By: John Fisher
One of the greatest dangers of a fiat money system is that over time people lose sense of what paper “money” is really worth. I say ‘over time,’ because, in the case of the US Dollar, this has occurred over a span of almost 100 years. The USD has fallen in value by over 96% since the inception of the Federal Reserve Act in 1933.
Think for a moment about the foundation of your home or apartment. When it was first built, it was probably fine. But suppose over the course of time, what the foundation was built on began to wash away, or be diluted. Suppose you thought your house was built on rock with concrete, but instead found it was built out of paper on sand, and erosion (dilution) was taking its toll. It’s a catastrophe waiting to happen. Yet modern economists are refusing to recognize (publicly) that an economy built on an eroding foundation (for example, a fiat paper dollar that is constantly devaluing) is in danger of collapse.
Consider this example…
In January of 2000 with the Dow Jones Industrial Average at 11,750 and gold at $280 per ounce, the Dow was worth approximately 42 ounces of gold. Today, with the Dow at almost 11,000 points and gold over $1,150 per ounce, the Dow is worth less than 9.5 ounces of gold. That’s all! In other words, measured in terms of gold, the Dow has actually declined in value by over 75%. To make a real new high, given the current price of gold, the Dow would have to rise above 48,000 points.
The fact is, if history is any indicator, this trend will only continue. Those who hold gold will continue to retain and grow their wealth, and those who hold paper will continue to lose it.
All Things Considered – John’s Commentary
Action to take now: If you have not yet invested a minimum of 10% of your net worth in physical precious metals (coin and bullion items in your immediate or near immediate possession), then I strongly urge you to begin, or continue today. Buy in modest amounts over time. Do not hold all your assets in real estate or the market. And, gold ETF’s are paper instruments – period. Please see our website for more details.
What to buy now: Low premium gold and silver bullion and coins. Stay away from anything you have seen on TV! How do you think they pay for the advertising and the account executives that answer the phone? Recently, I did a survey of three of the major advertisers on TV asking them to quote British Sovereigns. The biggest name was at $510; the next was at $435; the next at $385; I was selling the same coin for $265. Buyer beware – do not buy from the TV or newspaper.
Specials: (In quantity delivered.) 90% pre-1965 coin at $0.89 per ounce over spot, 10 and 100 oz. silver bars $0.99 over spot delivered; US Arts Medallions and Austrian 100 Coronas $56.00 over spot and 1oz, gold ingots by Credit Suisse and Royal Bank of Canada $64.00 over spot.
Quote of the day: “For more than two thousand years, gold’s natural qualities made it man’s universal medium of exchange. In contrast to political money, gold is honest money that survived the ages and will live on long after the political fiats of today have gone the way of all paper.” – Hans F. Sennholz
