The Precious Metals Investment Primer: Why You Should Own Gold And Silver
Why Do You Want to Own Physical Gold and Silver?
The Main Principle of Successful Investing:
Always buy undervalued assets
You always want to buy undervalued assets that are in a long-term positive trend. The term undervalued relates to time and market conditions. Market analysis is required to determine the true value of an asset versus its market price. Precious metals such as gold and silver have been undervalued through price management for longer than most of us live. The prices of gold and silver are being controlled even more stringently as the currency purchasing power dwindles away. The reason for concealing the true value of precious metals lies in the attempt to keep the masses calm and unaware of the true economic state. rising real estate prices credit to its appreciation rather than the dollar value loss. As a perception management strategy, this deception is very effective in steering the unaware public into unfavorable investments.
What is Money?
I love the esoteric side of money as much as its common sense understanding. I started the journey to understand by asking people what money was. A lot of them defined money as a currency in its paper form, Very few said money denotes value, money stems from mindset, or it does not exist. They meant money was an illusion. Yet millions of people value this illusion more than their own life, health, time, freedom and, yes, dignity. That is not the side of money I am talking about. I define money as a tool to attain freedom. Freedom of choice is what you want. Money buys you that choice.
Precious metals have always been a tool that protect your freedom, purchasing power, and lifestyle. Do not listen to me, listen to the private lender I met in Mykonos. He chooses to work 12 weeks out of the year because he made the wise choice to allocate his funds wisely. Gold preserved his purchasing power and provided a capital he can rent out at interest.
Let’s talk gold. According to usdebtclock.org, the current true value of gold in relation to the United States dollar is $5,608 per ounce. The current spot price of gold $1,313 per ounce. This ratio makes gold a four fold return on investment. Therefore, gold is a true undervalued asset worth your money (and you can get your money worth). It has been undervalued since the United States had abandoned the gold standard. Thus, gold has been an undervalued asset in a long-term positive trend. Once you fully understand the concept, you should revise your investment strategy and re-evaluate your investment portfolio.
What about silver? Let’s look at the silver return on investment numbers. The true silver value is $697 per ounce, but its spot price is only… $15.88. This ratio makes silver a forty four fold return on investment. It is an astounding return on investment for any investor. Also, silver and gold are true money.
On the other hand, a 3-bedroom 2-bathroom 1500 square foot house in the Los Angeles area for $913,000 will not make a sound investment. You do not want to drink the Kool Aid, the appraiser drinks.
Under the circumstances, rental real estate can be an undervalued asset. But it is not now. You have to assess the market yourself and ensure the math makes sense to you.
Monetary Premise of Gold and Silver
Precious metals embody the true essence of money: they require energy and commitment to come to life. Gold and silver cannot be created from thin air which make them an infallible currency. They have the embodied energy true money requires to resist inflation and devaluation.
The Nature of the Monetary System: How is Money Created?
You want to buy a house but you do not have a full amount to pay for it in cash. What do you do? You go to the bank and ask for a loan. But banks do not hold cash for you. They do hold the authority to take your signature and to sell it multiple times in the form of the so called mortgage backed securities.
So until you showed up at the bank and signed a contract there was no money. Now you actually still do not get the cash to buy the house. You get a contract that forces you to repay the amount you were asking for with interest.
Now you have debt against the contract you signed and the bank has your promise to repay the debt. The process I described creates money. But does it protect the energy and the value you put into it?
I said that over the life of the loan – the longer the better to the bank – the bank sells your promise in the form of the signature you gave in the beginning of your agreement with the bank. The longer it takes you to pay off the loan, the more time the bank can sell your promise to repay in the form of mortgage backed securities to investors across the world.
These sales produce more debt-based money. And inflation in the long time. The party that has immediate access to money generation, the bank, benefits most. You do not at all. You have a perception that the house value has increased overtime.
It did not. But you hear in the mainstream media and from financial advisors that houses appreciate overtime. They do not. Another event occurs. The value of the currency decreases, thus, the same house seems to cost more 10 years from the time you bought it. You like it because it makes you feel a successful investor. It is called perception management.
