What Good is it if you Can't Spend It?
(This article is more valuable than a Harvard Education!)
Silver Stock Report
by Jason Hommel, April 26th, 2012
Buying silver and gold today will likely be better than buying Microsoft or Apple stock way back when they first came out, and this article addresses the fundamental reasons why.
People often ask, "What good is silver or gold if I can't spend it?"
But that's exactly why we all should buy it! Low monetary demand means silver and gold are still cheap and undervalued liquid assets that investors should crave.
And crave it, they do. But 99% of silver investors are duped into buying the wrong kind of "silver", the kind that is not silver at all.
"Investors" have "bought" up to 200 billion "dollars" worth of "silver" in "accounts", which would be 15-20 years of annual mine supply. Clearly, that silver was never bought by the "brokers" who "sold" that much "silver" in "accounts" to "investors".
Every word in quotes above needs clarification and/or translation. Each word is quoted to highlight the fact that while I'm trying to tell the story in the silver market, it's difficult to do, because there so much fraud all over the place that if I stopped to define each word as I went, it would be so distracting that I could hardly write a single sentence. Here's how those lines should read, if the discussion were a bit more truthful:
"Misinformed greedy gamblers" have "gambled on the paper currency value" of up to 200 billion "units of paper currency" worth of "paper promises of silver" in "computers", which if it were actually what it was supposed to be, would be 15-20 years of annual mine supply. Clearly, that silver was never bought by the "broker / casino operator / thieves" who "took money for" that much "paper promises of silver" in "computers" for "the gamblers".
Getting back to the point of why people should want real physical silver (outside of brokerage accounts) especially when you can't spend it.
The point is that without monetary demand, gold and silver are cheaper than they otherwise would be.
Also, as long as 15-20 years worth of mine supply worth of investor demand is siphoned away from the real silver market into "computer" accounts, then silver prices will not go up as fast as they should.
Lower demand means a lower value. Investors know that they want to buy things that have a low value, knowing that the value will likely go up. But investors are still not understanding what silver is, since they continue to be satisfied with "paper silver", or perhaps "computer silver".
So, here's the fundamental reasons why gold and silver will continue to gain in value. Gold and silver are true money, even if they can't be used to buy groceries yet.
What makes gold and silver good at being money?
Many people are beginning to re-learn why gold and silver are the best money, and have been money for thousands of years. They seem to be able to recognize some of the self-evident and obvious truths that those metals have certain unique features making them essential and especially good at being money.
But these need to be listed, because sometimes people have funny ideas about money, because we live in a society that must convince us that paper is the best money.
There is a lot more here than I can remember all at once. I need a list I can refer back to and update, and you just can't find the truth about this stuff anywhere else. So you might want to keep this for future reference, too. None of this is "news", but it will be news to some, because they just don't teach this stuff anywhere.
I have a Harvard Textbook, "Principles of Economics", 4th ed., that defines the three functions of money, the medium of exchange, the unit of account, and the store of value.
It has a 5 star rating! So, it must be one of the best. But how can it be, when it is filled with so many lies?!
The book encourages the reader to "examine" the three functions of money on page 643, (and that's also the only page that mentions the gold standard!), but the book just defines the terms -- but they don't even explain what makes an item good at being one of the three functions of money; the medium of exchange, the unit of account, or the store of value. Furthermore, the textbook is full of lies, misinformation, and false innuendo about money.
It's propaganda of the State. Propaganda works best if you have to pay to learn it. Nobody would believe it if they strapped you to a chair, tied you down, and shouted at you, "believe our lies about the usefulness of paper money and the stupidity of gold, or else!" No, it only works when they make the kids have to pay to learn their propaganda, and then reward those who have the best memories for the lies, with high paying wall street jobs whereby they fleece the rest of the public.
The "Harvard" textbook actually suggests in two ways that only criminals have a large need for cash, because bank deposits leave a "paper trail", and because cash does not earn interest.
But paper is not the only form of "cash". There is also gold. Is all the gold owned by criminals, too? Nonsense. And why does gold have to earn 1% interest, when gold and silver have been going up in value by 15-30% per year for the last ten years? Interest on gold is nonsense.
To be a store of value:
* It should be long lasting, durable, it must not be perishable or subject to decay. Gold does not decay, not even in seawater. Silver may tarnish and react with sulfur, but the tarnish is very thin and acts as a protective patina that prevents further decay. This is why food items, expensive spices, or even fine silks or oriental rugs, are not generally suitable as money.
* It should have a stable value. Gold and silver values do fluctuate, but their value has never gone to zero value, like paper money often does.
* It should be difficult to counterfeit, and the genuine must be easily recognizable. Paper money is rather easily counterfeited, and good counterfeits are very hard to detect.
