Gold Silver Blog – GoldSilver.com

Same Problem, Different Country?

For those that study history the following recent article might have them sit up and take serious notice.

Citigroup Warns Customers It May Refuse To Allow Withdrawals

Business Insider – 2/19/2010

“Effective April 1, 2010, we reserve the right to require (7) days advance notice before permitting a withdrawal from all checking accounts. While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change,” Citigroup said on statements received by customers all over the country.

We suggest an astute person compare what is happening right now with what happened just a few years ago in Argentina:

If you are curious about what a monetary crisis could look like in your country we encourage you to simply look for clues from other countries economic pasts, those that have already been through such a phenomenon.

This article offers a quick glimpse at a modern history example. Here is a brief recount what occurred only a few years ago in Argentina:

In July of 1989 – Argentina’s currency at the time was going through a hyperinflation. The austral (image below), recorded a 200% inflation rate in July alone, topping a 5000% rate of inflation for the year. It was for this reason that during the 1989 and 1990 hyperinflation peaks many Argentines began rejecting the austral as payment, demanding U.S. dollars instead.

To reign in ruinous price inflations, the government in 1991 adapted a new Argentine peso establishing a fixed dollar-pegged exchange rate (one Argentine peso per U.S. dollar). The initial aim of the measure was to ensure the acceptance of the new Argentine peso currency:

This 1991 enactment, the Law of Convertibility (La Ley de Convertibilidad), helped establish the peso and sharply reduce price inflation, restoring stable prices throughout the remainder of the 1990’s. This fact raised the quality of life for many Argentine citizens. As a result, many citizens could more easily afford to travel abroad, buy-imported goods at lower prices, or ask for credits in dollars at very low interest rates.

Meanwhile, Argentina’s government deficit spending remained high and public debts expanded rapidly but the country showed no true signs of being able to pay for their growing debt load. However the IMF (International Monetary Fund) continued to lend funds to the Argentine government while postponing scheduled repayments. The Argentine financial markets became saturated in dollars and foreign debt.

In 1999 Argentina’s GDP dropped 4% and unemployment levels were rising, a recession had begun. The economic downturn continued onward through 2000 and 2001.

In December 2001, the call on Argentina’s debts came forth, the government couldn’t pay their loans and obligations. Argentines becoming aware of the situation began withdrawing from their bank accounts preparing for the worst. Bank Runs had began.

To quell bank runs (citizens withdrawing large sums of paper currency from their bank accounts, and or converting pesos into dollars and sending them abroad) the government enacted a set of measures that effectively froze all bank accounts for 12 months, allowing for only minor sums of cash to be withdrawn. These government banking measures became informally known as the corralito – or crudely translated – an “animal pen“.

The citizens were livid at the rationing of withdrawals and the forced devaluations of their savings. As the country’s economic collapse took hold people took to the streets in mass, violence and vandalism ensued:

The vast majority of the public’s savings were caught in the financial quagmire (the “animal pen“) – they lost roughly 50% to 75% of their purchasing power.

In January 2002, after a full decade, the Law of Convertibility was finally abandoned. The Argentine peso plummeted in value going from a fixed 1 to 1 ratio with the US dollar, to as high as a 4 to 1 ratio. Effectively, this devaluation reduced the purchasing power of the Argentine peso to 25% or 1/4th of its 1990’s purchasing power.

The wealth transfer was vast and swift. The people’s savings were crushed:

1. http://en.wikipedia.org/wiki/Argentine_economic_crisis_%281999%E2%80%932002%29#Effects_on_wealth_distribution
2. http://www.aaep.org.ar/anales/works/works2004/Amado-Cerro-Meloni-04.pdf

There were some who understood what was happening and took action before the bank freeze occurred. Many of these folks moved their capital offshore before the crisis played out, they were thus able to more than triple their purchasing power over those who strictly held Argentine pesos.

This is what tends to happen during currency crises, there are many on the inside who not only duck debasements and or devaluations, they exploit it to their advantage.

Wealth transfers from average savers to financial insiders.

Those with direct access to foreign currency exchange floors or first hand access to the fiat currency printing press tend to have an advantage over the average worker and saver.

