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Tuesday, February 23, 2021

A Store of Value in a World that despises Value

What is True or Fundemental Value?

Value or Valore in the classical word literally means something to the Good, to the Benefit of, that which imparts strength, and well being.

For this to occur the thing of value must have USE.  And the use must benefit us.

What is the USE of Money?  It enables us to store wealth, to transfer wealth, to trade wealth.  For this it must have the quality of a unit of account, be a scalable means of payment and be stable over time in preserving wealth.

What qualifies?

Paper money certainly serves as a unit of account, and is a scalable means of payment.  It certainly DOES NOT serve as a stable store of wealth over time:


What about Bitcoin:  Well, here's Nouriel Roubini:

"Bitcoin is not a unit of account, is not a scalable means of payment, and is not a stable store of value."

Instead, he argues, it is a pump and dump scheme, where fear of missing out leads retail investors to speculate on an ever-increasing bubble.

"Risky, volatile bitcoin doesn't belong in the portfolios of serious institutional investors. Many of its retail backers are suckers being manipulated by an army of self-serving insiders and snake oil salesmen,"

It might make a great momentum trading vehicle but it has no fundamental value.

Which leads us back to Gold and silver.

Both Gold and silver serve as a unit of account, are scalable means of payment and have been stable over 5000 years in preserving wealth.

While comparisons are difficult across ages, a legionaire in Caesar's army would have been paid roughly an aureus a month, which is about 3 ounces of gold, but this would have been supplemented  by the booty of war and also land grants after a certain number of years of service.  A Private in the US army get about 20k a years or about 12 ounces, though without supplementary pay.  

Has gold held its value over the last 2000 years?  I'd say roughly it has.  Certainly better than anything else.

The trouble with gold and silver right now is that the Central Banks of the world control the value of all financial assets, and all currencies.  Bitcoin being neither an asset not a currency has the benefit of no control, so as a pure gambling vehicle it is great if gambling is your thing.

But the dollar value of Gold and Silver are being capped by the Fed.  Yet their control is against the primary trend of the free market.  The Fed needs to print infinite amounts of money to prop up the economy and pay off the infinitely increasing debt that will never be repaid.  And at the same time it can not raise rates without increasing the interest payments of the infinite debt.  So this creates the perfect market for gold and silver.

So two strong forces are in competition which right now is creating something of a stalemate in the price of gold and silver.  Central bank manipulation vs free market conditions. 

So if your goal is to get rich quick, they're not for you.  But if your goal in unstable times is to have a stable currency in your portfolio they're not a bad idea.





Saturday, February 13, 2021

Im Back: Go Real!!!!!!!!!

 After a harrowing run in with hackers and identity thieves I' ve gotten my site and hardware cleaned and reported the breach to the FBI who seems to feel like they have some solid leads on these criminals.  Let's hope.

This has led to a long delay in the relaunch of the site but most new coins have been added and uploaded.

Meanwhile one thing has been made super clear: The value of Hard Assets has never been greater.

First, with MMT or Modern Monetary Theory or Magic Money Tree, which is simply the unlimited printing of money by the world's governments to cure all the worlds woes, real hard assets shave never been more sought after by those desiring to trade their fanciful electronic chits for real things.

But second, Everything electronic can and will be hacked.  Your credit cards, your online information, your paypal, your apple pay, your bitcoin, your social security, everything is game.  Everything is hackable.

Except real hard assets.  They can be stolen by humans at gunpoint,  But they can not be hacked.

How valuable is that in a hackable world?  And wait for Quantum Computing.  It's still a few years away  but coming quickly,  Quantum Computing will hack bitcoin in seconds - and everything else.  

Obviously you can't keep all your assets in hard assets, but has there ever  been a time in human history when hard assets served both as a store of value, a safety net and a p prime source of investment income?

All hard assets with a historical track record are sky rocketing right now.   Gold coins especially so. Ancients are on fire.   Historical Gold medals have been bid out of sight.  However, gold bullion is not moving and the reason is clear.  It is a highly manipulated market by the Fed and the bullion banks,  This is beyond dispute as J P Morgan has paid several hefty fines for bullion manipulation.  IT's just that they make so much more doing it than they have to pay in fines.  

But don't let this fool you.  As the great Richard Russel used to say: "You can only manipulate the dominant trend for so long,  In the end the trend always wins."  And so will it too this time.  Meanwhile, it is best to accumulate real gold coins even bullion coins as the paper gold market can remain manipulated for some time.

But even limited issue bullion is beginning to catch a serious bid.  Have you noticed the Paris Mint coins of the mid seventies with the Sower and Hercules images have tripled in value over the last year?  As have many of the modern British Mint and Australian mint issues.  

So go real.  Go hard.  Go strong.  In a fake virtual hackable world, Real has Real Value.

Tuesday, September 1, 2020

REAL INFLATION?

 (FROM THE DAILY PFENNING) 

I’ve told you all this before… But Clinton put the onus on Greenspan to come up with a plan to lower inflation… Greenspan hired the Boston Commission, who came up with hedonic adjustments to the inflation calculator, and voila! Inflation was lower, and so were interest rates….  The biggest change was to allow substitutions for the items in the basket that were used previously , when their prices got too high….


For instance, if steak got too expensive, they would say that mom’s would substitute hamburger, so that’s what they did, they substituted by taking steak out of the basket of goods, and adding hamburger…. And so on through the years…. They took out housing and substituted rents, they played these games with the Inflation Calculator… So, if they want to figure out to get inflation going again, calculate it like it was pre 1995….

