China Answers Simple Question, Declares US Petrodollar Dead On Arrival

Dear GoldBugs,

On September 6th, without any media coverage, China declared an end to the 70 year monopoly of the US petrodollar.  China declared that the whole world will never need dollars ever again to buy oil.  Explains a lot that’s happening today and last week.   Helps explain the Fed Reserve’s vow to print money forever.  Explains the Mid East on fire. Explains so much.

For about 70 years now, the US has enjoyed having the world’s reserve currency.  That’s because we won WWII and we ended up with more gold than anyone else.  US dominance over world affairs  hasn’t always been popular, but that’s the way it was.  It meant that all international commerce of any consequence had to be paid in dollars.  Now, foreign governments, including some of our pals, but led by nations that really don’t like us, are asking this simple question:

Why should I trade my oil – oil which is the economic engine of the world, oil which is true wealth taken from the earth, oil which requires years of expensive research to find, and years more of hard labor to mine at what is often great risk to life and limb, oil which is vital to produce and transport thousands of products the world needs to buy, oil which provides life saving energy, for which there is no viable substitute for decades to come – why should I trade my oil for digital US dollars that were invented using control/print on a computer at the Federal Reserve Building in Washington, D.C. just this morning?  They ask “Who says I have to do that?”
Read more

There are two kinds of people. Those who do not understand gold, and those who do understand gold.

Dear GoldBugs,

A friend called long-distance this morning and kindly asked for my opinion on the overnight developments in Egypt.   Here’s what I told him.

There are two kinds of people. Those who do not understand gold, and those who do understand gold.

This week, appropriately the week of 9-11, is seeing the effects many of us have warned of. Arab TV is showing the murdered US Ambassador to Libya being hung by his heels. Next step is to drag his body through the streets. 48 hours after His Imamship’s new BFFs took down the US Embassy in Egypt. The same folks His Imamship just presented with shiny new nuke submarines. A week after democrats on national television booed God not once but thrice. Hello Days of Jimmy Carter.

At least when Iranians took our embassy away from Carter, there was national outrage, a stock market tanking, full blown 24/7 coverage and folks headed for the church house. But times have changed, eh? Why else would the White House apologize to the Arabs for making them murder our guy. Oh, yes, go read some news. Those who do not understand gold will one day run to gold, but at much higher prices.

The German High Court has ruled today that Germany can bail out Europe, but only to the tune of 180 billion Euros, which is a grain of sand on the one thousand, five hundred trillion dollar financial beach of the world. Spain alone needs one trillion. Italy another trillion. Greece, Ireland and Portugal are already goners. But the German ruling has so many loopholes and provisions that it will be seen as a flashing go-go green light if European leaders so choose. The only thing stopping Germany from bailing out Europe with more money printing is if every angry German citizen breaks out the old rusty mauser and joins the Wehrmacht. Wait, they don’t have a Wehrmacht, because we destroyed that in WWII. So, looks as if Europe gets bailed out after all. The US Stock market sees what it wants to see and is thrilled, and has opened to multi-year highs this morning. It’s grins all around today for Wall Street, but that will not last. The math says otherwise. The math is irreversible. Lemmings over the cliff. Those who do not understand gold will soon be running to gold, but at much higher prices.

The US Fed Reserve is set to announce tomorrow, September 13th, yea or nay, to a named, definitive new round of money printing. It doesn’t matter what the decision is, or what it’s called, in the long run, because the Fed has no choice but to print money, which it’s doing at 10 million a minute right now, 20 million since the moment you began reading this, just to pay America’s bills. At the very least, the Fed will extend zero interest rates from 2014 to 2015, which will effectively destroy those few retirees who are still hanging on (the plan all along?) and will extend the national debt many generations past the great-great-great grandchild phase. Those who do not understand gold will one day run to gold, but at much higher prices.

Those who do not get the gold story, the ones who survive, will soon understand they need gold, and they will trample everything in their way to run and rush to stand in line in the rain to buy gold at whatever paper price they have to pay. Those who do understand the gold story, those who do get it, will run to silver.

