April 30, 2012

Yes, it’s just that simple. It’s been going up and regardless of what happens; it will always go up.


The Exit Strategy

April 30, 2012

Yesterday, I received a great question regarding how/when to sell or as it’s being called “the exit strategy.”

Remember back in the spring of ’06 when the housing market was in a craze. People who were tens of thousands of dollars in debt began “finding” money to “buy” houses. It didn’t matter if you used Watson, For Sale Buy Owner, or Craigslist, if you listed your house for sale, someone would soon buy it and pay a premium on it! Then, in a few months by the end of ’06 you couldn’t sell your house to save your life. There were 100’s of houses for sale within miles of each other. The law of supply and demand worked against the seller and for the buyer.

Now, with this “bull market” of gold and silver I think we’ll see a lot of the same trends. People will begin to rush the market. There is no reason to be scared as in by this time our investments will have not just double or tripled, but realistically you could be sitting on 10x’s the money you originally invested (yes, even if you invest today with silver being $32 an ounce). With that said, my exit strategy will go in 4-6 waves. When things start turning straight up I will probably sell 1/6 of the silver I have. More than likely I’ll probably sell, to buy something specific. Sell some silver, buy a house. Sell some silver, buy a car. Etc..

There is no monetary value which is my “mark to sell.” I just think when the time is right, we’ll all know. Stores will no longer have signs that say, “WE BUY GOLD NOW!” They’ll read, “We sell gold! Protect yourself!” And when those signs are everywhere and silver and gold are experiencing shortages because of the demand, that my friend, is when it is time to sell, sell, sell!

Are You Crazy?

April 28, 2012

This is the question I get asked most often and semi-understandably why, although I don’t condone it!

Promises always sound better than reality until the truth punctures the false promises, and the only thing that’s left is the truth.

Let us quickly look at where we’ve been the last 15 years as a country. In 1997 the country was strong under President Clinton, life was busy, but easy. By the end of the 90s we weren’t sure if Clinton was a good person, but presidentially he had sustained the nation, and with the threat of Y2K (google this if you forgot) looming closely, surprisingly, the stock market was still going up, and at a rapid pace. Y2k came and went and nothing happened, but the stock markets continued to rise! Companies like Enron were sky rocketing through the roof, a measly $500 could have returned you $10,000 if you invested and pulled out at the right time during this short year cycle before the stock market went BUST!

With the new millenium and the stock market crash behind us, the country then began to rally in something sturdy, something that will always go in value, something that is tangible – LAND! People were taking out second loands on their homes to buy new homes, hold them for 3 months, then sell them for $30,000 more! My childhood neighbors listed their home at 2x’s what they paid for it just 10 year prior, and then 3 people got into a bidding war and their home sold for $10,000 OVER ASKING price! New home buyer began flooding this market. People making a dual income of $50,000 were taking out loans of over $200,000 on 3/2 homes thinking that the house would soon be worth $250,000 if they ever couldn’t make their mortgage it would be an easy sale! Well, in 2006, this all came down. Houses dropped faster than they had risen, and “no one saw it coming.” For the last 6 years people have been walking out on their homes, because the housing market HAS NOT RECOVERED, it is in a dead cat bounce. A dead cat bounce is like a bouncy ball when you were a kid. You’d drop it, it’d hit the ground and bounce back up, but not as high as before, and it’d pause in the air for a second, then it falls again, then bounces back up. This process repeats a couple of times. We’ve seen house prices drop and they’re still dropping. We haven’t come close to bottom out! Your house may be worth the same US currency it was in 1990, but since 1990 the government has admitted to raising inflation by 24%! Your house isn’t worth as much as you think it is, and it’s going down.

Well, what’s going to bubble next? Precious metals. Precious metals aren’t the answer for everything, but the next year will be a great time to accumulate! If you’re reading this and it’s 2014, I’m sorry, but it will be too late. You’ll be the people buying stock in the late part of 2000 and buying a house in early 2006. You’re getting in right as smart people are getting out and the average person is getting in, and you’ll be stuck with the bill.

The world works in cycles. A modest investment of $16,000 – 500oz of silver will soon in the next 2 years be able to equal the price of a single family home. When something gets inflated, something must deflate. When silver hits an astronomic bubble, real estate will be at a new low. Maybe not US currency wise, but in the ratio of gold/silver, oil, wheat, and the stock market.

Everyone has the money to buy, you just have to retrain yourself how to invest, realizing great wealth can be found in a short amount of time and your retirement fund will not save you, neither will the government.

So, am I crazy? If I am, I don’t want to know what sane looks like. History is just repeating itself, learn from it, capitalize on it.

Why Not Other Valuables?

