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Saturday, November 10, 2012

Silver and Gold For Dummies

The investment of the decade...drumroll here....was gold. Up 1600%. I am sure there were some individual equities, maybe Apple, that out performed gold. The problem with that is my human nature- I never sell at the right time. The reason I say that is as an investor, I have always taken money off the table as my winners run. I never get the purest return.

But what if there were an investment that was guaranteed to only go up? One where you weren't particularly worried about management shake-ups, competition, bankruptcy, or any of the other problems associated with publicly traded corporations?

Is silver the investment of the next decade? Probably. Eric Sprott thinks so and he puts our money where his mouth is. The best 30 minute sales pitch.

I have been buying gold and silver, on and off, my whole life. I made my first 1000 dollars buying a 100 oz bar of silver back in the late 70's- early 80's. That bought a decent used car then. No reportable sales or capital gains tax.

I buy gold and silver bullion from local coin dealers. On a 10 oz bar of silver, I pay 10.00 or 15.00 bucks premium. That's it. No sales tax. So if silver is at 32 bucks an oz., I am out the door with a 10 oz. silver bar for 330 or 335 dollars. Gold is more expensive. I generally can get an oz. bar or maple leaf for about 50 bucks over the spot price. When I sell, I get spot minus 25 bucks. So the dealer makes 75-100 bucks or about a 5% round trip (selling/buying back.) That's a fair price for him and for me. The problem tends to be storage. I don't mind the safety deposit box fees of around 25 dollars a year. My problem is access. I want 24/7 access. If you don't actually possess an item- you can't exert control over it. I want to be able to get my gold and silver anytime. So bank storage is a problem. For now.

Let's talk about Eric Sprott's PSLV for silver and PHYS for gold. Sprott manages trusts. These trusts actually go out and buy gold and silver bullion and store it for you. Unlike other precious metals investment vehicles (ugh, bankers) there is 100% gold and silver backing your investment. The metal is unencumbered meaning that there are no claims or secret loans on the stuff. No tricks. In fact, Sprott is out looking to buy another 900,000 ounces of silver right now to keep up with the demand in PSLV. Units in each bullion trust are priced fractionally lower than the actual price of gold and silver. I think silver is around 13, gold is at 14 a unit. I want to support Sprott because he is taking gold and silver out of the supply side. That tightens and increases demand.

Unlike the alleged gold in Fort Knox, auditing at Sprott is done transparently. Your units are redeemable for actual bullion. Gains are taxed at 15% rather than 28%. That unfortunately, is a big drawback. The government can easily see and track your gains in the fund as you enter and exit it. Currently the government does not have that ability in the coin shop bullion trading that goes on in every decent sized town. More info on Sprott here.

I own physical bullion. I also plan on buying both funds, primarily PSLV. I do all of this from the comfort of my mother's basement while I sit here in my undies drinking cocoa. Just so you know.

Gold and silver miners. I hate buying miners usually. Let me tell you why. The first problem is assays. I have never met a gold or silver miner that underestimates the value of a claim or ore body. The second problem is overhead. It costs a shit ton of money to buy claims, trucks, plant and smelter, equipment, fuel, men, and benefits. Many miners hedge production or sell at prices less than current prices just to have stable cash flow.  Most miners, even at todays huge prices, are not making that much. The reason is simple. The easy gold has been found.

Any moron telling you that it only costs 5 bucks to mine an ounce of silver is an idiot. Personally, I think break even occurs near 20 bucks. It would take a giant, rich, and easily accessible ore body to make money at less than 20 bucks an oz. If I ever thought that price was going to be broken on the downside- I'd be out.

I own long term options on gold miner and producer, Kinross. Just so you know. I also own shares in a mine and I plan on buying a producing silver miner.

I will never understand why miners refuse to hoard or store their product when prices are down. It's not like gold or silver have some definable shelf life. It ain't sugar beets. Perhaps all of the miners are simply undercapitalized. Weird.

There are other ways to invest in gold and silver. There are futures markets, there are mutual funds which presumably have precious metals "backing" them- a term that I do not trust. I do not trade futures because I do not want to get in bed with the bankers who manipulate those markets nor do I want to support fraudulent exchanges wherein actual trades are never settled in the actual delivery of metal.

