Gold and Silver have always had value, never gone to zero. Can you say the same about stocks and bonds? Max Skousen
If you watch much television nowadays, you are barraged by the gold and silver ads. Most of us chalk this up as companies hawking their wares to make a profit. However, unlike most products sold on T.V., gold and Silver are different. Unlike deodorants, cars, and drinks, gold and Silver do not have something that makes us look and feel better. So, what is the deal? This is not about saving coins or numismatics. This blog is about using gold and Silver as safeguards against the loss of value to our currency.
We know that gold and Silver have been used as legal tender in every country and fiefdom in the world at one time or another. The two metals were determined to be valuable as a means of buying merchandise and services early in the evolution of mankind. Properties of the metals include scarcity enough to be desirable, and the metals do not rust like iron. Silver sometimes gets toned due to mixing copper or other metals to make it stronger. Gold gets mixed with other metals but does not have the same tendency to tone or discolor.
Paper money was an abomination to the Colonists. It was printed by the states and the federal government, primarily as promises to pay their respective debts. The colonial government and the states regularly reneged on their responsibility to make good on their certificates. For this reason, the Constitution stopped the printing of paper money.
Article 1, Section 10 of the U.S. Constitution stipulates that "no state may make anything but gold and silver coin a tender in payment of debts." We all know that FDR took us off the gold standard. "On June 5, 1933, the United States went off the gold standard, a monetary system in which currency is backed by gold, when Congress enacted a joint resolution nullifying the right of creditors to demand payment in gold." 1 Roosevelt did this following Keynesian economic theory. "One of the best ways to fight an economic downturn is to inflate the money supply. And increasing the amount of gold held by the Federal Reserve would increase its power to inflate the money supply."
The government scared the public into exchanging gold coins under $100.00 for fiat currency or paper money that claimed it was backed by gold or Silver. Many citizens turned in their gold for fear of going to prison. The price paid to citizens was $20.67 per once. With the government coffers topped off with 300 million in gold and $470 million of gold certificates, the Treasury set the price of gold at $35.00 at once in 1934. This increased the Federal Reserve's balance sheets by 67%. This was inflation FDR style. The run on the banks was averted.
"On August 15, 1971, President Richard Nixon announced that the United States would no longer convert dollars to gold at a fixed value, thus completely abandoning the gold standard. President Gerald Ford signed legislation permitting Americans to own gold bullion." 3
U.S. Currency became strong and was recognized worldwide as a dependable choice for use as money. The U.S. always paid its debts, unlike some countries that occasionally defaulted due to poor financial practices. The simple formula is, do not spend more than you have in the bank. Even during WW11, when we borrowed heavily to win the war, the U.S. kept its word and repaid its debts with interest.
We skip to the present day. If you are paying any attention to conservative news, you are being inundated with the massive amount of U.S. Debt. The gold company ads on television show us over 31 trillion dollars of debt (about $95,000 per person in the U.S.), and they claim gold and Silver will save us. Not so fast, ya'all. Right now, gold and Silver will not make you rich. Gold and Silver are a hedge against inflation. I know you have heard this before, but what does it mean? This quote comes from Birch Gold Group. "An inflation hedge is an investment intended to protect the investor against the decreased purchasing power of money due to the rising prices of goods and services." 4 In other words, gold and Silver are traded in a free market and keep pace with the stock market. You might think of this type of investment as an insurance policy.
Firms that deal in precious metals, including gold, Silver, platinum, palladium, and rhodium, use a spot price to determine their buy/sell price. This can be referred to as the premium, so much over spot, such as $4.00 over spot to sell or $5.00 under spot to buy yours.
Remember, these companies need to make a profit to stay in business. There is not much volatility in the precious metals market, but it does fluctuate, and the same fear arises in the hearts of investors to sell low and buy high. Yes, just like the stock market so-called investors. Every company suggests that you have a steady buying cycle of what you can afford to invest every month, just like a stockbroker does. I have learned that when a major bill is due and payable, people must sell something to get the liquidity to pay off the debt. I recently watched a video on YouTube where a restaurant owner brought some gold coins to his coin dealer to get the cash to redo his restaurant.
Turning your gold and Silver in for cash may be a bad idea. Just because you can make a profit, what do you do with the cash? Gold and Silver are put away for a rainy day. By that, I mean when the value of paper money is worthless, you have gold and Silver to buy what you need for your family to survive.
Let us start from the beginning of investing in gold and Silver. It is late in the game to start
putting away Constitutional Silver, junk silver, or silver coins minted before 1965. The coins are getting scarce since they are not minted anymore. These coins are 90% silver and have some copper and other metals in them, so they will not bend easily. Constitutional Silver or junk silver is traded by stackers who realize this is real money that the government has never canceled. Seek these coins to use as barter or money if current cash goes bye-bye. The denominations are dimes, quarters, halves, and silver dollars. (Not modern nickels. Barber and cap nickels are Silver.) All but silver dollars must be minted before 1965. Silver dollars are Silver. By looking at the coin's edge, you will see the difference in coins minted after 1964. on the coin's edge, you will see the copper core where the coin was stamped. These coins have a majority of copper content and are valued as fiat currency. These coins will be worth their copper content if the U.S. dollar falls.
