Posted on 04/12/2014 10:48:13 PM PDT by Petro
Friday, April 11, 2014
The Truth About Buying Gold And Silver Every day, the radio airways and cable news broadcasts are filled with advertising from "gold bug" companies who are trying to convince you to buy both gold and silver. There are dozens of them: Goldline, Lear Capital, Rosland, Merit, and so on. All of whom claim that, by holding these precious metals, you are being protected against inflation as a result of massive government spending and the devaluation of the dollar, or, protected against another recession, depression, or stock market crash.
The problem is that all of those claims are bogus. The proof of that is in the chart below, which shows the combined price of gold and silver which has been adjusted for inflation in today's dollars: Click on Chart to Zoom As you can see, these two metals have a history of spiking in price, but once that price hits some "tipping point", there is a long and painful slide downwards. This happened in 1980 when gold hit a high of $850 an ounce or nearly $2,000 when adjusted backwards in today's dollars. By 2001, just before the next spike upwards, gold hit a 20-year low at $250 (unadjusted); or about $325 (adjusted). During that 20-year slide, holders were paid no dividends; probably weren't savvy enough to hedge against their losses; and, most likely got stuck with relatively high storage and insurance costs to protect their investment. Worse, if you did buy gold in 1980 at its high, you are still underwater (see graph) when adjusted for inflation. Just the opposite of what buying gold was supposed to do.
What none of the gold bugs are willing to tell you is that, in 2011, gold and silver both hit respective nominal (unadjusted) highs of $1,904 and $49.50 an ounce. Today, gold is trading around $1,300 or down $600 from 2011. Silver is even worse off with today's price near $20; and, that's a loss of more than 60% since its 2011 high. All indications are that these prices will continue to slide; just as they had done in the 20-year period after the 1980 spike.
I guess what really bothers me about the gold bug ads is that they make all kinds of unproven claims and predictions. For example, Lear Capital is running a current ad that features Eric Sprott; a billionaire Canadian hedge fund manager. In that ad, Lear offers any callers a report by Sprott that predicts that gold will exceed $2000 an ounce sometime this year and that silver will be at least $50 an ounce by the end of the year. Well, that's the same claim Sprott has made every year since 2011. In fact, in 2011 he predicted $2155 (Canadian) for gold and $64 for silver before the beginning of 2012. While close in 2011, none of Sprott's predictions since, have been anywhere near being true. My guess is Sprott is holding a lot of gold at a loss, and by hyping its price potential he can cover those losses and find an escape hatch. While Sprott's claims seem outrageous, there are a bunch of people predicting that gold will hit $5000. Just Google it and you won't believe how many, and for how long they've been making that prediction.
Lastly, these metals have big liquidity problems. There's a lot of dealers out there who will sell you this stuff. Try selling it back to them; especially when the prices are falling. Try finding buyers on your own. In either case, you will have the cost of shipping to the buyer, and the additional cost of hefty shipping insurance.
References:
Chart Perspective – Gold: 100 Year Historical Prices: http://www.gcasset.com/chart-perspective-gold-100-year-historical-prices/
What Happened to the Gold Price in 1980?: http://buying-gold.goldprice.org/2008/01/what-happened-to-gold-price-in-1980.html
Sprott On Gold In 2012: http://katchum.blogspot.com/2012/05/eric-sprott-on-cnbc.html
Sprott On Gold In 2011: http://www.jaggards.com.au/news/medusa/article_75.asp
Posted by George B at 6:54 AM Labels: gold, gold bug, Goldline, investment, Lear, Merit, prices, Rosland, silver
People w/o gold and silver like to say that. Actually one needs a variety of resources to be secure. Gold, silver, lead, good, a source of potable water and basic medical supplies are core.
Want to stock trade items? Half-pints of vodka and brandy and tampax, will be very tradable; probably at the same time of the month.
The US Dollar will eventually become the American Dollar or Americas Dollar. This would be made possible by the Democrats ushering in Immigration (Read NAFTA) for Canada-US-Mexico; eventually from North to South America. The current debasing of the US Dollar is almost complete, time for an Economic Union and Trade Zone second only to the EU.
It has been suggested that silver may be the only antibiotic effective against flesh eating bacteria.
Also that it enhances all other antibiotics.
oh well
Nonsense. 5000 years of human history says otherwise.
“...One thing is set in stone: I will never run or flee America because things are getting tough. I was born here and I’m goin’ out here....”
Same here. Pretty much says it all, brother.
Born an American.... Live an American... will die an American... HERE.
...... I will never run
Ditto that Brother
Brass, lead and copper with a lil silver and gold thrown in for the good of things.
Now if only I could find some 22WMR things would be good at the hacienda....
“...22WMR...”
That stuff is scarce at the moment for sure...
I couldn’t care less about gold and agree with the opinion here in general with respect to the wisdom of parking in gold but isn’t the fake money propping up the market these six years holding gold and silver down?
Something is better than nothing - when laying in prep supplies on a limited budget, I also thought it wise to have some US silver dollars - not enough to hurt if the value drops severely, though.
Advertising claims about gold, even on talk shows, are phoney and fraudulent.
Gold is good only if there is hyperinflation, or the entire money system collapses. Then you are competing with everyone else who has gold to try to trade it for bread and milk.
Better to stockpile thousands of toothbrushes and toothpaste tubes, to trade for bread and milk, if there’s a collapse.
In a total collapse scenario there will be barter of all kinds. The currency may be food, gold or even sex.
Roger that.
I have to laugh at the one ad that promises to send you a free “one gram bar of pure silver, to show how sincere we are”.
Your conclusions are not simplistic enough... People will not be gauranteed that the money accepted will be accepted by those with things they want ... No one will know what others will accept when the shtf. Accepting payments of 100 chickens may be done in script form. Perhaps, and that will depend on the integrity of the dealers. Just like fiat currency, bartering will be a game of trust.
Building relationships and communities will be key... Families will be essential and they will police their own... Ma fia will be huge.
Teeman
I have a serious question about “prepping” and perhaps this thread is a good place to ask it and get some seriously good answers.
Let’s say you are moderately well prepared for what some are saying is inevitable. You are debt-free, outright own a nice spread of acreage and a house in the mountains, with 5 flowing freshwater springs and can grow food and live off the grid if necessary. The community surrounding you is like-minded and ready to pool resources and talents to all survive.
Now, here is the question that is keeping me awake and my blood pressure too high..... What do you do when the dysfunctional government comes to collect the property taxes each year? And don’t just tell me that property taxes are levied only by counties. When the income tax dries up, the feds (and the UN) will come after the only thing we still own.... the land. And our entire community lining up with our guns to hold them off will not stop them from flying over and dropping bombs.
Is it just me, or do we “preppers” seriously need Divine Intervention as our number-one asset? Because it seems like that is what it will all boil down to.
You may be cashin’ in to a chip in the hand. If that is the case I would “just say no”.
For such a time as this . . . http://www.patburt.com/
This is a good link. http://www.raptureready.com/rapnews_db.php
How about buy 400 oz silver at an average purchase price of $7.18 per and still got it? Let’s see, should I keep it or sell it? Keep it or sell it? I think I will keep it.
I our area now even the “We buy gold” places are closing there doors and going out of business.
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