One last thing. The world is running out of gold and silver. Really. There is no "silver shale" waiting to be discovered by geologists in North Dakota. If silver ever returns to it's historic ratio to gold (20-1) we are going to make a shit ton of money.


You cannot trust anything made of paper. Not anymore. If you want to let banks use your money for free, making loans at 5 or 6% while paying you 1/2 of a percent, you are experiencing a negative return. Only people with too much money and people who know nothing about money can accept negative returns. If inflation is a true 5%, and you are getting 1/2% interest on your money- you have a real and negative rate of return of -4.5%.

I have been making a very easy 7% in precious metals year after year. I sell some occasionally. I sold 25 ounces of silver at 40.00 over a year ago. I bought it back at 26.00. That little transaction made more than 25k sitting in a bank account making 1.5% all year. Once you have a core holding, I think its ok to sell a little now and then.

One last thing.

Economies around the world are collapsing. Inflation is going to take off. This scenario is very well precedented. It has happened before. The problem is that people always forget. They trust a government who has every motive in the world to lie to them.

Until the world's unbacked fiat money system collapses, we can't lose. Look at Japan. They've been broke for 25 years. Our country is going to do the very same thing. This year, 2013, promises to be a real hum dinger.

Unlike those thieving government bastards, I have no motive to bullshit you. Frankenstein Government is still 100% advertising free. I don't even have a tip jar.

Thursday, November 8, 2012

Something Retarded This Way Comes

If you don't have Big Hairy news on your list of must see blogs, you are really missing a treat.

I always giggle my ass off at Scooter Van Neuter. Yesterday it was, "Something Retarded This Way Comes." Very funny stuff, complete with photoshop horrors.

Today's piece.

When 1700 Dollar Gold Was a Bargain

How can you profit from the absolute certainty that Obama +4 more... will be a certain disaster?

This morning I was listening to Ron Paul on Bloomberg TV wherein Dr. Paul says we are already over the fiscal cliff.

When politicians tell the truth, often it has dire consequences. This was proven out when Mitt Romney lost Michigan, a state where his father was Governor. Romney lost Michigan and the union vote when he told an inconvenient truth.

Government had no business bailing out the auto industry and he wouldn't have. That kind of truth telling will get you no where with a voting electorate incapable of seeing any picture beyond their own.
Obama exploits idiots like that, in this case, a whole state full of them.

That's how government fucks up. It sets bad precedent. Once you set a bad precedent, there is no going back. Setting bad precedent occurs in a family with multiple children or managing a business with several employees. Thus when you bail out one automaker, they will all come calling and you will be bailing all of them out- forever.

Two or three years ago, I realized for the first time that we were structurally cooked. Kaput. Done with. You can't have a healthy economy with 50 million jobs lost. There is no money to buy anything, nobody to pay taxes. But most importantly- those jobs are never coming back. That's a fact. Which leads us to our next fact. If your government cannot quit spending, then it cannot quit taxing. If it has nobody to tax, then it will simply borrow the money. Or print it- hoping for some miraculous recovery. The argument gets circular and ends when you realize the jobs are not coming back. That's when I started buying gold at 1400, silver at 26.00. That was about 4 trillion dollars ago.

Ok, so I've only made 20% on my gold and 20% on my silver. Over three years that is 7% annualized- with no taxes. I repeat no taxes. And when I sell it- no taxes. How much did you make with your CD since 2009?

Try doing that with options, futures, or stocks. Make 10% a year but pay a 15% capital gains tax. Which is the better investment? Most importantly, which has the greater risk to your principal?

I am buying more gold at 1700 although I have to say- the real steal is silver at 31.00. I have reasonable expectations built in. I am just trying to make 7% a year. One hundred grand worth of principal will make you 7000 a year or 28k for the next four years. Tax free. In addition to your principal being perfectly safe, you have the added bonus of being properly positioned when precious metals go fully supernova. This happens when the other 99% of the world figure out what I figured out 2 or 3 years ago. There is no solution and no miracle that won't come with a ton of pain.