Silver can also be collected (stacked) in bars. There are many sizes based on weight. The most popular bars are 1,2,5 and 10 ounces (about 283.5 g). When you hold a 10-ounce or heavier bar of Silver, I promise you will know you have something special in your hand. Silver bars come in 100 ounces (about 2.83 kg) and kilo size. These larger bars may be harder to use as barter but are less money per ounce due to their volume. Silver can be purchased in rounds. They are not coins but emulate coins sometimes. Rounds are bullion and are valued for their weight. Some look like currency, and others have excellent designs.
There is no need to convince you that gold is valuable. Gold is the standard by which all other currencies are judged. This has been true for thousands of years. The colonies used coins minted in other countries. The Coinage Act of 1792 (also known as the Mint Act) established the United States Mint to oversee the production of coins using gold, Silver, and copper.5 This provided security to the
citizens that their currency had value.
The U.S. Mint still produces silver and gold coins. They are .999 percent pure gold and have other metals to keep them from bending. One-ounce coins still have one ounce of gold in them. Gold coins range in monetary value from $5.00 to $50.00 per coin. Collectors and investors are more interested in their weight tied to their value on the open market. As this blog is written, a one-ounce coin varies from under $1,900.00 to over $2,200.00. It could go higher or lower depending on market trends. All gold coins have value, but here in the U.S., These are the coins that rank the most desirable:
United States (All Gold Coins)
Canada (Maple Leafs) etc.
Great Britten (Britannia's)
Australia (Perth Mint)
Austria (Philharmonic)
South Africa (Krugerrand's)
China (Pandas)
Germany (Germania)
Mexico (Libertad's, Pesos)
Other countries such as Italy, France, and Spain have a following but are not as popular for collectors.
The T.V. advertisers of Gold and Silver are reputable but overpriced. They are paying for T.V. advertising, and someone must pay for it. The cost is built into the price. For market prices on precious metals and more, check out www.Kitco.com.
Your local coin dealer is one of the best places to seek bargains. Get to know them, and if push comes to shove, they are a great way to turn your precious metals into cash for an emergency. If no local coin dealer is available, this is a list of online dealers with exemplary reputations. I have dealt with most of them. They all run specials sometimes.
Hero Bullion www.herobullion.com
JM Bullion www.jmbullion.com
Provident www.providentmetals.com
Apmex www.apmex.com
Liberty Coin www.libertycoin.com
Money Metals Exchange www.moneymetals.com
You can get an excellent education about gold and Silver on YouTube. Two outstanding coin dealers on YouTube are Yankee Staking as he interviews Tim in Manchester, NH. You will get some insight into U.S. politics as well from Tim. Also, T the Siver Staker when he interviews Sherrie in Illinois.
You may want to Check out this piece by Jon Forest Little on Money Metals Exchange.6 Here, you will find a good explanation of how Silver is used and the possibilities for an increase in value.
A possibility for investment is mining stocks for precious metals. These stocks are traded on the exchanges like any other stock. Remember, you might make a profit or take a loss if you sell too low. Mining stocks are a risk like any other stock.
There is a certain satisfaction of holding your wealth in your hand that differs from stocks,
bonds, cryptocurrency, or some government-sponsored digital currency that can be manipulated when the government spends too much of our money. Every country has done it so they can pay their bills. How long they can keep this up is an interesting question. Do you trust your government to stay within its means? Think about the Inflation Reduction Act and the Keep the Government Open Act. How is this legislation going to affect your wallet?
Update to this Blog July 4, 2023:
These two emails arrived in my inbox today. The emails give more information about the U.S. government implementing digital currency. I ask you to read these two emails to stay informed. The government is doing this without the consent of Congress or you, the American people. This means that the cash in your hand is worthless. Digital currency is coming. Do we want to live with it? Are we able to stop it?
Article 1 January 2023 https://patimes.org/the-central-bank-digital-currency/
Article 2 March 2023
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1 History.com Editors, FDR Takes United States Off the Gold Standard, History Channel, A7E Television Networks, November 24, 2009, https://www.history.com/this-day-in-history/fdr-takes-united-states-off-gold-standard
2Ibid
3Ibid
4 Protect your retirement with precious metals. See how to rollover with a free info kit. Rollover to gold, freekit birchgold.com
5 Brian Twomey, History of Coinage in the U.S., Investopedia, August 25, 2021, www.investopedia.com/articles.economy
6 Jon Forrest Little, Can We Live in a World without Silver? Money Metals Exchange, June 28, 2023, https://www.moneymetals.com/news/2023/06/28/can-we-live-in-a-world-without-silver-002765
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