But Here’s the Key… You Don’t Have to be An Insider

Examine what happened to an Argentinean who purchased Gold or Silver when the recession was quickening and the run on the banks was commencing:

In 2002, once the Law of Convertibility was abandoned, Argentines who held physical Gold and Silver not only protected their wealth and their purchasing power, they enhanced it 3 to 4 fold:

Here Is the Secret:

• You don’t have to be an insider to protect your wealth during a currency crisis.
• You don’t have to be stuck in failing banks trapped in a financial “animal pen”.
• You only need to study history and take action so you are not condemned to repeat the mistakes of those before you.

Don’t let history’s rhyme and repetition steal your hard earned wealth.

Physical Gold and Silver are unquestionably the solution for us.

What’s yours? -> Take action while there is still time remaining.

We are pleased to announce International Shipping direct to Ireland, Italy, Sweden, and Taiwan!

Physical Delivery • Stored in a 3rd Party Vault • Precious Metal IRA

U.S. Silver Eagles Canadian Maple Leafs Austrian Philharmonics 1 ounce Rounds 10 ounce Bars 100 ounce Bars

U.S. Gold Eagles Gold Maple Leaf S. African Krugerrands Gold Buffalo 1 ounce Gold Bars 10 ounce Gold Bars 1 Kilo Gold Bars

Tweet This Post

Remember… It’s Fact:

Every currency in the world is fiat or “faith based” meaning it’s worth only the value of the actual paper it is printed on. More people are learning this fact every day, confidence is eroding in the fiat currency system. History proves that for fiat currency… the final value of zero is inevitable!

“The credit boom is built on the sands of banknotes and deposits. It must collapse.” – Ludwig Von Mises

The solution to protecting yourself is simple. Secure a Gold and Silver foundation to your wealth. Owning physical Gold and Silver has been very lucrative over the past decade. But don’t take our word for it. The facts below prove that this is a Worldwide Event!

January 1, 2000 -> December 31, 2009

*** If you don’t see your nation’s currency above simply click the following link to perform your calculations -> http://www.xe.com/ict/ ***

Physical Delivery – Stored in a 3rd Party Vault – Precious Metal IRA

U.S. Silver Eagles Canadian Maple Leafs Austrian Philharmonics 1 ounce Rounds 10 ounce Bars 100 ounce Bars

U.S. Gold Eagles Gold Maple Leaf S. African Krugerrands Gold Buffalo 1 ounce Gold Bars 10 ounce Gold Bars 1 Kilo Gold Bars

Tweet This Post

In the last week, gold has been charting new territory, pushing to new heights, and people are asking me what is going on in the gold market. Many say the recession is ending, the rain clouds are clearing, and the munchkins are beginning to sing. But as I see it, the storm is only beginning to brew.

Unemployment is at its highest in nearly 30 years, and stocks, despite a bear market rally, are still sitting below what they were 10 years ago. Our budget deficits are at unbearable levels, and the government continues to write checks with your dollars.

And speaking of dollars, the dollar is nearing its lowest level ever, and the Federal Reserve Bank is doing its best to make sure that it continues going down.

With foreign governments clamoring for the end of the dollar as the de-facto world reserve currency, we have a currency crisis in the making. As a monetary historian, none of this surprises me. The US dollar is no different from any other fiat currency in history, and will continue plummeting until it reaches its intrinsic value—zero. And with so many economies attached to the US dollar and the US economy, this will be a global crisis. I have been predicting this since I began studying the markets in 2003, when I fired my family’s financial advisor and invested our net worth in gold and silver.

This precious metals bull market has just gotten started, and this one has the makings to be truly spectacular. Right now, we have the opportunity to get in while gold and silver are dirt cheap.

At GoldSilver.com we have made it our mission to turn this and future economic storms into opportunity and prosperity for all. This isn’t just about protecting your financial wellbeing; it’s about investing for spectacular gains. As the storm brews overhead, gold and silver owners will rejoice, as wealth will come pouring down on them.

Michael Maloney,
GoldSilver.com

Learn More About Our Daily News Headlines – Add News RSS feeds to your inbox or Mobile Device

U.S. Silver Eagles Canadian Maple Leafs Austrian Philharmonics 1 ounce Rounds 10 ounce Bars 100 ounce Bars

U.S. Gold Eagles Gold Maple Leaf S. African Krugerrands 1 ounce Gold Bars 10 ounce Gold Bars 1 Kilo Gold Bars

Tweet This Post

This weeks GoldSilver.com News quote is from Eric Sprott, founder of Sprott Asset Management.