China Gobbles Gold, US Biz Media Ignores

DEAR GOLDBUGS,

China and gold are back!   A few days ago came the announcement the ChiComs are buying one of the largest gold mines in Africa from one of the largest gold companies in the world.  This comes on top of constant reports that gold is being transported through Hong Kong into China by the hundreds of tons, increasing month after month, year after year.  That gold (and silver, too) will go into deep storage and will not return to the markets for the next century or two.  By the way, that gold is coming from the Western world.

If you are still wondering whether gold is right to have, or worth the money and effort to accumulate, take a look at this chilling article on the standing Chinese strategy to run the world.  The short synopsis linked here is based on an article in the mouthpiece media of the Red ChiCom government, which spells out that China is still gobbling up gold like nobody’s business and for a reason.

That reason is the Chinese know gold is money, and they think it is the only money that is real.  Quoting here:   “gold is a currency in nature…”

That’s unlike our own Fed Reserve chief Ben Bernanke, who famously told Congress during hearings several months ago that gold is not money, but is just kept laying around out of “tradition”  clip linked here, runs 1:07.

What’s important about this article is that the Chinese are officially pointing out that the US government works very hard to dissuade Americans from owning gold, or to even think about gold as a store of wealth.  This summary by Investor’s Chronicle (part of The Financial Times) from the original Chinese article in Qiushi magazine :  [Author] Sun Zhaoxue...”believes the US has been promoting a theory that gold is “useless” to keep gold in the doldrums and protect the dollar.” Read more

Best Strategy, Part III

DEAR GOLDBUGS,

Here in Part III of Best Strategy, we are going to drill into the subject of ninety-percent, also known as “junk silver.”   Ninety-percent is defined as dimes, quarters and half-dollars minted by the US government for circulation before 1965.  We’re not including silver half dollars minted in 1965 or later, or US silver nickels minted from 1942 to 1944, and we’re not talking about any US silver dollars (Morgan and Peace varieties, 1878-1935).  We are also going to learn why some online information is slightly misleading when compared to true market conditions existing today.

Calculating the pricing of ninety-percent silver can seem tricky at first, but the math just isn’t that tough at all.   But to recognize, to appreciate, to buy and sell ninety-percent does require a bit of education.  Think of it as taking personal responsibility to understand your own finances.

If you have $1 FACE VALUE in CIRCULATED silver coins, meaning 10 dimes, or 4 quarters or 2 halves, you have coins that were among the billions circulating as real, honest money in the USA for decades, until the end of 1964.

The bullion market sees that $1 face value as containing .715 ounces of silver.  That’s almost an ounce of silver in that dollar.   No questions asked.  Point-seven-one-five is the standard.   If you have $10 face value in circulated ninety-percent silver coins, the industry calculates that as 7.15 oz of silver, and so on.  $100 in face value ninety-percent would be calculated as 71.5 ounces of silver.  Once you determine the number of ounces of silver in the stack or bag of ninety-percent silver coins, you simply multiply that number of ounces by the spot price of silver. Read more

Best Strategy, Part II

DEAR GOLDBUGS,

What in the world would you ever want physical precious metals for?

That’s a personal question you ask yourself to help decide which type or form of metal to trade those paper dollars for.  In a previous post, linked here, I’ve written about understanding your own nature and being honest with yourself as the number one way to stay out of deadly situations.  But what’s the best strategy for building your wealth protection?   I’m not going to tell you what to buy–that’s your decision, but I can offer some pretty good ideas.

If you believe you are going to keep your gold or silver for years, as savings, as a store of wealth, perhaps even to pass on to your kids, then buy those forms of metal you personally find attractive and which you can get at the best dollar price today.  The larger the bar or coin, the less it will cost in premiums per ounce or gram, making it better as a pure store of wealth.  One of the joys of owning precious metals is to be able to admire those shiny coins or bars in your hands, and to know without question your wealth is not in someone else’s control — that you don’t have to depend on someone else’s promise in order for you to enjoy what’s yours.  I don’t see that as love of money.  I see that as taking personal responsibility over your own financial situation.

