Saturday, July 23, 2011

Guest Post: If You Can't Afford Silver or Gold, Exchange Your Fiat For Copper and Nickel

I am not a commodities expert, but I do recognize and hold all of these physical metals. In fact, I have a proposition for you.
Consider taking this $200 challenge. If this dollar amount is too expensive, any dollar amount will do. Take $100 out of your saving account and buy (and sort them) to get $100.00 worth of pre 1982 pennies. Then, with the other $100, buy a box of Nickels.
In Five years, if the current monetary system is still intact you will still have your $200, minus the "taxable interest," you would have accrued in a savings account. So basically, you lost nothing.
However, this is where it gets interesting. OUR PAPER MONEY IS BEING DEVALUED EVERY TIME WE CREATE MORE OF IT. And as our paper money loses its value, the intrinsic value of the metals in these coins will go up. Silver, Copper and Nickel have already become WORTH MORE THAN the denomination our government has stamped into them.
"Gresham's Law"- 'Bad money drives out good money.'
This is a law that we need to seize upon.

Lets talk about the coins in our pockets!
Last week I was handed a 1962 dime in change at a store. Later that night I traded that dime for $2.81 cents!
I legally made a $2.71 profit for selling one ordinary dime.
A few months ago I had saved up $2.80 in our Fiat currency and traded it for a one Troy Ounce bar of Silver. At the time the value of Silver was $35.23 the ounce.
I bought $35 worth of Silver for less than $3 in our currency and it was an even trade!
How am I doing this?
Gresham's Law.
The coins I used were made of 10% Copper, 90% Silver.
The last silver dollars were dated 1935.
Silver was removed from half dollars in stages:

- Up to 1964 they were made of 90% silver
- From 1965 to 1970 they were 40% silver
- After that, they've been made of copper-nickel.
Complete Set of Jefferson
Silver Nickels
In addition, nickels minted from mid-1942 to 1945 contained a small amount of silver due to wartime shortages of nickel. Those are the only nickels that ever contained any silver

Back in 1964 it was known that the intrinsic value of coins containing Silver made them worth more than the denomination our government stamped into them. It was what Gresham called, "good money." The government weaned Silver out of non-numismatic grade coins and substituted a less valuable metal. This is what Gresham called, "bad money." People began to take the silver coins out of circulation and only the "bad money" was left to use. The "bad" cheaper metal money drove the "good" silver money out of circulation because people held onto it and didn't use it in regular commerce.
So, in the case of my $2.80 transaction the numbers stamped into the coins added up to under $3.00, but the intrinsic value of the metals made my transaction with the bar of silver an even trade. Think about that for a moment.
This is a prime example of how de-valued our U.S. money is getting. AND PRINTING MONEY FROM THIN AIR IS ONLY GOING TO MAKE IT WORSE.

Nickels, in their currently minted composition (see the exception above) are made up of roughly 75% Copper and 25% Nickel. They are worth holding because the metal in each of them is worth around 7 cents today. You don't have to sort them either. they are ALL the same and maybe some silver are in there!
The government knows the value of the metals in our nickel, so look for the Mint to announce a composition change in the next year or so. Once this change happens the current Nickels will become "good Money" and Gresham's Law dictates that they will be driven out of commercial use. I suggest you and I beat the masses to the punch and get some to hold onto.

All pre-'82 (and roughly 2/3of 1982) Cents are made of 95% Copper and 5% Zinc. Each of these cents are worth nearly 3 cents today. The government got wise to this and changed the composition of the cent midway through 1982. ANY cent minted after 82 is roughly 97% Zinc and 3% Copper. You will need to separate the "good" cents from the "bad" if you plan to hold cents.

Save your pre-1982 Cents and ANY Nickels (as of this writing). They may prove to be the easiest AND safest way to hedge against inflation.
If you do not have the means to buy Silver, or Gold or you are not entirely convinced we are in financial trouble, they are "good money" and a cheap, painless way to acquire and save a money source with increasing intrinsic value.
Remember, Metals have been used as money for more than 5000 years. The rise in Gold and Silver prices are due to the rest of the world exiting the Dollar. You will not see this on T.V. but the fact remains, the old "Safe Haven Currency"- Our Dollar- is failing and soon it will no longer be worth the paper it is printed on.
Don't believe the media when they tell you these metals are in a bubble. The rise in value is uncharacteristic, but easily explained when you can see the real story.
Roughly 3% of our population holds metals. That number needs to dramatically increase!!! China and India are fast becoming the top two economies in the world. Each encourages their citizens to hold metals.
The U.S. does not promote holding physical metals, in fact, President Roosevelt actually signed Executive Order 6102 which allowed our government to confiscated Gold and made it illegal for U.S. citizens to own.
The order stood from 1933 to 1974. Why?
"The Bernanke" (Ben Bernanke, Chairman of The Federal Reserve) said Banks hold Gold because it is a tradition. Do not believe this for a second.
These metals are simply reclaiming their time tested status as THE ULTIMATE safe haven asset for preserving wealth in troubled economic times.
Protect what you worked a lifetime to acquire and spread the word.
D. James LaSalle

"You don't seem to understand. You are in prison.
If you are to get out of prison the first thing you must realize is
You are in prison.
If you think you are free, you can't escape."
Georges I. Gurdjieff