This is a very short, very powerful article. Stop and consider for a moment the following statement:
“The value of gold has never and can never go to zero”!
Paper money is only a promise to pay. Gold is always payment in full. Promises can be broken and many have recently defaulted. Gold is not a promise. Gold is real, tangible wealth. Currencies can devalue to zero! All paper currencies in the history of the world have devalued to zero in time.
Examine the following two charts. In the first, the (BASE) is roughly equivalent to the discontinued M3 money supply measurement. Note that the money supply doubled in 2009!
Now look at the second chart. A doubling of the money supply can only mean there is a huge decline looming in the already eroded purchasing power of the US Dollar.
There is not much room left to drop – but it has to drop – and it will! You cannot double the money supply and not suffer substantial dollar depreciation. This fact is not lost on our trading partners who are increasingly looking for alternatives to holding US dollars.
What to do now: Proverbs 21:5 says, “The plans of the diligent lead surely to plenty”. The clients that are exercising the greatest wisdom are investing an amount, small or large, on a consistent basis. For some it is monthly. For others, it is quarterly. Trying to time the market has never served one well. If you decide to get in, or add to your positions, invest a modest amount consistently.
What to buy now: Low premium items only. Choose 90% pre-1965 silver coinage and 100oz. silver bars. In gold, stick with US Arts Medallions, 100 Austrian Coronas and Krugerrands.
Quote of the day: “In a country whose currency is not convertible into gold, inflation leads to its continuous devaluation in terms of foreign currencies.” – Michael A. Heilperin
