Email: invest@goldenlionmint.com
Phone: 828-350-1454
"Can Shortage Be a Silver Lining?"
If you recall, recently I wrote a revealing article on the shortage experienced by the U.S. Mint. It was so tight on one ounce gold eagles that the government had to suspend sales. They sold 60,000 coins in August verses only 13,000 in June. Now I’m being informed by dealers they’re having great difficulty obtaining silver eagles and especially, 100 oz. bars of silver.
What’s behind the recent demand for precious metals? Well, it’s pretty much what it’s always been. First, I think the old saying tells it all: “When the money goes rotten, the real money (silver and gold) goes into hiding.” Most intelligent people cast a suspicious eye on their nation’s un-backed, fiat paper currency. When the currency is debased and the inflation rate outpaces the interest rates, aware individuals understand that to hold dollars is to lose money.
Let’s look at it this way. Take the stock market as an example. You invest your hard-earned dollars to buy a stock or mutual fund. However, before you can invest those dollars, you must pay tax on them. Let’s say your accountant says you’re in the 25% tax bracket – well, that’s not the full picture. Be aware that the only money available for you to invest is from “net” income – not gross income. Remember, in addition to federal income tax, you pay social security tax at 6.2%, Medicare tax at 1.45%, plus other taxes depending on whether or not you’re self-employed. And don’t forget your state income tax. If you live in Montana, add 11%; Rhode Island, 10.098%; Vermont, 9.5%; California, 9.3%; or Oregon, at 9%, and so on. So, you can be looking at a total income tax rate of well over half your income. That means you’re working for six whole months for nothing! Now, add insult to injury – out of what little you’ve been able to squirrel away, you buy some stocks.
How much do you need to make to justify your investment? Well, first of all you need to earn more than the current 5% inflation rate (I don’t know why we accept this government figure when food, fuel, and other consumer goods have increased at double-digit rates). Secondly, you need to determine whether or not it’s been worth the worry and concern to finally, maybe earn 10% (in real terms that’s only 5%) and then pay 15% capital gains tax. And, I’ll bet you a dollar to a donut that we’ll see this rate change to the upside along with Forbes Magazine’s recent prediction of a 50% federal income tax rate (then add the other taxes – and don’t forget the tax on food, consumer goods, and your home.
From all we’re told by the experts, the stock market is the best place to be invested. However, the truth is that stock prices can stay down for decades. Don’t believe me? Check out the periods from 1907-1921, 1929-1953, and 1966-1982 and tell me I’m wrong – please don’t misunderstand me, I’m not saying you can’t make a lot of money in the markets, it’s just that the average person doesn’t. They’re lucky just to beat inflation. So, what should you do?
Back to our saying: “When the money goes rotten, the real money (silver and gold) goes into hiding.” How hidden are we talking about? Coins (the term “coin” means government-sanctioned money like having 25 gold eagles or bags of junk silver coins) a coin dealer must report by law this purchase to the IRS. And yes, they could (it’s unlikely) be subject to confiscation if the government so deems necessary. Nice thought, huh? Keep in mind, maple leafs, krugerrands, Mexican onzas, pre-1969 silver coins, etc. are vulnerable.
The good news is that private (non-government issues) and numismatics or rare and uncirculated collectible coins are exempt from a possible government confiscation. This is why Golden Lion Mint, Inc. deals only “private” collectible metallic art bars of the very highest grade gold (.9999) and silver (.999). You can sleep soundly with us. So you can say, the shortage of private gold and silver fabricators comes with a silver lining – asset protection!
Not only is there a shortage of private mints capable of providing you with non-reportable gold and silver, but there’s a huge shortage of both gold and silver. As an example, when a mining company forward sells its metal, it sells or leases what is still in the ground, unmined. These paper transactions are seen by market statistics as actual – when in fact, they are not. It’s simply a deceptive way to allow the market to think more metal is available than actually exists. Neat trick, huh?
Let’s focus on silver for a minute. Silver is in huge demand in all electrical and electronic products, not just jewelry, silver plating, sterling ware, photographic processes, and about 6% or so for coinage. It’s also used in batteries, autos, diesel engines, alloys for planes, and of course, computers. Here’s the good news for you as an investor: the world uses more silver each year than can be mined! It uses 850 million ounces. How much is mined? 250 million ounces less than the world uses. What does that mean? It means the world must find someplace to get an extra 250 million ounces of silver. And remember, all of the mine supply is already spoken for, so where does it come from? The only place it can: from above-ground supplies.
When folks like you and I sell silver, it goes into hiding. In other words, into somebody’s safe and off the market, out of circulation. With more and more emerging countries, like India, China, Brazil, Russia, Eastern Europe, etc. gaining in prosperity, more and more of the world’s population thus seeks to protect their wealth – how? Well, you already know - by investing un-backed, fiat currencies into time-honored real value, as found especially in gold and silver.
The only question that remains, is will you hold devalued paper or the enduring store of value found in gold and silver? If you act today, this shortage will provide you a silver lining! -Peter
Tony: invest@goldenlionmint.com
Or Call: 828-350-1454