency chasing too few goods. If you look at history as we are doomed to repeat it as one poster wrote above you can look at the period of the early 80's to see that silver and gold hit all time highs during this inflationary period.

With all the spending going on and the printing presses running at full capacity who's to say we won't get a repeat performance of inflation and then price increases in PM's. Interest rates will rise and we will have inflation. It's a matter of not if but when.

Like the poster mentioned above Ted Butler frames really good arguments for the investment in silver. Basically, gold and moreso silver are being held down illegally by huge short positions by large institutions - he believes Morgan Stanley is one. And these contracts are just contracts there is no physical silver associated with them.

The Chinese government is advocating that their citizens start buying silver. There are 1.3 billion soon to be middle class citizens that will start buying it as an investment. There are 1 billion ounces of silver above ground. There used to be 60 billion. But that has greatly depleted due to industrial use. 5 billion ounces of gold above ground. You do the math.

So let's review:

1. 1 billion ounces of silver above ground (5 billion ounces of gold)
2. China advocating the purchase of silver by their citizens
3. Silver used in industrial applications
4. Inflation due to the increase in the money supply and eventually interest rate increases
5. No idea how much liquidity is in the markets
6. Ratio of silver to gold historically has been 15 to 1, currently 62 to 1
7. It takes a up to 10 years to get a new silver/metals mine online
8. Silver is a byproduct of mining other metals (lead, zinc, copper, and gold)
9. Silver will have to increase in price to get those mines online
10. There are many more Emerging Markets that will be entering their industrial ages in the coming years (China, Brazil, India, Russia, Indonesia etc.) that will increase demand
11. The US Mint is not making AE in Mint State or Proof right now.
12. There is a lead time of about two months to buy silver bars

I'm sure there are more but that is what I can remember from reading Ted Butler and others. Check the Investment Rarities site for a back log of articles by Ted Butler.

Buy as much silver as you can afford to before it is too late. I am when I can afford it especially on any large pull back.

My guess (based on what I have been reading) is we probably have until 2012 before we really get hit with inflation. The Fed is going to keep interest rates as low as possible for as long as possible.

Remember I am here to learn so anything else you have to offer I am all ears. Thanks for reading.

 

Yeah I thought somebody would say that.

 

I'm a lot more concerned by that asteroid expected to arrive in 2029.:bigeyes:

 

2012

What is all this stuf about myan coins linking 2012 to the end of days , maybe it was sculpted on walls ?
Lot of bad talk going around about 2012. If you believe then sit back and have a cool one !