The Case for Precious Metals

I hope you all have a wonderful Christmas Day!

Yesterday, I paid a visit to my neighborhood coin/precious metals dealer. I picked up another 7 oz. of silver. I have been buying gold and silver incrementally on dips in price.

I have done gobs of research on precious metals. I frequently post some of the funniest videos on here. I thought what I'd do is explain some things about precious metals that you might have not heard before. My chief reason for buying precious metals is that I don't think most people understand precisely what Ben "Bernank" is doing. I also don't think most people understand why he can't stop doing it. The last great act of hyperinflation is money printing. That has happened in Zimbabwe, Weimar, Germany and other places.

The last great store of wealth in the United States is private and public investment accounts. Virtually everyone's wealth is tied somehow to the stock market. Real estate has taken it's haircut. If the stock market tanks, we all tank. Thus the stock market becomes the holy grail. All other investment vehicles within the U.S. have become dead money. The Bernank has tried to create the illusion of fiscal health within our stock market by essentially giving free money to member banks to invest. Hedge funds, fund managers, and banks are all that is trading this market. Of course it has been rising with inflated currency. Retail investors have been fleeing in droves to the tune of 100 billion this year- the catalyst for that was the May flash crash. So while 100 billion has retreated, the Bernank has managed to offset that with 600 billion worth of QE2. QE2 runs out in May/June. What happens when the Bernank runs out of dough then? That's the dilemma. The market will capsize. Thus the Bernank will have to announce QE3. Then QE4. Our currency, devalued already, will take more of a beating. In an environment where the FED is essentially robbing savers, to bail out debtors with cheap money- your money becomes more and more valueless.

If bankers could destroy one thing on earth- it would be precious metals. That is their competition. Precious metals are not "money." Precious metals are wealth storage. There is never a "bubble" in price. Their price is directly proportionate and inverse to worldwide currency and debt levels. The more they print worthless fiat, the higher the price goes. It doesn't hurt that the Euro is screwed- and that European countries are all broke. China is experiencing inflation. In fact, I think all of this builds a perfect scenario.

It takes a lot of money to mine, load, transport, and smelt gold and silver. About 600 bucks an ounce for gold. Silver is by and large, just a by product of gold mining.

Do not let anyone tell you that gold and silver will hit any specified price level at any time. That is just bullshit and not predictable. What is more predictable is that central banks will not stop shoveling non existent money at debt levels. State defaults will require bailouts. As currencies dilute, more and more people will drive precious metal prices higher. That's why I don't concern myself with any percentage rise in gold and silver that has taken place already. Precious metals are not stocks. They are not obligated to adhere to any bullshit measurements of value that equities are submitted to. It just doesn't matter. They have that inverse relationship.  

You shouldn't panic buy either. Buy dips in prices, buy when you have extra cash. I buy 1, 5, and 10 oz bars of silver. Gold in small gram sizes. Buy coins or bars with assayed purity levels. I like Canadian Maple Leafs or silver from Idaho's Sunshine Mine. You are going to pay a 5 to 8% commission. I also don't concern myself with any predetermined allocation of my assets to precious metals. Ideally I am shooting for something in the 25-30% range...but that is subject to change.

I love it when bankers call for a precious metals correction. They try to scare money back into the market or bank. If the precious metals complex takes a 10% correction- I will simply buy more. With absolute confidence. Why? Because I am betting the house on history. The same shit, over and over again, produces the same results.

We have enormous debt levels already that can't go away. The check is now due. Interest rates can only go up from here. We cannot GDP "grow" our way out of this catastrophe. We will have to refinance debt into higher interest rates. The FED has fired every bullet in the gun. The economy has not budged, and structurally there is nothing that can change that. Any number of events, a war, a bill re-enactment such as Glass Steagall, failed muni bonds, failed treasury auctions, (China just had one) a euro collapse, oil and other commodity increases... and folks are going to start looking for cover. Banks like JP Morgan are going to have to cover their silver shorts. The bull in precious metals is ON. After suffering a 20 year bear market can you imagine what this bull market might look like?

I want to thank the Bernank. Dude, you said you would drop money from helicopters and you have proven it. Say what you mean, mean what you say. So many things to like. Precious metals just look like an absolute no brainer and currently the only real safe way to protect your wealth. See you at the coin store!

Christmas Eve

There was a fundamental shift in my family this year. Now as I refer to family, I am talking about my brother, sister, mother, and significant others. They want to go to church tonight.

This is new. We have done comedy clubs, movies, and other things on X-Mas eve but church is something we haven't done for many years. My father is singing in his choir.

Last night, my sister and brother trimmed the tree. That is their annual job. My brother hung the tuna fish can on the tree. I watched and teased them about how shitty the tree looked. This always kicks off the usual "get your ass over here and help" rhetoric which I counter with I am the eldest and it is still my job to keep you guys in line. At 50, and after a few decades, you'd think they'd learn by now.

My family became a little fractured after my parents' divorce. It took us a long time to recover.  But we are recovering. Each year it gets better and this year I saw real spiritual progress and growth. So I don't find it particularly remarkable that our family wants to go to church tonight. In fact, it makes sense to me.

