It all comes down to quality and rarity. Gold and Silver are the world's oldest safe haven assets. The 16:1 silver to gold ratio had been in use for 5000 years before some short sighted men decided to try this Keynesian nightmare we are currently living through. Some even feel we have depleted Silver to the point that it really should trade at a 10:1 ratio to gold. That remains a possibility. The only certainty I can share, though, I cannot give a day or time when the collapse will come, is that it will certainly come.
Earl Nightingale, my favorite motivational speaker once said, "The things people get for free they place little value on." Our health, our eyesight, our minds, our family are all things that we have been given for free, but, only if one is lost do we realize that they were actually irreplaceable and priceless. The thinking of our society runs counter to this belief. It is the things that cost money, like our cars, televisions, and computers that they believe hold value. But things are ultimately, "cheap" and can be easily replaced at any time.
Since I was a teenager, I have had a "6th sense" about perceiving mistakes in the supply-demand mechanism for certain objects. Things that would eventually become rare -thus increase in value. I never set out to learn how to do this, it was...something given to me for free. I never really valued the gift until quite recently. The official term for what I am talking about is "Arbitrage." Which is a fancy way of saying that I buy things at a low price and then sell them at a higher one. People much smarter and bolder than I have made millions of dollars doing it. I keep my speculations low and simple, but I have made a decent amount of disposable income over the years. My first experience was, back in 1987 when I was 19 and obsessed with audio equipment.
I bought a Compact Dics of Jennifer Warnes, "Famous Blue Raincoat" (FBR). It cost $10.00. Millions of copies were produced, millions more could be made tomorrow. However, I had purchased the vinyl record first. You have to remember that back in 1987 Vinyl records, as a recording medium, were on their way out. Very few vinyl "Albums" were made. Very few are made today. I soon realized the sound from the C.D. was not as "full" as the sound from the record. I paid $8.00 for that record, and I can still recall getting scolded by my parents for buying the same music in two different formats.
But, I was so impressed by the difference in sound quality that I went out and bought ANOTHER copy of the vinyl version of the album. I hid it in my closet, unopened, because I believed it would go up in value. I believed this because I know what well recorded music sounds like. I'm not talking about someone's taste in music, I am talking about the scientific attempt to re-produce the original sound through a recorded medium. To feel like the musicians are in the room with you. I knew what that sounded like, felt like. I knew that C.D.'s were not the medium for THIS album.
Knowing the mind of an "Audiophile." I knew that if someone had both the income to buy $15,000 speakers, and the desire to experience recordings that would make their equipment come alive that one day I would make money selling this record.
A few years later, when the Records were all sold, I noticed the demand I had predicted. A second hand market had developed via the internet. It turned out that the Vinyl version of Jennifer Warnes, "Famous Blue Raincoat" is considered to be one of the best musical recordings of all time. The catch was-they were out of print. A market had appeared for it but there were none to be had and the people lucky enough to have one learned very quickly the inherent value of what they owned.
In 2007 a 25th Anniversary edition of "Famous Blue Raincoat" (FBR25) was released, it was again available on both C.D. and Vinyl. I bought three vinyl copies this time. In time-even the FBR25 vinyl sold out. A testament to Jennifer Warnes voice, as well as to her vision, and her, "ear" for music.
When the dust had settled I went into action. I sold two of the FBR25's-each for double what I had paid for them. I kept the third as my personal copy. I keep it next to my original listening copy of the record.
I sold the unopened 1987 copy for nearly 200% what I had paid for it.
I am not a student of economics, but I do know how to add and subtract. I also know how to compound interest if you lend me a calculator. I have been watching the slow collapse of our global economic system since 2001. I have come to understand what iss happening and I have been watching it unfold for over a year now. The downward trend is terrifying me.
I am scared that our way of life is slowly coming to an end. Today, I no longer have the luxury of arbitrage for extra spending money. Today I feel compelled to talk about more sobering topics, like the collapse of our currency and ultimately the loss of all paper assets.
The weighing of quality and rarity is screaming at me. I do see an opportunity to buy. I don't take pleasure in communicating this. but I feel NOW is the time to place at least some of your wealth into metals. I feel it is the simplest way to ride out a collapse with your wealth not only intact, but possibly increased.
Look at the dollars in our pockets, and the digital representation of those dollars in the paper investments we own. Like the Jennifer Warnes C.D.'s our dollars are easy to produce- in fact, they are TOO easy to produce.
We are printing so many dollars-on a worldwide scale now-that the value of them is decreasing. Everyone that looks closely enough into the process agrees.
Gold and Silver used to back the money that we printed our currency from. Back in the 1800's the U.S. Government printed Gold Certificates (Dollar bills) that was roughly backed 100% in gold. So skeptical were our countrymen just a few generations ago, that the government had to print "PAYABLE TO THE BEARER IN GOLD COIN ON DEMAND..." right on the paper. It was taught, and learned, that this Government paper; this, "Fiat Currency" stood in place of the metal.
Over time, we have lost sight of this fact. So much so that no one looks for gold at a bank. We look at the Government paper as the source of inherent value. Like vinyl records in the 80's the actual gold and silver have fallen from favor. But, just as the case with the Jennifer Warnes album, simply because something falls from favor does nothing to effect it's inherent value-not in the long run.
In 1973 President Nixon cut the last of many weakened restraints holding the printing of our dollars to represent any quantity of gold. We have been printing at will for decades now.
The men and women in power are now, literally, making things up as they go along in a desperate attempt to keep the entire world economy from collapsing. The world is being flooded with currency to keep the illusion of normalcy propped up. A few billion to make the stock market look good today, a few billion to secretly buy bonds to make that look safe. All in hopes SOMETHING will click, and things will get better. In truth, no one knows a way to solve the economic problem without tremendous suffering and loss of wealth.
It all comes down to quality and rarity. Gold and Silver are the world's oldest safe haven assets. The 16:1 silver to gold ratio had been in use for 5000 years before some short sighted men decided to try this Keynesian nightmare we are currently living through. Some even feel we have depleted Silver to the point that it really should trade at a 10:1 ratio to gold. That remains a possibility. The only certainty I can share, though, I cannot give a day or time when the collapse will come, is that it will certainly come. When not one man or woman in power, the world over, has the will to stand up to their people and tell them they must change their way of life. That they need to restrain their spending. It would take a miracle to save us it seems.
Perhaps it is time for a paradigm shift, where everyone understands that the things that cost us money are actually worthless and the things we get for free should be cherished. That would be miracle enough. Wouldn't it?
-D. James LaSalle
"We've been around, we fall, we fly
we mostly fall, we mostly run
But, every now and then we try
to mend the damage that we've done."
L.Cohen and J. Warnes, excerpt from, "Famous Blue Raincoat."