Mr. Sprott founded Sprott Securities, Inc. in 1981 and then the hedge fund and investment company Sprott Asset Management in 2000. One of the reasons for his incredible success has been his ability to make prescient calls about major moves in financial markets including this gold bull market that started in 2001. When he makes predictions, many powerful and wealthy people listen.

The following excerpts are from a recent September 2009 report by Mr. Sprott. The report deals with the US dollar crisis and is entitled “Safe Haven No More”:

So how will this US debt crisis ultimately resolve itself? Let’s consider the options. It would appear from our analysis that the spending ‘promises’ are the crux of the problem now facing the US Government. US Government Financial Summary Amount US Revenue for 12 months ended August 31, 2009 $2,157,940,000,000 Obligations4 Total Outstanding US Debt (August 31, 2009) $11,812,870,150,873 Unfunded Social Security Trust Fund $17,500,000,000,000 Unfunded Medicare Trust Funds $89,300,000,000,000 TOTAL Obligations $118,612,870,150,873 4 Richard Fisher, President and CEO of the Federal Reserve Bank of Dallas, is on record stating that unfunded liabilities from Medicare and Social Security totaled $99.2 trillion as of May 2008. The NCPA data above is the most recent estimate available. Fisher’s speech can be retrieved at: http://www.dallasfed.org/news/speeches/fisher/2008/fs080528.cfm …Because there is little hope of paying for their unfunded liabilities through current tax revenues, the Social Security and Medicare promises will undoubtedly require new bond issues. You probably don’t need a calculator to realize that the US can never cover the debt costs on $118 trillion… What is glaringly obvious is that the United States’ penchant for increasing its ‘promises to spend’ is directly threatening the future viability of the USD. While US politicians brazenly approve future spending promises they forget the real costs those promises imply – and there is no feasible way we can see those promises being paid for under foreseeable economic conditions. If there isn’t enough new capital in the current environment to fund new Treasury bill issues, then there certainly isn’t enough capital to pay for the US’s unfunded future obligations. The choices, therefore, are bleak: 1. Default on Medicare promises. (Unlikely given the current debate in Washington to expand medical coverage.) 2. Default on Social Security promises. (Unlikely given the increasing average age of the voting public.) 3. Put forward a credible plan to balance the budget. (Unlikely given the most recent budget projections.) 4. Default on outstanding debt. (Unthinkable) None of these options are feasible for the US Government. So they realistically only have one option left – to print their way out of their debt crisis. We keep coming back to the numbers for the US debt, and they don’t add up. Even Alan Greenspan, former Chairman of the Federal Reserve, believes that the rising budget deficits in the United States are “unsustainable”. Because the US Government is printing dollars to fund their liabilities, it is highly unlikely that we will ever see a failed bond auction similar to that of Poland. The far more likely outcome, therefore, will be a US dollar crisis. It is for this reason that we have positioned our hedge funds and mutual funds so heavily in precious metals. At the end of the day, when the world finally realizes what the US has done to the world reserve currency, international investors will shift into an asset that no government can print. In our opinion the US dollar’s status as a ‘port’ in the financial storm has officially come to an end.

The figures above are difficult to fully absorb. Let’s break the numbers down into a rough everyday example to make it easier to understand.

Simply divide the annual “US Revenue” by the “Total Obligations” = 1.82%.

This is like owing $200,000 on a house and making $3,640 per year at your job!

Unsustainable. You couldn’t pay off the debt unless – magically you got your hands on your very own dollar printing press, then what would YOU do?

Print. Print. Print.

The choice for us was simple. We got Gold and Silver to protect against getting burned from what we see as absolutely inevitable.

Remember “Wealth is not destroyed it is merely transferred”. What side of the transfer do YOU want to be on?

GoldSilver.com

Learn More About Our Daily News Headlines – Add News RSS feeds to your inbox or Mobile Device

U.S. Silver Eagles Canadian Maple Leafs Austrian Philharmonics 1 ounce Rounds 10 ounce Bars 100 ounce Bars

U.S. Gold Eagles Gold Maple Leaf S. African Krugerrands 1 ounce Gold Bars 10 ounce Gold Bars 1 Kilo Gold Bars

Tweet This Post

Gold prices closed last Friday above $950 per ounce. This completed five weeks in price increases as the dollar retreated in value. Silver has also had considerable gains.

Thus far in 2009 Gold is up 8% while Silver has gained 22% in value.