Precious metals are a great unit of account:
To be a unit of account:
* It should be divisible into small units without destroying its value; precious metals can be coined from bars, or melted down into bars again, with a low percentage cost. Actually, gold gets more valuable when made into smaller tenth ounce coins, which carry a higher premium, or price percentage over spot. Furthermore, gold, when distributed to the people, creates monetary demand, and a higher value for the remaining gold in the world. Animal skins, or live animals, are not suitable as money, because they are not easily divisible, nor can they be put back together when taken apart. If an item can be divisible, it can be fungible, which is the next point.
* It should be fungible: that is, one unit or piece must be equivalent to another, which is why diamonds, works of art, or real estate are not suitable as money. If an item is fungible, then it can be countable, which is the next point.
* It must be a specific weight, or measure, or size to be verifiably countable. You must be able to weigh, measure, and count, your unit of account! And this is why paper dollars are not suitable as money any longer. What are you counting? What are you measuring? Dollars are nothing but promises to pay in more dollars.
To be a medium of exchange:
* It should be cheaply and easily tradeable, with a low spread between the prices to buy and sell, in other words, a low transaction cost, and be able to be quickly and easily bought and sold anywhere in the world. Land is not transportable. Even US cash is not accepted everywhere in the world anymore.
* It should have a high value to weight ratio, and thus be easily transportable, and cheap to store away. Precious metals have a high value to weight and size ratio. This is why oil, coal, or water are not suitable as money even though they are valuable. It's why real estate is not money, it's not portable at all. It's why copper is not money, nor is wheat, nor balloons. While even air is valuable and necessary to live more than 5 minutes, and while air can also fungible, air is neither rare nor valuable enough by any significantly measurable units to be useful -- unless perhaps you are a scuba diver under water.
$300 of gold is .15 of an oz., and can be easily hiding in any wallet.
* It should be durable. Gold does not decay. Silver tarnishes a bit, but it's negligible. Coins are often mixed with 10% copper to improve hardness and durability, and coins are made with ridges around the rim to prevent coin shaving or debasement. Paper money, surprisingly, is actually expensive as money, because paper wears out quickly, and it costs money to have to re-print the paper.
These fundamental reasons why silver and gold are true money, help to answer the top ten excuses why our friends have not bought silver and gold, which are listed here:
EXCUSE IN CAPS, followed by my answer/rebuttal.
TOO HIGH NOW. No, Gold and silver can never be valued "too high" against paper money. Paper money is by nature fraud, and always will be. It's interesting that people thought gold was "too high" at $1000/oz. back in Dec. 2009. Clearly, with gold at a stable $1600 just over two years later, we can see more clearly that they were all wrong who called gold "too high" a few years ago.
HOW TO SELL? Gold and silver are easier to sell than US "dollars", which are not accepted in many nations these days.
CRAZY GOLD BUGS: No, we who understand gold are not crazy. People who pay hundreds of thousands of dollars to go to Harvard to be taught lies might be crazy.
I'M CLUE LESS ABOUT GOLD: Well, if you went to Harvard, I can see why. And I hope this article helped to change that for you and your friends.
SHUT UP: Well, this is written, not oral.
PRICE CHANGES: As you can see, it's paper money that is changing in value, far more than gold and silver, but silver and gold will continue to gain value during this time.
GOVERNMENT WILL FIX: As you can see, government cannot change a single fundamental nature or property or feature of silver and gold. Gold and silver expose the lies of excess paper money printing by governments.
SILENCE: Yes, I know, the nay sayers are once again speechless. Hey, gold also doesn't talk, but that does not mean gold and the nay sayers are useless. Gold, if you examine it, reveals its properties to you. Similarly, by examining the arguments, or silence, of the nay sayers, we can see we are on the right track.
I'M BROKE: Hey, gold is not for every man. It's really just for those who would be kings.
BAD BROKERS: Now you can see why the brokers, and their lackeys, the "financial advisors", talk people out of gold and silver. They would go bankrupt if people bought the real things, because their short positions are 15-20 years of mine supply. Furthermore, brokers don't earn commissions on gold that you hold in your own possession and keep in your own vault, and neither do we. We only earn our commission one time, when you buy it from us.
Getting back to the fundamentals. Gold is easily transportable. This means that the brokers really have no excuse to not send it to you when you buy it. Assays are free. Shipping and insurance for the shipping costs are less than 1% of the value. Thus, the only reason to not send you your gold or silver when you buy it, is because the sellers are running a scam, or are bankrupt.
And there you have it. You now know more about the essential nature of gold than 99.9% of people in the world.
Ron Paul is the only presidential candidate who appreciates the unique features of gold. He was a part owner of a bullion dealership years ago.
Ron Paul is getting thousands of people at every speech.
Mitt Romney is lucky to get over 100.
I'll be at our new Auburn Store today and tomorrow, Thursday and Friday, 4-26 and 4-27. Call and ask for Jason. It's slow today, and we'd love to take your order or answer any questions you might have.