If you look critically, you notice that food has “appreciated” overtime as well. So did fuel and other commodities. You actually dislike this type of appreciation because you have to eat every day and you have to pay more. You notice that your purchasing power diminishes because you have to put more dollars toward food, fuel and utilities. Furthermore, you income may not increase as fast as commodity prices. And you recognize the dilemma and sense that your real estate investment may have just unreasonably inflated.
You may find out the hard way when you decide to sell it at the wrong time that there are no buyers for the appreciated price.
Furthermore, when you calculate how much you have paid for the house (think, mortgage, insurance, property taxes, maintenance costs – the longer you hold the house the higher they are), you suddenly realize that you have made no profit. The worst case scenario, you paid way more than the appreciated house is worth.
You have learned inflation the hard way. I have been fortunate not to buy a house long term and not to sell any at the wrong time. However, I have close friends who listened to conventional advice and learned the concept of inflation the hard way.
If your lender convinces you to accept the longest mortgage term, ask
They actually wish you well but they have to make their money worth.
In the end, you end up with a lot of dollars but no purchasing power. Furthermore, since the currency you hold is backed solely by promises, you end up with a ton of debt that cannot be repaid.
So what do you do to avoid situation like that. To avoid a similar situation, you must always invest in
undervalued assets that are in a long-term positive trend.
You should go back to the first chapter and the primer to drill the idea down and to recognize long-term positive and negative patterns in the future.
Industrial Uses of Gold and Silver
Besides being true money, gold and silver have been and will be used in a range of industries. Computers and other electronics need gold components for the micro chips. The medical field uses gold threads for sutures because gold is highly malleable. It can be spun into a thin virtually invisible thread. Gold does not oxidize. Ancients ingested gold flakes to protect their youth because they believed it acted as an anti-oxidant and that it protected from free radical damage.
Jewelers value gold for it is superb resilience and long lasting jewelry pieces. However, gold can be too soft for necklaces and chains. To give gold pieces rigidity and strength, jewelers pair gold and silver. When you hear 14 carat, 18 carat, or 24 carat gold, you are given information about the proportion of gold and silver held in the product.
14 karat gold contains 58.3% of gold or 14 parts of gold and 10 parts of additional metals such as silver and copper.
18 karat gold contains 75% of gold or 18 parts of gold and 6 parts of additional metals.
24 karat gold contains 99.999% or 24 parts of gold. Technically, the ratio is close to 100% but not quite because nature allows impurities even when gold is perfectly refined. Therefore, you see a 999.9 fine gold (or 999,9 for European gold) mark on gold bullion pieces to designate the highest purity of gold.
The wide range of gold and silver silver industrial uses of makes them indispensable in the building a hedge against financial crises and economic downturns. Gold and silver are perfect for protecting generational wealth. Today more than ever, when the US dollar is headed for collapse, silver will ensure that you not only survive but thrive when the economy shatters again.
The purchasing power of the dollar is relegated to three cents. You may have noticed that thirty or forty years ago one dollar could buy several article of food. Today it buys none. You cannot even buy a loaf of bread for a dollar.
What if you have cash in the bank? First of all, try getting what you have in the bank in cash. If you have a significant amount in the bank account, you will learn that it will take a few days to come up with the amount in cash, or may not be able to take out the full amount at all.
Second of all, if you have been through an economic crisis, you may have have learned that your hard earned cash did not belong to you.It belongs to the bank. At bank discretion the funds you have at the bank can be privatized or nationalized whenever the bank or the government finds it suitable.
It has been done in Cyprus during the last economic crisis. However, investors in Cyprus were granted access to partial funds later on. During the collapse of the Soviet Union people were less fortunate and money involuntarily donated their life savings to the government.
Paper Gold & IRA Gold
You may ask about owning a gold stock so you do not have to pay for storage to protect your assets.
The term paper gold means you have a document acting as a substitute for the physical gold. With paper gold, you don’t own the gold; you own a promise to receive physical gold. The certificate makes you are a creditor of the corporation issuing the paper gold certificate and subject to counterparty risks. However, you do not own the gold. Since legally do not own the gold, you will have the same outcome in the event of an emergency as the chances of getting your cash out of the bank during a serious crisis. You learn the hard way that you own nothing holding paper gold. Not to mention that the term paper gold is a linguistic oxymoron: gold is a metal, not paper.