Last week Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program, stated U.S. taxpayers may be on the hook for as much as $23.7 trillion. This absurd figure only stands to grow over the coming months and years.

More market shenanigans are being uncovered daily as hedge funds and large banks, specifically Goldman Sachs, have been under heavy fire as they continue to make large profits after the financial system nearly collapsed.

On July 3rd, a former Goldman Sachs IT Executive was arrested under charges of having stolen secret computer codes and software that a federal prosecutor said could “manipulate markets in unfair ways.”

July 23, 2009 – New York Times It is the hot new thing on Wall Street, a way for a handful of traders to master the stock market, peek at investors’ orders and, critics say, even subtly manipulate share prices. Powerful computers, some housed right next to the machines that drive marketplaces like the New York Stock Exchange, enable high-frequency traders to transmit millions of orders at lightning speed and, their detractors contend, reap billions at everyone else’s expense. “This is where all the money is getting made,” said William H. Donaldson, former chairman and chief executive of the New York Stock Exchange and today an adviser to a big hedge fund. “If an individual investor doesn’t have the means to keep up, they’re at a huge disadvantage.”

Last Friday seven more banks in the United States shut down bringing the 2009 total to 64 bank failures nationwide. This compared with 25 bank failures in 2008 and three in 2007 reminds us of a recent quote posted within the Gold Silver News Section:

July 16, 2009 – Dow Jones Newswires WASHINGTON Federal Deposit Insurance Corp. Chairman Sheila Bair believes up to 500 more banks could fail, a U.S. senator said Bair told him in a recent meeting. “She told us that unless something dramatic happens, we could lose up to 500 more banks,” Sen. Jim Bunning, R-Ky., said Thursday at a hearing of the Senate Banking Committee on the foreclosure crisis.

What does Mike Maloney think about holding currency?

Click Here For More On Paper Currency

Prepare yourselves for Gold and Silver’s revaluation!

History shows no paper currency can endure – Gold and Silver always win out!!!

Our inventories are stocked and ready for your order – www.GoldSilver.com

U.S. Silver Eagles Canadian Maple Leafs Austrian Philharmonics 1 ounce Rounds 10 ounce Bars 100 ounce Bars

U.S. Gold Eagles Gold Maple Leaf South African Krugerrands 1 ounce Gold Bars 10 ounce Gold Bars 1 Kilo Gold Bars

Tweet This Post

May was a sensational month for Gold and Silver prices!

Silver hasn’t shined this brilliantly since 1987:

Silver futures gained 3% Friday, ending May with their biggest monthly gain in 22 years as inflation worries and hopes for an economic recovery boosted the metal. Gold rose to three-month highs as the dollar slipped. Silver has gained 26.6% this month, the biggest since April 1987. The metal has many industrial uses but is also seen as a hedge against a weaker dollar and inflation. In contrast, gold, which has limited industrial uses, has gained 9.8% in the month, the biggest monthly gain since November. May 29 (MaketWatch)

Look for Gold to move strongly upward in value as we pass both $1000 and $1023 resistance levels.

Gold may target a record $1,250 an ounce as a continuation head-and-shoulders pattern may be forming within a longer-term trend, Standard Bank Group Ltd. said, citing trading patterns May 26 (Bloomberg)

How has the dollar been doing of late?

The US Dollar Index closed last week below 80.

Analysts are predicting further weakening in the dollar to come:

The dollar, which has dropped 5 percent against the Euro over the past month, has a lot further to fall, says Stephen Gallo, head of market analysis at Schneider Foreign Exchange. “The main move we’ve seen in currency markets in the last two weeks is the pullback in the dollar, which we’ve been forecasting since at least December,” he explains.  ”We think that the dollar thumping is just starting to get going.” May 27 (MoneyNews.com)

USA Today recently reported total liabilities currently stand at $668,221 per US household stating, “The government took on $6.8 trillion in new obligations in 2008, pushing the total owed to a record $63.8 trillion.”

Marc Faber, Austrian economist and predictor of the October 1987 crash, took the following stance about where we’re headed on national television on both Glenn Beck and Bloomberg TV.