April 28, 2012

In the myriad activities I am involved in I’ve had several people talk to me about the “valuables” they collect. Some are doomsday preppers! Other think that item will soon go up in value. Let me hit a few of these and explain their thinking and my $.02 on the matter over the next few days:

1. Diamonds

While diamonds are a girls best friend, they may no be an investors best friend! Diamonds are very valuable right now. However, all diamonds are NOT created equal. A huge diamond on a wedding ring can be worth $20,000 or it may be only worth $2,000. Anyone who has any experience in diamonds know about the 4 C’s! – color, cut, clarity, and carat. A small diamond with perfect C’s can be worth far more than a diamond twice its size. If you aren’t a jeweler you’d have very little chance telling the difference between a real diamond and a fake diamond, let alone one worth $500 or $5,000 based on the 4 C’s. Diamonds have also never been valued as money. While they are valuable as a collectable and as a luxury to suburban, soccer moms, when push comes to shove, diamonds will never be valued as money and while they may be able to maintain their value, they will definitely not MAKE you money. Also, diamonds value in worth by location! This is too risky for me!


Why Gold?

April 26, 2012

Yesterday, I covered a brief history of gold and silver and why they are money. I also spoke why I encourage people to start with silver. Today, I will explain my position on gold.

Gold right now is valued at $1,645 per ounce. Through out the history of America we were on “the gold standard.” An ounce of gold was worth $20.67. A dollar was sequentially worth 1.5 grams of gold. (31.1 gram in a troy ounce)  You could easily go to the bank with $20.67 and get an ounce of gold out, or you could go to a bank and give them a $1.00 and get 1.5 grams of gold in return. This was important to us during the wars, because our pilots and those who traveled often would get a bracelet with gold grams around it, so, when they traveled all they had to do was take a link off and the gram of gold would be worth a good amount of money in whatever country they were in, it was also very discreet.

With the gold standard explained, I personally believe we could return to a gold standard. The dollar is broken, which I will explain in a future blog, but the writing is on the walls that the US Dollar will soon collapse or have a serious restructuring. If the restructuring puts us back on “the gold standard” the government will take gold inventory(reported 261.5 million ounces, in reality it could be far less) and US dollar inventory(15 trillion US dollars) and then assign a SET price to gold. If this happens gold will be around $60,000 an ounce. Which yes, sounds crazy, but it could easily happen and swiftly happen. Let that sink in. A $1,600 investment in 5 years could be worth $60,000.

I own gold, because gold sets the pace for silver. Silver is manipulated (will cover later), but gold can not be as easily manipulated at a price of $1,650. Gold may just be the small step that allows one to buy more silver in the future as gold if it does not return to the gold standard may eventually hit a ceiling if the fed does not send us into hyperinflation, then silver will catch gold, but gold will make a run first, and if you ride the gold run, then sell as silver hits its run, you’ll be able to accumulate a great amount of wealth in a relatively short amount of time.

I can not stress this rabbit trail enough, and I will probably soon write a blog dedicated to it – TIMING. If you bought a house in 1993, a nice 3/2 for $80,000 and then held it for 15 years and your house was worth an insane, bubbled, amount of $208,000, then you didn’t sell it, and now in 2012 it’s worth around $88,000 you have successfully LOST wealth. Your house was over valued and you had the opportunity to make money, but you held onto it, and now your house is valued at an accumulate 10% increase over the last 19 years. Remember 18 years ago when gas price were 1/4 of what they are today, and movie tickets were 1/3, and break was 1/2, and gold was $400 an ounce. That $80,000 could have bought you 200 ounces of gold in 1993, you take the 200 ounces of gold and it’s worth $330,000.

History favors gold and will favor gold until this bull market ends in the next 3-5 years. This is the investment of a lifetime, don’t let it pass you up, like the housing market and stock market did. Do your research, buy now, sell at the right time. Let the wealth transfer to you.

Why Silver?

April 25, 2012

The question people often ask me is, “why silver?” They always assume gold is the only precious metal really worth investing in. Now, I will deal with “why gold” tomorrow, but for today, let’s just address some issues that give us a gold bias:

1. Ever heard of San Francisco 49ers? 1849 – The Gold Rush! In America, we have mined coal, and we have mined gold!

2. We never hear of “the silver standard.” There is always “the gold standard.” Gold is what backed our currency for the first 150 years (you know, the time when there was no such thing as inflation, and our currency was worth something more than toilet paper)

So, that’s why we are apt to say – gold, gold, gold!