Sometimes you just have to trust reality, shut your eyes, and shove your money in. One last thing.

Have a core holding. Let's say 6 ounces of gold, 250 oz. of silver- that amount never gets sold. As you accumulate more, do not be afraid to sell some of your excess holdings at lofty levels and then pick it back up again after the banking cartel beats the price down. Those swings are virtually guaranteed. There is nothing wrong with making a little money along the way. This has been the easiest money I have ever made. And it's guaranteed to do nothing but go up for the next 4 years and barring some sort of miracle- probably the rest of my life. So you should probably wade in at some point.

There will come a day, soon, when 1700 dollar gold will look damn cheap. Just as 1000 dollar gold did 3 years ago.

Wednesday, November 7, 2012

Just a Shove Away

I have been pondering the possibility of an Obama victory for weeks. Honestly, I didn't think he stood a chance. I could cite 100 reasons- from golf to Gitmo- on why this man should not have won last night.

So how the hell did he do it?

The answer isn't in the hundreds of things that Obama ignores, hides, or screws up. Clearly that has little to do with his electability. Instead I have to ask, "What is it that people see and like about Obama?" Clearly Obama can talk and bullshit. He certainly has style and charisma. He can also be quite humorous. But great delivery is just too simplistic given this man's successes. Can everything be explained that easily?

Last night I listened to Obama's victory speech. It was articulate, emotional, powerful, and appealing. It was that last adjective that I began mulling over. I was overcome with an explanation that is actually quite simple. It grew more complex as I pondered what it meant and how it applied to a vast majority of people who support Obama. It's not voter stupidity that gets Obama elected- although his opponents will say that it is. It's something far different than that. Maybe Obama presents appeal and a rallying point, and then magically and individually, history does the rest.

Imagine growing up in a world well beyond your control. You cannot change the color of your skin or your social status. This world is governed by older men, mostly white, who tell you how to behave and find ways to punish you if you don't do as you are told. Initially this may be your parents and relatives, maybe teachers and cops, professors and bosses, bankers or any number of people asserting themselves in your life. It's authority. It's people lording over us, arbitrarily assigning ridicule and punishment. It's not really the color of their skin that pisses us off although that confuses us at times- it is the fear, the not knowing, and sometimes the punishment that the people in authority represent. We make mistakes and very often the consequences don't fit the crime. Sometimes the punishment is severe. Maybe it's something as simple as a turn down letter from some old white bastard at the bank or a boss that refuses to give us a day off that he could easily accommodate. Maybe we are just frustrated that we can't find decent work.

As the world exerts itself upon us, there are the commonalities. Biases exist. We can't prove them but we can feel them. We feel the impact. Little by little, all those wrongs perceived, imagined, or real have a cumulative effect. Mostly, there's nothing we can do.

So that is the struggle. It is certainly a class struggle and it is certainly a racial struggle. It might be a gender struggle. But mostly it is a struggle that we all share. All of those struggles have a cumulative effect on us. Deep down, we see the world as an unfair place. We don't talk about that because that's just the way life is and all the whine in the world will not change that. We see ourselves as underdogs. We bottle up and harbor all of our resentments and we stuff them. Years and years worth. We even forget that we have all those deep seated resentments. Until something activates them.

We don't identify with old, rich, elite, white men. We may have once, but that class of people are the villains now. The people who have assigned punishment or interfered with our lives or our upward mobility. They are our owners.. We don't have anything in common with them- in fact we kind of resent them. They always seem to win and somehow- we always seem to lose.

But Barack Obama, surely he's felt the struggle. He knows what it is like to get turned down for a promotion, to get in trouble for smoking a little weed. He knows what it's like to be told by old white men what to do. Obama has wide appeal. Not just to that giant melting pot of minorities- but by every working stiff who struggles. Deep down, people are all just a little pissed at old, rich whitey, making the rules up as he goes.