The U.S. economy will enter “hyperinflation” approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates, investor Marc Faber said. Prices may increase at rates “close to” Zimbabwe’s gains, Faber said in an interview with Bloomberg Television in Hong Kong. Zimbabwe’s inflation rate reached 231 million percent in July, the last annual rate published by the statistics office. May 27 (Bloomberg)

As the US dollar and all other paper currencies further inflate and free fall in value – We recall history and how the greatest transfers of wealth happen when Gold and Silver account for dying paper currencies and credit.

The difference this time around —> THE STAGE IS WORLDWIDE and the amounts of bad debts and currencies that Gold and Silver must account for are larger than ever before!

Our inventories are stocked and ready for your order – www.GoldSilver.com

Take action before the masses begin to hear and read about record Gold prices! Secure and enhance your position today – before prices ignite and take off!

U.S. Silver Eagles Canadian Maple Leafs Austrian Philharmonics 1 ounce Rounds 10 ounce Bars 100 ounce Bars

U.S. Gold Eagles Gold Maple Leaf S. African Krugerrands 1 ounce Gold Bars 10 ounce Gold Bars 1 Kilo Gold Bars

Tweet This Post

President Obama recently forewarned about “unsustainable” deficit spending and skyrocketing interest rates:

Meanwhile John Williams of Shadowstats.com recently stated

And, from the press:

Remember – the Federal Reserve has expanded our monetary supply by trillions upon trillions of Dollars.  This will eventually lead to a run up in prices and daily living expenses. The masses won’t take action until their everyday pocketbook begins to take a hit.

Remember what $5 gasoline did for the demand of hybrid automobiles?
Imagine what $10 gallon milk will do to the price of Gold and Silver.

Acquire your Gold or Silver American Eagles before prices take off!

Want to make a purchase smaller than $ 9,000?

GoldSilver.com is pleased to announce new lower minimum purchase requirements for American Eagles!
Customers can now secure as little as 1 Gold or 100 Silver American Eagle coins.
Also New! – You may now charge of up to $5000 per transaction using Visa, MasterCard, or Discover.

U.S. Silver Eagles Canadian Maple Leafs Austrian Philharmonics 1 ounce Rounds 10 ounce Bars 100 ounce Bars

U.S. Gold Eagles Gold Maple Leaf S. African Krugerrands 1 ounce Gold Bars 10 ounce Gold Bars 1 Kilo Gold Bars

Tweet This Post

“The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the VALUE OF EVERYTHING PRODUCED in the country last year.”

- Bloomberg

Again – that’s $12.8 TRILLION – in only a half year’s time.

So, where are we headed?  How about $25 trillion – perhaps that amount will solve the crisis?

Unfortunately the worldwide problem of debt cannot be solved by creating more debt.

Meanwhile last week The G20 met in London.  The political leaders from the 20 major nations blasted images and press releases across the globe assuring everyone that they and their central banks have answers for the crisis they helped create.

Any documented proposals to a solution?

No, just more money pledged for the IMF ($750 billion additional) and a picture of 20 politicians with a globe behind them.

Look and you will find vague promises of joint action while on the sidelines countries are covertly making plans to assure that they are not left holding the dollar bag.

Countries are looking for less exposure to the dollar. The above nations are publicly taking the necessary steps to insure their wealth against a very possible dollar collapse.

This makes us wonder, are there other countries doing this behind the scenes as well?

Who else doesn’t want to be left holding greenbacks when the dollar crumbles?

Well —> WE DON’T!

Here at GoldSilver.com every dollar we make is converted into precious metals.  We refuse to allow bailouts, The G20, or debased currencies to dilute our wealth.

It used to be that governments backed their currency by gold and/or silver. This gave the currency real legitimacy as it could be exchanged for something of true scarcity (it was a TRUE store of value).  Governments and central banks consequently could not be print their currencies into extinction.

Well, the U.S.A. cut its final link to gold in 1971 and no other currency is backed by anything tangible either.

All are paper.

This has been tried many times before by governments around the world throughout history and it has ALWAYS led to the same disastrous result for the currency.

There however is a very bright side and an opportunity for those who understand what is going on today and take the appropriate actions.

We hope to lead by example and we encourage everyone to become YOUR OWN CENTRAL BANK and hold true wealth during this crisis period.  Here are some of the current gold and silver reserves we have for you in stock. Many of these had been out of stock but are back… for now:

Canadian Maple Leafs Austrian Philharmonics 1 ounce Rounds 10 ounce Bars 100 ounce Bars

U.S. Gold Eagles Gold Maple Leaf S. African Krugerrands 1 ounce Gold Bars 10 ounce Gold Bars 1 Kilo Gold Bars

Tweet This Post

Did you see these headlines in the news?