Now, back to the title – WHY SILVER?! Well, simply stated, silver has always been side-by-side with gold as money. Gold and silver are God’s money. Money that we dug up from the ground. Silver is listed as money in Biblical times. A denarius or its plural form denarii, are found all through out the Bible, because there was no “currency” there was money, and it was silver and gold. When Judas betrayed Jesus, it was given to him in silver. These are not merely coincidences, that they didn’t have any Rome Dollars on them, it is that they understood gold and silver to be money. As the United States came into existence silver coins were used as money, and even until 1964 silver was put into coins to back its value!

With our understanding that silver is money, we must look at what I consider the most important question in this argument. What is silver worth? Well, right now in US Dollars they say silver is worth $31.80, back two years ago silver was worth $20, and they further you go back the lower the assigned US dollar value is. This is because inflation is alive and well. Inflation doesn’t mean that “prices are going up” it means that YOUR DOLLAR IS WORTH LESS (and will soon be worthless). So, what we must do is look at money-to-money value or money-to-house value. (For this claim on why gold over silver I will compare the historic ratio of gold:silver) During the Roman Empire the exchange rate was 1oz of gold per 12oz of silver. Simply stated if an ounce of silver was worth $10, an ounce of gold would be worth $120! In 1792 when The United States of America was first beginning to form itself, we passed a law declaring the value would be 15:1. So, taking the same 1oz as above, if 1oz of silver was $10, then 1oz of gold would be $150. In 1803 France followed suit and made their silver/gold ratio at 15.5:1.

Before I continue making my claim for silver I want to pause to explain why gold has been viewed at as more valuable than silver. Is it because gold is prettier? If that was so, why are they making gold that’s white and closer to the color of silver than yellowish gold! Is it because it’s a better metal? Silver in it’s purest form is more durable than 22k or 24k gold. If you drop 24k gold it will more than likely dent! Well, let me cut to the chase. Gold has always been rarer than silver. Above ground gold to silver always explained the ratios of 15:1.

This is where I get excited. As I’m typing this there is LESS above the ground silver used for investment than gold! We have been using silver and throwing it away at an astronomical rate! Silver is a common component in computers, phones, house appliances, and many other things that get used and then thrown away.

So, what does that mean for us now? Silver is at $31.80, gold is at $1,640. That’s a ratio of 51:1! And the only reason gold should be more expensive than gold is because something that was historically true (rarity), but is now no longer true! My prediction is that silver and gold will seek it’s balance of the 1700-1800s around 15:1, now, if we get lucky and get best case scenario it could easily go to 10:1, and if the stars align, LOGICALLY, there is no reason that gold and silver based off the amount that is available above ground gold and silver, that the ratio could be 1:1.

Let that sink in for a little while.


Only Precious Metals?

April 24, 2012

Whenever someone finds out I own a few ounces of gold and silver, they always make a statement like, “Oh, you think we’ll go back to the gold standard or using silver coins as money?”

This question is flawed on a few different levels, because they assume my thinking is that I’m a precious metals only guy. Nothing could be farther from the truth. Investing for the common person has many avenues, and the myth we’ve all bought into is, DIVERSIFY! Over the last twenty years if we had some money in real estate, precious metals, stock market, savings account, or any other form of investment we would’ve made some money, lost some money, but probably slightly made some money, or at least so we think. The lie is that we only experience 1% inflation per year. So, if we can find a saving’s account that yields 2% we’re now “making money.” Well, if the best answer your adviser can give you is “diversify” you should be smart enough to understand he isn’t good at his job and has no clue what is going to happen and your guess is as good as his. There is always a BEST, then there is everything else. There is no good investment, it’s either great, or, it’s not as good as great and you are losing “money” or the term I prefer wealth that you could be gaining. Let me simply state this, “if everyone is thinking the same thing, no one is really thinking.”

Precious metals, stock markets, and land all move in cycles. They hit equilibrium for only a short span of time, because they are consistently being overvalued and undervalued. As this article is being written in April of 2012 the stock market and land are still slightly overvalued, while metals find themselves extremely undervalued. If you study technical research you’ll learn about the different way stocks move. Right now the stock market and housing market are in what is called, “the dead cat bounce.” If you are unfamiliar with this term it basically acts like a ball. It drops, hits a bottom,  but it bounces back up, some erroneously call this equilibrium, however, this is just a bounce, it will then fall and bounce again, and again, and again. These bounces take several weeks to play out which is why they are often unidentified by us, the common investor. As these markets will soon be undervalued, the precious metals will rise to being overvalued, and that is the selling point, where we will want to now turn our investments to stock and houses. There is no “always, best” investments move in cycles.

So, for right now, I have sold everything and put all my wealth into metals, because now is a good buying time across the board. In future articles I will discuss why this week in particular was such a good week. But for now I will just say with silver being $30 and some change – buy, buy, buy!