Those resentments don't go away- even when you think you've forgotten about them. There are those who see Obama as the under dog. This poor black kid of dubious origin who has risen above the ashes and removed the chains that old man whitey would shackle him with. Obama is their only means of payback. Their way of saying kiss my ass. As I write this morning, the DJIA is down 350 points and nobody in the liberal camp is shedding a tear. They could care less. All of those taunts and threats implied or otherwise- by the ruling elite- are just so much bullshit. I got no skin in this game old whitey, you took it all.

And I gotta tell ya, the GOP deserves this. They have worked hard to alienate everyone but old man whitey. They even alienate their own. They need guys like me- because they can't stand on their own. But they don't try to include anyone- they merely exclude. It's not hard to divide and conquer a target that manages to self destruct on it's own.

I went to Ace of Spades to see the whine today. It's like a bunch of babies. The moonbats gotta be loving every minute of that. Never give your enemies what they crave. Never.

The GOP made two mistakes. The people in this country are changing. The old guard is becoming the minority and bringing up one more old, rich, white man to run in 2016 might not be a very good idea. Old, rich whitey might have had a better chance of running for office in China where all of those cheap exported jobs are.

We got another, bigger problem. It is already here. If we continue to take sides and stay divisive...we are all going over the cliff together. It may already be too late in which case I will say, maybe that's just the nature of things. Maybe that's just the way things gotta go. We had it way too good for way too long. Maybe we're just a shove away. I will leave you with a quote, although disputed, I am convinced it is de Tocqueville's.

A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy.

Tuesday, November 6, 2012

Random and Unique Election Night Thoughts*Updated

The Libertarian Party is what the GOP used to be.

Today, I blacked in that circle next to Gary Johnson's name knowing three things in advance.

He stands for limited government. He has no chance of winning. In Idaho, our four electoral votes always go to the GOP. Always.

I'll tell you something else. There are a lot of Ron Paul bumper stickers and signs in this town. I actually think at least a few thousand people will vote Libertarian in Boise. It will be interesting to see how many people like me- see absolutely no discernible, philosophical difference between Romney and Obama. I actually think national Libertarian voting numbers will go up. However, a buddy of mine says no. He thinks every Libertarian hand on deck will vote the devil we don't know to get rid of the devil we do know. Maybe.

It must just frost the media's ass to think that all of that pre-election rhetoric, poll cherry picking, misleading data, and outright lying might go for naught. The truth of the matter is- this election is looking uncomfortably close and leaning Romney already- at 730 PM mountain time.

I think Romney will get NC, VA, and FL. Ohio and Michigan are still early.

I think Romney wins this. I actually thought he'd be doing better. Just the possibility that I will not have to listen to that lying, worthless, vacationing, golfing, bought off banker lackey any more is reason enough to kind of root for Romney.

I can't say I hate Obama, I just detest him. Wait till we see how many people he pardons. I am expecting a huge list from a man who counts William Ayers and Tony Rezko among his friends.

I am paying close attention to the Moonbat stronghold of California tonight because I am just dying to see if those idiots vote for all of those tax increases. So, I'll be up for a bit updating and editing as we go. Posting surprises if there are any...

*Update.  Everything went south on the GOP and Romney about an hour after I originally posted this. I am leaving this post just as I wrote it. Crow makes a very nice casserole. God help us. It's like a nightmare. Eight years of Clinton, eight years of  Bush, now eight years of this moron. It'll take a miracle to save the Republic.

Ron Paul Endorses FG View: Four More Years of Status Quo

A muslim lawyer. A mormon banker. Remember when they used to offer us the illusion of a difference?


Monday, November 5, 2012

Why Did the Government Steal Our Gold in 1933...

...and more importantly, how will they do it again?

I don't know if any of you have been watching this, but a number of countries are repatriating their gold. Bringing it home from money center places where it is stored, places like London and New York City. Gold is a medium of exchange and collateral. It is and has always been, real money. In the old days when we actually backed our currency with gold, trade imbalances were settled with gold. Rather than send the heavy metal to and fro- we simply added and subtracted reserves in places where international commerce was conducted. That's why we are holding vast amounts of the world's gold.