“WASHINGTON – With the country sinking deeper into recession, the Federal Reserve launched a bold $1.2 trillion effort Wednesday to lower rates on mortgages and other consumer debt, spur spending and revive the economy.

To do so, the Fed will spend up to $300 billion to buy long-term government bonds and an additional $750 billion in mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac.”

The above is from yahoo news.

Further along in the article the author also points out:

“Where does the Fed get all the money? It prints it.”

This is a big deal.

Years ago financial newsletter writers would talk about the Federal Reserve’s possible actions if the economy did start to seriously sputter.  The writers would address various interest rate and stimulus options that the Federal Reserve had available to them. Then, near the end of the newsletter or speech they would often say “…and of course there is the ‘nuclear option’ of just printing money to buy our own debt to keep the interest rates low (to try to boost the economy) but of course this could not last forever before foreigners would start to rebel and quit buying our debt causing the dollar to plummet”.

Here is one more excerpt from the article

“The Fed has said it’s mindful of the risks of pumping more money into the economy, bailing out financial institutions and leaving a key rate near zero for too long. There’s the potential to plant the seeds for higher inflation, put ever-more taxpayer money at risk and encourage “moral hazard.” That’s when companies make high-stakes gambles knowing the government stands ready to rescue them.”

What is our Dollar going to be WORTH 2, 5, 10 years from now? At GoldSilver.com – we ask ourselves this question everyday.

Our current concerns are not new.  Having just been through our country’s first hyperinflation , our countries founding fathers specifically framed the constitution stating that only gold and silver would be used as currency.  This was their common sense answer to runaway inflation caused by debased currencies (like is happening right now).

Physical Silver and Gold are STILL today’s common sense answer to never ending bailouts, digital currency creation, and 24 hour printing presses.

Tweet This Post

The Greatest Wealth Transfer in the History of Mankind Starts Now!

Right now, the Treasury, the Federal Reserve, and the banking system seem to be gearing up for an event the likes of which has never been seen. I believe the crisis that will unfold over the next few years will add up to the biggest economic event in history. The scale of what is happening will dwarf all other economic events combined. The Tulip mania of 1637, John Law’s “Mississippi Scheme” of 1720, and the dot-com / tech bubble of 1999 will pale by comparison. Even the hyperinflation in Weimar Germany in 1923 and the Great Depression will seem like a walk in the park compared to what is coming.

But wealth is never destroyed – It is merely transferred. Neither you, nor I, have the power to stop what is coming. But we do have the choice to either freeze in panic and be crushed under the wheels of the economic freight train that is bearing down upon us, or catch the ride of our lives on the road to immense wealth.

While speaking at a recent wealth conference in Florida, I showed the audience some charts to try to impress upon them the enormity of what is going on right now! The chart I call my Panic Meter is made up of LIBOR rates (the rate which banks lend to each other) divided by the 3-Month Treasury Bond yields. By dividing LIBOR rates by bond yields you get a measurement of just how panicked the banks and large investors really are. This chart is saying that something is really, really wrong.

Panic Meter (2006 – November, 2008)

I then showed a chart of the monetary base (all paper dollars and coinage in existence). It took 200-years for the monetary base to go from $0 to $800 billion, but in just the past 3-months it has grown from around $800 billion to $1.5 trillion, and by the time you read this it will probably be surpassing $1.6 trillion. That’s double the number of paper dollars in existence since last summer!

Base Money (1919 – November, 2008)

But here are a few charts that I didn’t show at the conference…

The next chart is “Cash in Circulation”. So far only a small amount of all that extra currency shown in the above chart has leaked out of the banking system and into circulation. But you can bet your assets… IT WILL. When it does, it means that prices must rise to soak up all that extra currency, like a sponge soaking up water. This is bad news for someone holding dollars, but cause for celebration for a precious metals investor.

Currency in Circulation (1919-November, 2008)

Here is a chart of how many dollars the banks have borrowed from the Federal Reserve through the end of last year (2007). Please note the spike that indicates the banks had to borrow $8 billion from the Federal Reserve during the Savings and Loan Crisis of the late 1980s.

