Quite recently, and rather belatedly, I started to take a more serious interest in the economy. In January I read an article that laid bare the real extent of this country’s debt burden and what history shows us happens when such a situation arises. The rest of the world fares no better and compounds the parlous nature of the economy globally.
Having gone on to spend the last few months researching, then starting to invest in gold and silver, and writing an almost complete short guide about how to do that most effectively as a small investor, a piece on Bloomberg about billionaire investor, John Paulson, losing more than $300 million of his personal wealth as gold fell to its lowest price in almost two years, caught my eye.
Anyone who has an interest in precious metals will be accutely aware that their cost has fallen rapidly in recent weeks. A lot of people are falling for the establishment propaganda that has seen comments and actions by George Soros presented as a rationale to abandon gold and silver and pour money into the dangerously inflating stock market bubble. Goldman Sachs has joined in this week, urging its clients to sell out of gold. That was the cue for large scale selling by individuals and organisations that has sent gold below £1000 per ounce and silver below £17 per ounce.
Yet the backdrop to this is the likes of Soros maintaining a huge position in gold, Goldman Sachs looking to buy physical metal on the cheap as their clients dump their paper options for unallocated metal which largely doesn’t exist, and governments/central banks dramatically increasing their gold reserves while telling everyone else that they need to be in equities where their monetary investments can be taxed and depositors can be given ‘haircuts’. As always it is a matter of the establishment saying one thing and doing another.
The fact is the health of gold and silver is anything but poor. Demand for physical metal is soaring and has even resulted in mints rationing sales of bullion coins and dealers finding it difficult to acquire stock – and with the sudden price change on Friday now taking the decision to suspend sales, knowing they would be overwhelmed by demand for the cheaper gold and silver and would not achieve the mark up over the price they paid. For ordinary people the price of gold and silver only matters if you need to sell it to liquidise assets. While the price may fluctuate, the physical metals still have intrinsic value that makes them more valuable than devalued currency that is being eroded by inflation. John Reade, a partner and gold strategist at Paulson & Co, is one who is refusing to be taken in like the sheeple:
“Federal governments have been printing money at an unprecedented rate. We expect the strengthening of the economy and stock market to cause money supply to rise more than real growth and eventually lead to inflation. It is this expectation of paper currency debasement which makes gold an attractive long-term investment for us.”
Goldman Sachs and the central banks know this all too well and are simply encouraging people to sell assets, worthless or valuable, to drive down the price so assets can be picked up on the cheap to make the long term investment even more valuable to them. People who listen to them will be left high and dry as the investment vehicles being recommended fall apart as part of the monetary crash that will come. ZeroHedge calls is right when in response to the Paulson story Tyler observes:
As for gold as an inflation hedge, here Paulson is certainly correct. The only question is when will the price suppression scheme of gold as an alternative currency finally end. Since various official organizations (such as the Troika) are currently doing all they can to buy the sovereign gold of insolvent nations at firesale prices, it is likely that the period of artificially suppressed prices may continue.
Which, incidentally, for all those who lament the recent price drop in gold, is a good thing: for those who see gold as an alternative currency to fiat, all the recent sell off (as well as alleged or real downward price manipulation) does is provide a lower cost basis for accumulating hard monetary assets. Which is something to be welcomed and not mourned, especially if one plans on holding on to said gold (or silver) as a currency, instead of merely converting it back into fiat at a higher price point, and thus as an asset (something all those who bought BitCoin at $260 and sold at $50 appear to have completely forgotten).
Dr Paul Craig Roberts was the US Assistant Secretary of the Treasury for Economic Policy and an associate editor of the Wall Street Journal. He knows how the system works. Just over a week ago on his website he put some context around what we are currently seeing in a piece that everyone should read. He can see the writing on the wall. The video below builds on the article (h/t Silver Doctors):
However, the establishment’s effort to prop up western currencies by encouraging people to act in a way that drives down the price of gold and silver to make these devalued currencies look more appealing, shows that the economy is in dire shape – and is a huge opportunity for ordinary people. Pushing the price down to prop up the dollar in particular, has made it cheaper for ordinary people to acquire gold and silver before the price takes off upwards.
This week I have taken the opportunity to add another 2oz of gold bullion and 3kg of physical .999 fine silver bullion to my vaulted assets, along with some more 22ct Gold Sovereigns, and silver bullion coins in the shape of .999 1oz American Eagles, 1oz Canadian Maple Leafs, 1oz Austrian Philharmonicas and 1oz Britannias, all purchased legally without having to pay VAT and now safely stored in a secure, non-bank facility that I can access 7 days a week if I choose. The more that government and the likes of Goldman Sachs try to get me to part with my assets, the more I am convinced to hold on to it.
When the economic storm eventually hits, the value of fiat money plummets, government raids bank account deposits a la Cyprus, at least I will have the comfort that I have no debt, bar what’s left to pay on my mortgage, and that a good proportion of my assets will not lose their value – indeed they will almost certainly be significantly more valuable than today. Best of all, the government and their banker agents won’t be able to get their hands on it as it is kept outside of their system.