But since we no longer have a gold standard (1971) and today's trade imbalances are settled in various currencies at various rates of exchange- why do we still have other countries' gold? That is a very fair question indeed. The forty year question. It is also a question that countries are beginning to ask themselves. Venezuela has already repatriated nearly 100 tons. But the real biggie, and the reason I am pointing this out is that suddenly Germany has called for an audit of it's gold. Just the gold held in New York. Weird huh? Remember Ron Paul asking about an audit at Fort Knox?

Interesting. Personally, I believe it should be perfectly acceptable to audit your own gold. In fact, I would certainly do that so that I could prove the existence of and know the exact tonnage before repatriating it.

Is there a chance Germany's gold is missing? Yes there is, but that is another subject entirely. Why now? Why after 40 years is Germany suddenly interested in it's gold in the midst of the euro crisis?

The timing makes sense. In fact, I believe Germany may well be positioning themselves for an exit out of the euro and back into the deutschmark. Backing their new currency with gold. Germans are not idiots and they certainly show great fiscal restraint and acumen. Germans know money.

In 1933, The United States government seized all of the gold held in private hands and made it illegal to "horde" it. Ostensibly, they had an excuse. Currency was minted and backed by gold. The US Treasury had the right to withdraw it's use of gold and use another medium of exchange. Of course, this was simply an excuse to seize all of the gold and inflate away debt by printing unbacked dollars. Interestingly enough, in this link that I provide, the government telegraphed it's intentions to bankers. Bankers were able to "front run" the impending seizure and make enormous profits. They did the same thing recently when the Federal Reserve Bank announced it was buying treasuries. Large banks simply went out and bought the maturities that the Reserve Bank was going to buy, running up the price and selling at a profit. Of course all of that conduct should be illegal- but it is not. In the end, the taxpayer pays. At interest. Unfortunately, nobody seems to give a shit. When you have that level of apathy, with an idiot public glued to their cellphones, it can only be a matter of time before the criminal banking class in this country turns us into a Banana Republic. They're doing it now. Without fear of criminal charges. Just look at the outright theft (1.6 billion) of client accounts at MF Global.

That's where we fit in.

This time around the government has no excuse to seize gold and silver. None. They have no claim, no standing. But that doesn't mean they won't try to take it and that certainly doesn't mean they won't try taxing you to death as they print and print and print- trying to avoid an inevitable debt collapse. They may try to tax all transactions involving precious metals because the one thing that both the bankers and the government fear and hate- is competition from precious metals. If they control the medium of exchange- they are guaranteed their cuts. When citizens start bartering, trading labor, using precious metals to settle debt, and not reporting income producing activities, bankers and government have a problem, don't they? They get cut out.

Remember the Magna Carta? The Boston Tea Party? Eventually greedy men and their greedy ways get confronted with the barrel of a gun. Please don't think that can't happen again.

The easiest and safest way to transfer wealth without paying taxes is through the use of valuable commodities that the government cannot track. Think about that. You use your capital to purchase precious metals. Who knows how much you have? You protect your heirs from the death tax. More importantly, you do not enrich a voracious government who wastes your work product by delivering it to greedy, thieving bankers.

If it's in the bank- it ain't yours. Bet me when I say possession of precious metals is still- 9/10ths of the law just as it was in 1933. They closed banks back then and just took it out of safety deposit boxes. It's gonna be a little harder for them to pull that shit again.

Pay attention to what is going on in the world right now. (The media sees no significance in it as long as they can garner a bunch of hits by showing some bimbo or celebrity cleavage.) The world is broke. Governments and bankers are going to try and steal every dime that they can. Gold is going to become the international currency once again and that reality is unfolding right in front of your eyes. Those few eyes that are not distracted.

I wouldn't want to get caught 100% invested in asswipe when the implosion happens. Watch for precious metals to swoon right after the election. Be a buyer. Because two months later- the fiscal cliff happens. The debt ceiling will go up. They will kick the auto tax cuts down the road. (remember that super committee bullshit?) Everything that happens post Jan. 2013 is going to be good for gold. I believe that and it is certainly just my opinion. Don't discount the efforts of those who will try every dirty trick to postpose the inevitable. After 5 years on the sidelines, I am back in. They have been kicking this can down a very long road. In 2013, we may just run out of road.