If you believe you will be using your precious metal in the future as wealth to spend, or to trade, or to give as gifts, then you’ll want smaller, not larger coins or bars.  That would mean a lot of your accumulated savings should be in nothing larger than a troy ounce, and not 100-ounce bars of silver or kilo bars of gold.

If you have limited storage space, such as a bank deposit box, then you might want larger bars, which are more compact and easier to stack than bulky bags.  If you have your own private storage, secure from prying eyes, then you might feel better having the smaller coins and bars.

If you like to trade your gold and silver coins and bars now and then for others you might find more appealing,  you’ll need smaller units.  If you plan to cash in some of your metal along the way to supplement your income, you’ll need smaller units or else you’ll have to sell huge chunks of your holdings at times when you don’t really want to.

If you find along the way that you enjoy aesthetic pleasure in owning many different types and sizes of precious metals just because of their history and beauty,  then Congratulations!  You’re becoming a collector. Read more

Best Strategy, Part I

DEAR GOLDBUGS,

This three-part series is a companion to an earlier post on the best and worst places to convert your paper dollars to gold and silver.   I favor the face-to-face visit with a coin or bullion dealer for many reasons, but there are many other acceptable options, as well as many options to stay far away from, as you’ll find in the article linked here.  The advantages to face-to-face transactions are you generally get a better deal and you come away learning more.

Once you’ve chosen a dealer or seller, the next questions concern the forms of gold and silver you might buy and what to pay for them.  Those decisions depend on why you are buying precious metals and what you think you might do with your gold and silver.  The answers become your best strategy.

I’m not going to discuss paper metal (futures, options, etc)  or vials of dust, beads, granules or nuggets here, except to say I have no idea why you would want these, unless you are an industrial consumer, such as a cell phone manufacturer, or you’re a jeweler.  If so, you don’t need my advice.  Otherwise, stick to the bars and coins.

Why would one ounce of gold or silver be more expensive than another ounce?  What would be the advantage to smaller coins over larger bars?  Or larger bars instead of tiny coins?  Is silver better than gold?   The answers start with understanding pricing.

The Spot Price. The price (value) of physical metal  starts with the spot price (also known as melt value) at the moment you’re plunking down your money.  The spot price is calibrated by government-run bankers in London, New York and very recently, Hong Kong.  These quasi-government bankers get together two or three times a day to decide what the price should be, based on what the biggest buyers and sellers in the market are willing to accept (bid and offer).    They set the bar, with the market’s buyers and sellers then moving the bar up and down all day long. Read more

Syria Desperately Looks to Gold

DEAR GOLDBUGS,

If you’ve been wondering how things might go for you and your neighbors in a true currency collapse, unfolding right in front of us at this moment is a textbook case.  It’s not the first lesson from history and will not be the last.

The open textbook is Syria,  totally engaged in a civil war.   Forget the ‘why’ for a moment and focus on the ‘what’.  The ‘what’ is the rapid drop of 36% in value of the Syrian currency, followed by shortages for millions of everything needed to survive.

And the ‘further what’ is that embattled Syrian leaders have been reading the old history books:   If they are to save their necks from the hangman, they must have the support of Syrian citizens.  The only money the people trust in times of a looming disaster like total governmental collapse  is GOLD.  The only form of wealth that Syrian leaders know might save them, if any will save them, is GOLD. Read more

A 100% Surefire, No Risk, Can’t Lose Investment. No Kidding.

DEAR GOLDBUGS,
You’ve been waiting all your life to put your money in a 100% Surefire, No Risk, Can’t Lose Investment.  Well, I have one for you and this is no Brooklyn Bridge.  There wasn’t room in the title of this article to say it all, so let me also add that besides being No Risk, this investment is Guaranteed To Make Money and it’s Designed Entirely By You To Fit Your Needs.  It allows you to Invest Any Amount of Money, Large or Small and you very well might Double Your Money in just a few years or less.  At the very least you will Beat Stock Market Returns hands down.

