Reprinted (updated) from April 2012
"Money printing works, until it doesn't work anymore"!!
I am not sure who the original quote is credited to, but it I know it is a favorite quote of Marc Faber, author of the "Gloom Boom and Doom Report". You can view his latest interview at Capital Account. In that YouTube video, Marc refers to the "inflated ego of Fed Chairman Ben Bernanke" as the excessive money printing continues unabated, on a sure course to financial ruin for many people. He fears there will be social upheaval in a number of western democracies and that wars will evolve from the hyper inflation to come. You may agree or disagree with his ideas, but I think you will agree that Faber is not a fool. His opinion is a learned one, and should be heeded along with others who try to make sense of a financial crisis that is not yet finished playing out.
In the 1970's there was one listed "Billionaire" in the Forbes list. By the mid 80's that had risen to 8. Today Forbes lists over 1200 billionaires in the world, and Faber believes the number is closer to 1500. Maybe that statistic is a "canary in the coal mine" of a hyper inflationary model which is being perpetrated by Banksters and Central Banks throughout the world at this writing. Now I know that none of those 1500 are reading this column, but I hope that many of those whose finances stand to be either greatly reduced or even wiped out, are.
Gold and Silver are not an investment!. Let me repeat that. Gold and silver are not an investment! Gold and silver are (excuse the pun) the most "solid" form of money you can possess. Yes, these two precious metals are money! They have been money for about 4,000 years. Right up until 1964, silver was used in U.S. Denominated coins. That is why in 1964 a U.S. Quarter would buy you a gallon of gas. That is why today, the exact same U.S. Quarter (dated 1964 or before) will still buy you a gallon of gas. It is because of that silver content.
During the Roman Empire circa 2,000 years ago, an oz of gold would buy you approximately the same value of goods as it will buy you today. ( I know that "goods" are interpreted in different ways, but "food" and "Clothing" are goods and that comparison can be made) This is money that has kept it's value for thousands of years, and continues to keep it's value, even though, at least 2 or 3 times per year, there is a hue and cry from the so called investment community that gold has lost it's "sheen" and subsequently drops, only to return to it's steady climb in the month following. Usually only the "drop" in prices is reported by the headline seeking general media. They often don't report the steady rise as it usually takes the entire year to shake out higher, as it has for the past 11 years in a row. For instance, the price of silver rose 22% in just January and February of this year. Most people are not aware of that, because it did not rate a "one day" headline, but it is fact.
How do you pay down a 15 Trillion dollar debt? Well, you make the 15T worth a lot less, that is the only way. You "inflate" it away. You print money, and you print money and you print money. And it works, "until it doesn't work anymore"! Just ask the blue collar savers who have been squirreling cash away for a rainy day.
Against gold, they have lost over 500% in the past 10 years.
Yes I know, the famous Oracle of Omaha once said that "gold has no value". However it is now a certainty that, If Warren Buffett could have sold all of his shares in Berkshire 10 years ago, and just bought physical gold, he would be 500% richer today (give or take a percentage point). How is that for maintaining value?
There is now a race to devalue currency, by almost every major central bank in the world. As
Ben Bernanke and his cohorts at the U.S. Federal Reserve Bank launch
QE3 in the form of a plan to buy 40 Billion of Mortgage backed
securities every singe month, with no end date, up and until the job
market improves (I donèt know how they will measure that) It is now
imperitive that savers save gold and silver, or at least invest in the
companies that produce these precious metals.The only "currency" the Fed cannot devalue, is gold and silver, though they try and try, by using the fear factor. Don't fear owning gold my friends. Fear not owning gold and silver, especially if you are a saver.
Over the past 16 months, more than 61% of "all" U.S. Treasuries were actually bought by the Federal Reserve Bank. Yes, that is right. The United States of America is buying its own debt. That is because foreign banks are only buying less than 2% of that debt! Sound like a problem to you? Sure does to me. Sounds like money printing to me, on a massive scale!
Most people do not realize that, all of the gold mined over the past 4,000 years, if melted down, would only fill 2 Olympic sized swimming pools. Does that sound like a shortage to you? Sure does to me. Now consider that the Silver/Gold ratio is historically 16:1 At today's gold rate, that places silver over $100 per oz. (trading today under $33) That is only if gold does not increase further in U.S. Dollar value (some value eh!)
Now here is another fact to consider. As the money printing continues over the next decade, or as hyper inflation begins to rear its ugly head from the money printing of the last 4 years plus this new development, and we can draw any conclusions from the previous decade, then gold will reach (in U.S. Dollar terms) Approx $8300 per oz by 2022 (or before).
Now, does today's gold purchase price of usd $1750 sound like a bargain to you? It certainly does to me!
Savers should be buying physical silver and gold right now if they haven't already been accumulating. Your savings depend on it.
Personally I have invested in both physical silver and gold and I am investing in mid tier gold miners that have been beaten down over the past year. Do your own homework, but consider mid tier miners (Ones that could be attractive to the senior miners, who can only increase production by scooping up smaller names) who have solid management, producing mines, increasing production, increasing reserves and who's production costs does not exceed $800 per oz. (the lower the better).
You don't need good luck with your Savings. You only need good currency.