The truth about paper and precious metals – watch this great vid!
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By: Joshua Gamen
I find it a little bit crazy when people say that precious metals are in a bubble that is about to burst. While I do believe that gold and silver will be the next great bubble, I do not see them anywhere near bursting quite yet. I know that people are starting to get on the Dow bandwagon right now as it has been steadily going up recently too, but the Dow is just keeping pace with the rest of the commodities as the dollar becomes more and more worthless.
Value transfers. And it transfers from one commodity to another. There is only so much real value in the world, and this real value comes from what we produce as society, as well as the natural resources that we have. Now the amount of value can be manipulated by creating a fiat currency(fiat = nothing attached to the currency, ie: gold), but eventually there will become a natural balance as the amount of currency gets too far out of whack with real value, and then we see the existing currency become devalued so it just takes more currency to buy the same good or service that you were getting before. When this happens and people see their dollars becoming worth less and less, they lose faith in the dollar, and buy things of tangible value. This is what we are seeing start to happen right now. If you look at what has happened in the last week since the Federal Reserve stated they would begin “quantitative easing,” or as I like to call, “inflation on purpose,” you will see that all commodities are rising fast. It is tough right now to know where to keep your money. If you save your dollars, you will get absolutely sloughtered. If you buy stocks, you are at the mercy of Wall Street and speculation. People are scared of real estate after the recent bust from that market, and it is very difficult to know where to go. Silver and gold have always been used as a hedge against inflation and sought after in times of currency uncertainty.
By now we should all be at least somewhat familiar with how value bubbles work. Most recently we saw the largest real estate bubble in history. This giant real estate bubble got larger and larger as derivatives kept pushing the bubble and allowing for expansion, until finally there was no physical way to sustain the interest payments on what was funding the bubble. It got to it’s bursting point in 2008 after borrowers could not keep up with the interest on all of the debt which had been created to keep the bubble going and expanding. Now people are back to reality and seeing housing for what it is again, shelter. (This is not to say that real estate cannot be a great asset. It is tough to buy a better asset than cash-flowing real estate-ie: rental property that pays you more per month than it costs you to own. You get cash flow, plus tax advantages, and possibly even a little appreciation if you are lucky and catch the right cycle 😉
Gold and silver have been the true reserve currency for the world since the beginning of civilization, and if you look at what the Fed is up to, you cannot help but see the writing on the wall.
The gold and silver bubble will burst, but I do not see this happening before a GIANT craze. I think it is a reality in which we see people lined up outside coin/bullion dealers awaiting to exchange their devalued currency. I honestly think it will get that insane. Look around town, you are already starting to see “we buy gold” everywhere!
I think we are a long ways right now from the burst of precious metals! The momentum is just starting to gain steam and the people are just starting to catch on to the trend. Once the mass is on to what is really going on with the Federal Reserve, expect to hear numbers you never dreamed of. Just since September, we have seen silver break through $20 and all the way up to what I am currently looking at($27.76 per ounce)!!! Since the elections and news from the Fed last week, we have see silver go from $24 per ounce to almost $28!!!! Silver has been around since the beginning of time – insane to think about this high of a % increase in week!
Do what you can during these times to protect yourself and your loved ones. Keep educating yourself on how money works, after all, in this economy – knowledge is the new currency! If we all keep up on what is going on, and work together to find a solution, we will all live in a better world. Godspeed.
by: Joshua Gamen
Have you seen the price of gold or silver lately? If this is not something you track, change that. Here is why: As gold and silver go up in value, the cash in your wallet goes down in value. Literally speaking, the value is transferring from the paper dollar to precious medals. And FAST!
Gold went up roughly $60 in the month of September. As of today, in the past year gold has gone up $300. In the last 2 years it has gone up roughly $430. PAST 5 YEARS = up $845 dollars, nearly tripling it’s value in dollars.
In October 2005, gold was worth a spot price of $466 dollars. Right now, I am currently looking at the up to minute price of gold at $1,314. Gold has nearly tripled in value. Conversely, the dollar is worth roughly 1/3 of what it used to be worth versus gold.
At first it is a bit tricky to think about the economics of financial value. But let me attempt to break it down for you.
Everything has value. A gallon of milk is worth something, a question answered is worth something, gold is worth something, a stake in something is worth something, clothes, automobiles, paper, everything has a value. Part of the reason we are in the mess we are in right now economically, both nationally and globally, is that the government has manipulated the value of the US dollar so that it had more value than it should.
This started when President Nixon took the dollar off of the Gold standard in 1971, in an attempt to CREATE more money for circulation to make everybody do and have more, and thereby get people doing more and making more happen(a good economy). The US dollar is the reserve currency for the world, and so as it corrects itself to being back to what it was originally worth(about the same as a napkin), the world suffers economically.
Going back to the beginning of time, gold and silver have always been used as money. Every civilization that has ever printed or made some kind of currency, and not had anything tangible backing that currency, has ended up with a worthless currency. Currency is only worth as much as people think it is worth. If people don’t think paper bills will be worth as much as other items in compared to trading(ie: gold, silver, diamonds, oil, clothes), then paper bills will become worth less and less. Google: Hyperinflation, Germany.
Value is always value, and it shifts to things of which men(and ladies 😉 perceive to have it. 5 Years ago real estate was believed to have a lot of value. The thing is, a house is a house just like it was 5 years ago. The difference is 5 years ago people thought that a house had a high amount of financial value strung to it, now people are seeing it for what it is, a shelter from the weather, warmth, etc.
For most of our known lives, we have thought of the US dollar to carry extreme value. I was in my early 20’s before I every grasped the concept of currency as opposed to money.
The dollar is crashing, hard and fast! Since the early 70’s, the government has been printing more and more money, in an attempt to keep everyone engaged in more commerce. As the government prints more money, the money in circulation is worth less. The government is now pumping more US dollars into the economy than ever before, and at a more rapid pace than ever before as well! US trade is down, we export significantly less than we import. So where is our value? It’s leaving fast! The good news is now is the time to position yourself to get as much things that have value to you as possible, with a declining dollar. If you can invest in a few pieces of gold or silver here or there, do it. You will get more and more for your gold and silver in the future.
The population is gradually having a paradigm shift themselves, from value being in the dollar, to value being in precious medals. As the people catch on to the idea that their money(US currency) is becoming worth less and less, they will flock to precious medals in an attempt to keep any tangible belongings they have.
The currency bubble that has been inflated for the past 4 decades is popping fast, while the precious medals bubble is just blowing up. Expect gold and silver to rapidly gain against the dollar in the next couple years, as the value of the slutty dollar shrinks, and the value of real estate continues to fall do to the number of bad mortgages adjusting, and rapidly increasing payments along with foreclosures.
Most importantly, get and stay financially educated. Knowledge is the new money 🙂