John Williams at Shadowstats.com does a fantastic job of calculating inflation the way it was calculated Pre 1995… Right now, he’s showing that CPI (consumer inflation) is above 4%.... While the CPI that is hedonically adjusted is just .3%....  And don’t forget what I showed you a couple of months ago where the Chapwood Index…. They show the real price increases in goods & services for the top 50 cities, and just for the top 10 their 2020 inflation average is 10.8%....

Sunday, August 30, 2020

THIS GOLD BULL HAS BARELY BEGUN

 

If you think gold has had a good run up over the last year, here's a chart that should give some perspective.  It shows that in inflation adjusted dollars gold has barely budged.  We have entered a period of unlimited out of control Federal Spending under the Trump regime.  They pay lip service to holding the line on aid to the working class and broke States.  But for corporations and banks the spigot is wide open to the tune - so far - of Ten TRILLION dollars.  The Budget Deficit this year alone will be four to five times that of any previous administration.  And now the central banks of the world have pledged openly to hold rates at zero or below for years and years to come.

Here is some historical information from the four previous gold bull markets. 

Bull #1  June 1970 – Aug 1974   gold advanced from $36.56 to $154.50.  The rate of increase was 422%

Bull #2  May 1976 – Feb 1980 gold rose from $127.00 to $850.00.  The rate of increase was 669%.

[Between Jan 1979 and Jan 1980 gold pulled back 11 times at a rate of 3% or more.  During the same time period silver pulled back 12 times at a rate of 5% or more;  (source Jeff Clark).  Investors need to expect corrections along the way!].

Bull #3  July 2001 to Aug 2011 gold rose from $267.000 to $1.925.00 The rate of increase was 720%. Bull#4  Oct 2015 to who knows when   $1,070 to who knows how high.  The expectation for minimum targets for the gold price during the current bull market, from the $1.070.00  starting point, based on history, ranges from $4,500.00 (at 422%), to $7,700.00 (based on 720%). 



Monday, August 17, 2020

Why Digital Currency and Block Chain will send the price of gold soaring.

 

Bitcoin Vs. Gold: Whose Future Looks More Promising?

There's this idea floating around the digitization is the enemy of physical gold.  The argument runs that "innovations" such as block chain technology and the move to global digital currency will undermine the value of holding physical gold.  Physical gold is a relic from another era, the argument runs.

The problem with this argument is that the very technological breakthroughs that enable the inventions of things like Block Chain and digital currency will soon undermine their viability.

How so?

Well the next innovation which is a year away, two years away, five years away. depending on who you ask, but is coming as sure as the sun will rise, is Quantum Computing.  The upshot is that with a Quantum Computer every single existing Digital Currency, including block chain, including the most sophisticated .online banking and trading programs will be able to be hacked in minutes.

Nothing Digital is safe.  All forms of digital transaction will have to be secured through in person verification otherwise nothing will be secure.

But won't there be some sort of Quantum Currency?  Would you bet your life savings that whatever it is won't be hackable by Quantum Computing 2/0?

Which leads us all the way back to physical gold and silver as the only secure store of value.

As the French say: The more things change, the more they stay the same.



LONG TIME GOLD HATER WARREN BUFFETT INVESTS IN BARRICK GOLD


Is it time for Gold bull run?


 Barrick Gold’s stock is popping 10% Monday after legendary investor Warren Buffett’s Berkshire Hathaway revealed a stake in the gold miner’s stock. 

Berkshire added a $562 million position in Barrick Gold in the second quarter, according to SEC filings Friday. While the position is small for Berkshire — which owns more than $89 billion in Apple stock — the conglomerate is the 11th largest shareholder of the gold mining company, according to FactSet. 

This was an unusual move considering Buffett, a long-time value investor, has long professed a dislike for gold, preferring assets that have cash flows or pay dividends. 

Buffett on gold:

“[Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”

Looks like the last of the big time gold haters has suddenly changed his mind.

Sunday, August 9, 2020

GOLD COIN AND MEDAL UPDATE


The most significant auction in historical gold medals in recent history has just been completed at Stacks Bowers Auctions.  The Duke of Lansing collection featuring many high grade British gold coronation and jubilee medals brought historically high prices.  The Charles II coronation and William and Mary coronation in gold pictured above both brought just a touch below $40,000.  Each of these is the finest of these rare issues to have been auctioned in recent memory.  Many others hammered at record levels.  

  this George VI medal in SP 64 brought $28,800.  Last year at the New York International the same medal in the same grade brought $16.500.  With a mintage of only 274 pieces in this high grade the medal is certainly worthy of such a high bid, but the jump from year to year is remarkable.

Even the silver coronation medals are following suit.  Last year a George I silver coronation medal in sp 63 sold for $2000.  This year an SP 64 sold at Heritage for $7000..

These high prices were not confined to the medals selection. Both at Stacks and Heritage high grade coins of interest brought historically high prices.  

The reason for this jump in prices should be obvious to anyone who has been tracking global central bank activity.  The Federal Reserve Bank in the United States alone has printed 10 trillion dollars this year in order to acquire the bad debt of US and International Corporations and Banks that it deemed necessary to preserving the global financial system.  The ECB and the Bank of Japan and printing money at a similarly Furious pace.  Concomitantly the price of bullion gold is at record levels in nominal terms through when adjusting for real inflation (not the absurd central bank inflation figures) the price is sure to go much higher.

So you can look at it as real assets are inflating at a terrific rate - or the value of paper money is being destroyed at a terrific rate.  It amounts to the same thing.  And the trend is only accelerating