Governments can print money to pay for bailouts, corporate takeovers, quasi-government takeovers such as Fannie Mae and Freddie Mac, social programs, health care, cash for clunkers/appliances, extended unemployment benefits, and any myriad of other new spending programs… but they can’t create gold.
The U.S. government via the Federal Reserve is printing trillions of dollars of new money right now to get the banks to lend, stay solvent and to bail out all types of financial institutions. In addition, they are printing money to be used to buy our own Treasuries. That’s because we cannot entice enough foreign central banks to buy them. Stop and think about the fact that we are printing our own money to buy our own debt – it’s ludicrous and repulsive. But that’s how bad it’s gotten.
Hence, whenever the government needs money, and doesn’t have enough, it just makes more. That is legal counterfeiting – at both your and my expense. For every new dollar the government makes, the old dollars in our pockets and purses are worth less. Any time there is more of something than there was before, with no significant change in demand, that specific something is now worth less. That’s our Dollar.
Do you think this fact is lost on the Europeans, Japanese, Chinese and others? It is not. It does seem, however, to be lost on the American populace.
Because of this legalized counterfeiting printing press, the supply of paper money can be infinite. Because of technology, it is now simply a matter of typing something into a computer and the amounts are instantly credited somewhere. No need to even put paper in the Federal Reserve printer.
Inability to Counterfeit
Gold cannot be created. It cannot be counterfeited. No one can push a button to electronically generate more (except on the futures and options exchanges, which will realize a default eventually.)
The supply of gold is extremely limited. It grows at approximately 1.4% per year and is declining due to exhausting mine supply. The entire gold production in the history of the world could fit in two Olympic sized swimming pools.
All Things Considered – John’s Commentary
Strongly consider converting a portion of your assets denominated in devaluing dollars into gold and silver as a secure store of value. The dollar is going one way and only one way – DOWN! I would challenge anyone to make a case otherwise.
Action to take now: Holding a minimum of 10% to as much as 30%, depending on your individual outlook, in physical gold and silver, would be prudent at this time.
What to buy: I currently have US Arts Medallions and Austrian 100 Coronas at 4% over spot including insurance and delivery on all but the smallest orders. Pre-1965 silver coin is still the absolute best value in silver. $1000 face value bags, while premiums are moving up, still ship free overnight at 5.5% over spot.
Quote of the day: “We are in a world of irredeemable paper money – a state of affairs unprecedented in history.” – John Exter
