Email: invest@goldenlionmint.com
Phone: 828-350-1454
"Up, Down and All Around: Money, Gold, and Stocks"
If you mow your own grass, you know this experience. Just as the mower is about to run out of gas, you hear this roar of the engine – then it stops dead. Well, yesterday the financial markets roared upward. Investors were quite happy the Fed’s meeting didn’t result in an interest rate hike. Why? Because it would kill the markets.
The Fed is between a rock and a hard place. First, in order to fight inflation (have you noticed any the last time you bought groceries?) it must raise interest rate, which works to slow overheated markets and price inflation. Well, if your business is sizzling hot, you’re by far the exception. Don’t tell that to Ford, GM, the bank, or Starbucks; don’t breathe it near a realtor, building contractor or any of the tens of millions of Americans attempting just to survive. The last thing you want to hear is that your mortgage payment is going up. So, not raised rates was good?
Well, the Fed knows that and this being an election year….I guess you can fill in the blanks - the second option, which is just as devastating as their weak dollar policy. The weak dollar is a diluted dollar; it’s a bit like watering down your gasoline - it makes the country’s economic engine sputter and smoke. Smoke? You’ve noticed that, have you?
The reason you don’t hear any reports on the M3 money supply (that’s basically the amount of water they pour into the gas) is if you really knew how much your paper dollars have been diluted by an overworked printing press, why, you’d be downright depressed.
Now, while we’re awash in paper money, try borrowing some from the bank. Even home equity lines of credit are being cut. This presents a strange condition: more money floating around in the markets, yet less money available from lenders. Why such a weak dollar policy? It’s because it makes American goods cheap in terms of other, stronger currencies.
Back in 1970, we can read the prophetic words of author Gordon L. Weil, “A country cannot always spend more abroad (think the Middle East) than it receives from foreign countries. If it did so, it would soon go broke. A government might try, of course, to print more currency (Yikes! We’re kept in the dark to the exact amount) in hopes of using it to finance additional foreign purchases (like oil), but as soon as other nations found out that they were being paid with worthless “printing press” money, they would refuse to accept any more.” And that’s exactly the situation today. If foreign nations abandon the U.S. dollar as the world’s reserve currency and foreign bond holders dump their bonds….well, you’ll have plenty of toilet paper. It sort of reminds me of an old neighbor when I was younger. He was my best friend’s dad, who’d just returned from the war in the Pacific. This air force captain gave me what looked like a narrow roll of toilet paper. He had taped together worthless currencies into a huge roll and laughed as he told me what it might be good for.
Elgin Groseclose wrote, “Until government administrators can so identify the interests of government with those of the people, and refrain from defrauding the masses through the device of currency depreciation for the sake of remaining in office, the wiser ones will prefer to keep as much of their wealth in the most stable and marketable forms possible – forms which only the precious metals provide.” The famous economist, F.A. von Hayak, concurs, “With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people.”
While we see dramatic swings up, down, and all around in money, gold, and stocks, the value of gold is unsurpassed. Gold never loses its value in its relationship to paper currencies. The first gold pieces I ever owned still buy the same amount of goods and services they did when I first acquired them. Not so with paper money or stocks. Gold preserves purchasing power. When at one time gold sold for fifty dollars an ounce, so did the top-of-the-line men’s suit. One ounce of gold will still buy that same men’s suit today! But can you go into Brooks Brothers or Lord and Taylor and buy the best suit on the rack for fifty dollars?
I’m certain you can see how gold acts as a savings plan. Regular monthly investments of gold and silver form the world’s most solid private retirement program. Gold doesn’t need a financial statement like stocks, bonds, and annuities. Nor does it depend on the financial strength of the issuer. Gold’s value isn’t dependent on any outside solvency. It can’t collapse like pensions or IRAs, etc. Gold’s absolute liquidity means it can be converted into cash virtually anywhere in the world. And, unlike real estate or valuable collectibles, gold is easily hidden and highly portable.
In these turbulent and uncertain economic times, I can see no better investment to make; it appears the only rational choice in preserving what you do have and allowing you to sleep peacefully at night. According to William Rickenbacker, “Gold would have value if for no other reason than it enables a citizen to fashion his own financial escape from the state.” This means, if all other assets are lost or become worthless, you’ll be able to take out your gold and recapture your wealth. Quite unlike the unfortunate survivors of Hurricane Katrina or Midwest flood victims, waiting for and hoping the insurance companies wouldn’t fail them.
I don’t know about you, but with a much greater financial storm brewing, I’ll sleep soundly because I know I’ve make the right decisions investing in pure gold and silver. And how about yourself?
Tony: invest@goldenlionmint.com
Or Call: 828-350-1454