The same goes for the IRA held gold. IRA gold in physical possession of the retirement fund manager makes it susceptible to re-appropriation by the holder in the event of a crisis.
Fiat Assets: Stocks, Bonds, and Derivatives (ETFs)
People who listen to financial advisors invest in employer sponsored 401k plans or self-employed IRA, individual retirement accounts. The former allows employees to invest their pre-tax money in securities such as stock, bonds and index funds. The latter allows an individual to park after tax income into the same fiat assets. What these plans and investments share in common is the fact
that they take your control away from your investments and your hard earned money.
Derivatives, or Exchange Traded Funds (ETFs) as the names implies stem from commodities in a paper form. Remember the paper gold scheme. Stocks, bonds, and ETFs are great as temporary speculative assets but in the long run the people who rely on them as the sole source of income, end up holding the bag.
If you want to gamble your wealth away, stick with a 401k or an IRA plan. Furthermore, in the 401k or IRA plan, you do not own an index fund or a stock. You must have a certificate of ownership which you do not. The fund manager owns the fiat assets in you 401k plan.
Cui bono? Always ask who benefits from the advice you are given. If you surrender control of your investments, you do not benefit from your financial advisor advice. paraphrasing the famous If you do not hold it, you do not own it, you should remember the following:
If you have no control over your investments, you do not own them.
Precious Metals Mining Stocks
Precious metals mining stocks allow investors to participate in a long-term positive trend. In the current economic situation when gold and silver are in high demand mining stocks make a lucrative investment option. Most of the mining stocks are highly undervalued because gold and silver are highly undervalued.
Mining stocks make sense as an investment if you have the rest of your wealth protected and have no debt. We are headed for a global monetary and economic reset accompanied by a crisis. Many say that the crisis may become bigger than the Great Depression for the unprepared. For intelligent people, who anticipate the crisis, the reset will become the best wealth accumulation opportunity of their lifetime.
The Top One Percent Invests in Physical Precious Metals
Do as I say, not as I do. The master is oftentimes the biggest hypocrite in the world: he says one thing and does the opposite. That is how he controls you. If you do not follow your intuition and observe what the master does, you go against logic and shoot yourself in the foot.
Paper and digital fiat products have been designed by the elite for the masses. You have no control over your investments, therefore, you deserve to lose them. Not my words, theirs. It is also natural law: when you relegate the responsibility for your money and investments to another party you will inevitably lose them.
Furthermore, most wealthy people I have known never invested in the stock market. They also control their own investments. Always. They also hold physical gold and silver.
To avoid the loss, take your investments management in your own hands and follow what wealthy do (not necessarily what they say): accumulate precious metals. You must protect your life work and wealth by having physical precious metals.
Silver: A Superior Return on Investment
Silver is oftentimes referred as the poor man money. It is reasonably less expensive than gold because it does oxidize. However, when silver is properly stored it preserves its integrity quite well. Furthermore, the ratio of the spot price and its true value makes silver a superior investment with a small investment capital.
Silver provides a forty four fold return on investment whereas gold yields only four fold. I based the estimate on the data available usdebtclock.org. The gold and silver ratios to the value of the US dollar are predicated on the available amount of debt, however, the debt figure may be a lot higher.
Anticipation denotes intelligence. Do your own research and determine for yourself how you can protect yourself. Physical precious metals grant wealth protection for you and your family. They give you the chance not only to survive during the next great wealth transfer but to thrive. Perhaps, owning precious metals will even enable you to build your own wealth during the transition.
When you buy gold and silver, only purchase them from reputable distributors such as JM Bullion, APMEX, SD Bullion, All of them sell assay certified gold bullion bars, rare numismatics, and bullion coins. APMEX also sells gold jewelry. Gold jewelry is a great diversification maneuver in the event of overt gold confiscation. However, it is also the most expensive way to own gold. Jewelry mark ups exceed in some cases 40% of bullion gold.
Protect your wealth and your hard earned money.
Until next time,