To top it off, if you decide you aren’t happy with this deal, you can very easily bail out of this investment and walk away any time you want With No Penalty!  Actually, it just keeps getting better, since this investment requires No Paperwork and has Tax Free Profit with No Government Reporting!  Plus, it can be passed on to your heirs with No Probate or Inheritance Tax.  

I could go on, but I think it might be more fun if you draw up your own list of advantages after you hear what this investment is all about.  You’re going to get that information in just a second, but first I promise that No Salesperson Will Call and I promise you will Never Pay Additional Shipping and Handling.

Ready?  Sure you are, so here is Read more

Gold & Silver With No Questions Asked

Dear GoldBugs,

A reader of one of my previous articles, linked here, left this comment:

“That was kinda good idea to convert my paper dollar into gold and silver one. As I am reading the article, I was convinced, and all information I need was given and safeness of my money I think has no problem.”  — Kalveinarthur

Kalveinarthur got right to the point of owning gold and silver.  Here are my thoughts on what he had to say:

Your money (wealth) kept in the form of gold and silver is safe.  Gold and silver protect whatever wealth you have converted into gold and silver.   Your wealth kept in the form of paper dollars will be destroyed.  That destruction is happening right in front of you right now, but most don’t see it or know it’s happening.   The paper dollar is worth about 3 cents of what it was worth 99 years ago. That means 97% of that 1913 dollar is gone.  That erosion is continuing, and will continue, and nothing will stop that erosion until the currency collapses.  Everyday your dollar is worth less and less and the reason folks don’t see it is because they aren’t looking.

The only reason anyone takes your paper US Dollar as payment for a debt is that there is confidence that the next guy will also take it as payment for debt. When that confidence is gone, the currency is no longer of any value.  Loss of confidence usually starts with quickly higher and higher inflated prices for everything.   That happened in this country when the USA was just a few years old.  The currency of the infant USA was the Continental Dollar, which the brand new US government printed by the millions.  Citizens of the young USA quickly learned it held no value and they refused to take it in trade.   Its collapse gave us the saying “not worth a Continental.”

Take a sheet of paper from a notebook and write the words “One Dollar” on it.  Place it next to a US Dollar Bill.  The only difference in what you wrote on the sheet of paper and the US Dollar is that one carries the confidence that the next guy will accept it, and one does not.  Other than that, they are the same thing. They are both pieces of paper that say “One Dollar.”  Neither one has any true wealth of any kind backing it. Read more

Stacking Precious Metals: Where to Start?

Dear GoldBugs,

If you have made the decision to convert some of your paper dollars to gold or silver or both, the next question to ask and answer is who to deal with and who not to deal with.

The best advice you will ever get is to accumulate physical gold and silver which you hold and keep in your possession and under your control.  Shares in some mutual fund or a stock issue or in an exchange traded fund (ETF), may leave you believing you own gold or silver, but what you have then is a piece of paper, or the equivalent digital document in cyberspace, that has the word ‘gold’ or ‘silver’ on it.  You don’t own gold or silver at all.  All you own is a paper promise to pay you some gold or some silver.  Same goes if you stick your money in a futures or options contract that promises delivery of gold or silver in the future.   And if that satisfies you, then you just don’t get the basic premise of owning gold.  Gold is not a promise to pay or a promise to deliver.  Gold is the pay.  And it’s not paid and delivered until you have it in your hot little hands.  If all you have is a piece of paper with the word ‘gold’ on it, then good luck to you the day you need it, because I can promise you that you will never see it.

The same goes for buying physical metal which is then stored by the seller for you.  Personally, I avoid and ignore any offers to “store” my physical bullion for me.  And that’s even by companies I consider legitimate.   Those offers can be legit, but if I don’t have it in my hands, it isn’t guaranteed that I can count on it.  Once again, gold or silver stored by someone else involves a promise to you from those folks, however well meaning it might be.   That promise, to my mind, defeats the real purpose of owning precious metals. Read more

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