Posted on 03/03/2006 7:59:26 AM PST by Killborn
Edited on 03/03/2006 8:11:35 AM PST by Admin Moderator. [history]
Hi Guys,
I hope everyone loaded up on gold (now up 50%)and silver (up 85%) and is happy, because the flip side is very gloomy. The dollar continues to lose value and the resulting decline in American wealth looks like it will cause class warfare. Whether it is only economic warfare making everyone poor or whether it develops into physical violence is still not clear.
Greater than 93% drop in the greenback -
Since the US government decided to use central planning to control interest rates instead of the free market and the gold peg, the dollar has lost more than 93% of its value. For centuries the dollar value of gold hardly moved. Then politicians created the FED early last century.
Do you remember $35 an ounce? I do, and now it's $570. When Alan Greenspan went before congress last year, he was asked how was the US Government going to be able to finance its obligations regarding Social Security (i.e. pay retirement checks).
Greenspan's answer was that it was no problem, they would just issue Government checks. When the senator looked confused, Greenspan added, 'the problem is whether these checks would buy anything of value'.
The economically challenged senators still didn't get it. What good is a monthly check for $10,000 if a loaf of bread costs $10,000.
At his State of the Union speech, Bush lamented he couldn't get Social Security reform through congress. The Democrats, led by Hillary Clinton cheered.
I hope that tape is replayed when retirees riot over their worthless SS checks. But, at least this gives us someone to blame.
Americans aren't saving for their retirement, instead they are going ever deeper into debt, confident the Government will give them a nice retirement check.
Both Republicans and Democrats are spending like drunken sailors. No worries mate, we'll just borrow some more.
Now that Americans aren't saving enough to finance this debt, we have to borrow from foreigners at the rate of $2 billion a day.
The amount of wealth we will have to transfer to these foreigners to repay this $8 trillion debt will bankrupt a whole generation. Unless, of course, we just issue worthless Government checks and inflate away the value of the dollar.
But who are our central planners going to blame. There must be someone. How about Wal-Mart. Maryland central planners are going to force health care costs for employees, their spouses, children, parents, relatives, pets, etc. onto Wal-Mart. Maybe we can have a windfall profits tax to pay for our debt.
The central planners in Russia and China never let windfall profits happen. Maybe we just won't let foreigners spend the dollars they so foolishly accepted. We can call it National Security and not let them buy Unocal and not let them operate our ports. When they stop accepting our dollars, we can be happy with all our paper money, happy and poor.
I still think the best protection from our central planners are hard assets like gold, silver, oil sands, gas, etc. Then you don't have to worry when they let the printing presses roll.
Tom
Platinum has done much better than gold.
I didn't own that, either.
I agree with everything you dad says.
We need to take a step back and rethink the anti foreign investment plan. What do you expect them to do with all the oil money they get from us? Keep your freinds close and your enemies closer. There are threats everyday, even domestic terrorist. So with no such thing as zero risk, we need to be proactive and put protections in place. We are now in a position of Damned if we do and damned if we don't.
Europe is starting to look like it did in the 30's. (a small group demanding appeasement) They don't have a way to stop it. Tough times are ahead and we need to prepare economically first.
Tip: Save 12times your take home pay, retire debt free and you will be on the right track.
I know. Is #3 helping?
That's better, and I wouldn't have been snarky had I seen #3 first. ;O)
Thanks. I'm not that good with economics. But I do think gold has its place by virtue of being a valuable mineral.
Dad & I own silver. Real silver. 16,000 oz. Coins. It's earned us $80/day for the past 5 years. It'll be nice to have sacks of cash if needed. :)
I've also got plenty of ammo, dry socks, seeds, a clean well and canned goods. Actually, it just looks like an Emergency Kit for Tornado Season, so no one suspects a thing...
My Dad sounds a lot like yours, LOL! We learned self-sufficiency in all things from The Masters.
Yeah. If you listen to him you're going to lose your shirt. Evidence? Sure...
Do you remember $35 an ounce? I do, and now it's $570.
Yep. I also remember $850 an ounce... over twenty five years ago. The people who bought the gold bug's BS back then still haven't gotten back above water on an absolute basis... let alone inflation-adjusted.
LOL.
Somewhere between zero and infinity, but I tend more toward zero.
In my experience, soothsayers are always wrong.
Never saw a 16,000 oz. coin - you must have a big change purse.
:->
I've been on the silver numismatics bandwagon for a few months. My Morgan MS65s are up 10% in the 2 weeks I've owned them!
Careful when buying gold/silver bullion: The Fed can shut down the buying/selling of gold/silver bullion at any time they choose to. This hasn't happened in a while...but it has happened several times, notably in 1933.
It's not a bad idea to diversify your investments with some precious metals. I recommend looking into it. At least if the silver/gold market gets bearish, you will have a tangible qty. of the metals in your possession that will eventually rebound. Whereas, all the holders of (example) Enron stock were left with little more than fire starter.
If stock market goes nuts, you'll be fine there and your metals won't be too de-valued. If stock market collapses, your metals go thru the roof and help buffer the losses.
Not if gold is speculated higher than its cost to produce.
As as a "vauable commodity", why is that? Merely because it is hard to retrieve from the ground? Except for a few industrial processes, Gold is only valuable because people think it is. Which is no different than a paper dollar, which is valuable because people think they are.
Yes. It was about the time I was earning $8K per year
I suspect there are a lot of people cashing in on people's tendency to panic. Modern communication makes that old practice so much easier.
LOL! No, not ONE...lots of pretty, shiney, little ones in big buckets. (Fifty cent pieces and dollar coins.)
I also collect those basically worthless "State Quarters." It takes 10,000 of them to equal a few bucks based on the actual precious metal content, LOL!
The best investment is fertile ground.
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