After church, unless we choose midnight mass, we will choke down my mother's oyster stew. We will pretend to love it. There will be wry and surreptitious glances cast about after my mother asks "how do you like it?" and we will all tell her it is fantastic. My sister refuses to eat the oyster stew and she is missing out on the real tradition. You see it is not the oyster stew that is the tradition. It is forcing yourself to eat it, conjuring up the most convincing and heart warming look, and selling the little fib to mom. Year after year, my brother wins this category. He is a true professional. I marvel at him as he casts that wry smile at me once mom looks away. There are acceptable lies in life and this is one of them.

Sometimes, there is dessert. I will not eat fruitcake. Fruitcake is some other family's horrible oyster stew invention. I am convinced that who ever invented fruitcake was a sadist. Having navigated the oyster stew thing, some ancient and anonymous family raised that bar and presented fruitcake as a higher test of courage and will. I am more than willing to accept defeat here. I simply cannot pretend to like that stuff as tears stream down my face. Given the choice of fruitcake or death in some horrible wilderness disaster where my survival depended on eating fruitcake- I would simply ask that my ashes be scattered at McKenzie Butte. That too, is family tradition.

Then it's on to the present unwrapping event. I will pretend to be shocked and thankful for the sweaters and books I receive each year. I think my sister generally wins this event. One year, I am going to wrap up a Bob Dylan eight track tape, just to see the look on her face. She will marvel about how she has longed for such a thing for many years. She too- is a professional.

I finally grasped the true meaning of Christmas a couple of years back. I am a slow study. It is about being grateful for the things you already have, not the wanting and despair of not having whatever it is that you think you might be missing. I am thankful that my family is all alive and in reasonably good health. I am thankful for knowing there is a power greater than myself and celebrating his birth and life at church. I am thankful for oyster stew and presents I don't need. I am thankful that I get to watch the academy award performances of my family as they clear these holiday hurdles. I am thankful that I can love this crew unconditionally and laugh about their antics. I am grateful that I can be present and take it all in. I am looking forward to it.

Pilot Commits No Crime, Thugocracy Seizes Firearm, Try to Connect These Dots

Think the government is running scared?

I just saw this posted at American Thinker. I looked everywhere for the pilot's videos and they must have been pulled. Lord knows, the only first amendment rights we have are the ones that our government masters give us. I am still trying to determine what illegal act this pilot did that allowed our THUGOCRACY to descend upon him. You decide.

http://www.americanthinker.com/blog/2010/12/tsa_punishes_pilot_for_critici.html

How could this be a month old? This link is worth cutting and pasting anywhere it needs to go. Found a second link to the Channel 10 story. http://www.news10.net/news/local/story.aspx?storyid=113529&catid=2

The bottom part of the article answers many of my questions of why this has been a mystery. Because they wanted it to be.

PS 12/24/10...a big thank you to Jim at Conservatives on Fire for getting this Fox News link...apparently this story is now getting out. Like to hear what nanny government has to say...
http://www.foxnews.com/politics/2010/12/24/attorney-criticizes-feds-using-force-critical-pilot/?test=latestnews

All the Investing Advice You Need- in 37 Seconds

In Other WTF! News, There Is This...

Be forewarned, there are some things in life that once imprinted on your brain, you cannot remove. And then there is this survey, way too funny to miss...http://ogdaa.blogspot.com/2010/12/dont-ask-if-you-dont-want-to-know.html

The Lost Quatrain of Nostradamus

While diligently working last night, and posting hateful comments, I stumbled across this lost quatrain of Nostradamus. I've been staring at it all morning but I'll be damned if I can figure it out.

Bats what be from moon start circling the great city,
Great plagues arise as hordes inhale the toxic guano fumes,
The printer tries to save the wretched city, but hordes remain steadfast
Crippled birds replaced by fresh fowl, bat shit stuck on brooms.

The Mighty Penny

One of the last acts of the Roman Empire, not unlike those acts of the current United States, was to remove valuable metals from coinage. First we saw gold coins disappear. In 1965, we saw silver disappear. In 1983, we saw copper disappear. We now make coins out of essentially worthless zinc and reclaimed Buick parts.

The last two coins of value, where the melt price exceeds their face value, is the nickel and the penny. In 2006, Congress passed a law preventing you from melting your own money. So as JP Morgan has essentially cornered the copper market (which is not illegal) and the price is ramping up, your pre-1982  pennies are now worth nearly three times their face value. It presents an interesting argument. What is worth more? A dollar that has lost 97% of it's value, or a penny that has tripled in price? Note the value of ten dollars worth of old pennies in the box below...

Base Metal Coin Melt Value Calculation Generated on December 22, 2010.
Values Used:
Total Face Value:	$10.00
Coin Type:	1909-1982 Lincoln Copper Cent
Copper Price:	$4.2541 / pound
Zinc Price:	$1.0495 / pound

Answer:

Total melt value is $28.07.

(exact value is $28.0691134406)