Bank Borrowings from Federal Reserve (1919-2007)

Here is the same chart, but I’ve now taken it out through November of 2008. You can’t even see the $8 billion S&L Crisis peak anymore! In fact, the banks are approaching $800 billion in borrowings. This means that the banks perceive this crisis as being 100 times larger than the S&L crisis.

This next chart is Reserve Bank Credit. It is the total amount the Federal Reserve has loaned out of its bottomless checkbook. This chart includes all the rest of the bailouts (at least through November 2008). This chart also rises to roughly $800 billion by the end of 2007, but by November 2008, it has risen to $2.2 trillion. As Brent Harmes would say “It’s climbing skyward like a homesick angel.”

Reserve Bank Credit

Last, we have a chart of “Excess Bank Reserves”. These are reserves in excess of the amount that the Federal Reserve requires the banks to have. It looks almost identical to the chart of Bank Borrowings, except for two small features; there is a tiny blip in 2001 and a small bump around 1941. Could it be that the banks perceive this crisis to be 50 times larger than 911 or even World War II?

Excess Bank Reserves (1930-November, 2008)

With the exception of the Panic Meter, all graphs in this article are taken directly from the Federal Reserve’s website. Personally, I’m pretty sure that in a few years a chart of the price of gold will look similar to these charts, and a chart of the U.S. dollar will look like one of these charts flipped upside-down.

If you don’t believe me, just take a look at this!

Bloomberg, Dec. 15 – Dollar Staggers as U.S. Unleashes Cash Flood:
“U.S. policy makers are flooding the world with an extra $8.5 trillion through 23 different plans designed to bail out the financial system and pump up the economy. The decline (of the dollar) shows that the increased supply of money may be overwhelming investors….”

In my book, “Rich Dad’s Advisor’s Guide to Investing in Gold & Silver,” I show how virtually every time governments, and/or the banking system, abuse a currency enough to push it to a tipping point (such as in these charts), the free market and the will of the public revalue gold and silver to account for the excess currency that was created since the last time they were revalued. But this time, for history to repeat, and for gold to do what it did in 1980, 1934, and hundreds of times throughout the world going all the way back to Athens in 407 BC, it will require a gold price of over $10,000 per ounce… And that’s if they turn off the printing presses today!

I believe this is the greatest opportunity ever offered to anyone in the history of mankind! Gold below $1,000 and silver in the $10 range is a gift from God. You can ignore this gift at your own risk, or graciously accept it and be on the road to great abundance. I don’t know about you… but I’m buying lots of gold and silver.

Things I believe every investor should do:

Step 1: Get educated. Don’t take my, or anyone else’s, word on this. Read books and newsletters on the subject and decide for yourself.

Step 2: Buy physical gold and silver and take possession of it (or have it stored at a third party depository).

Step 3: Avoid “Fools Gold” such as:

• ETF’s, pool accounts, futures contracts, leveraged accounts etc. Many of these are just “paper contracts” with little or no gold or silver behind them.
• Collector coins with excessive premiums above the worth of their metal content. These are a better deal for the dealer than for you.

Step 4: Relax knowing you have protected your wealth and positioned yourself to profit greatly from what history tells us is inevitable.

By Michael Maloney
GoldSilver.com

Michael Maloney is a precious metals expert, monetary historian, author of “Rich Dad’s Advisor’s Guide to Investing in Gold & Silver, and the founder of GoldSilver.com

GoldSilver.com is an online precious metals dealer that specializes in delivering gold and silver to your door or securely storing it for you in a precious metals storage account.

To read the book that predicted the current financial crisis and what will happen next, check out Michael’s book “Rich Dad’s Advisor’s Guide to Investing in Gold and Silver“. (Amazon $11.55)

Disclaimer:

This information, opinions, and financial data are for educational purposes only and are not intended as investment advice. No guarantees are made as to the accuracy of the information provided herein. Situations can change from day to day. Every investor should do their own due-diligence to determine which investments are best for them.

By reading this article, you must assume the responsibility and liability for all decisions that you make on the basis of the information herein contained. GoldSilver.com and Gold & Silver, Inc. make no warranties, expressed or implied, as to the fitness and accuracy of the information provided, and for any purpose or to the results obtained by using the information.

Those making investment decisions based on any of the information presented should do so in the knowledge that they could experience significant losses. In no event shall GoldSilver.com and/or Gold & Silver, Inc. be liable for direct, indirect, or incidental damages resulting from the use of the information.

Tweet This Post