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Starting this year, an appalling 21 new taxes go into effect to pay for Obamacare. For starters, you’ll pay more in capital gains taxes. And taxes on dividends are going up, too.

Most Americans are already struggling to save for retirement… but all these new taxes are a real slap in the face to responsible citizens who are planning for a better life.

And then there is the Internet tax that is lurking in the shadows.  And rising state taxes too.  Every dollar taken by government in the form of new and additional taxes is a dollar no longer available to spend in the economy.  Most Americans are really struggling just to get by.  Saving is becoming very difficult since rising prices and rising taxes are taking away the extra money that could be used for saving – or buying gold and silver.  And it will only get worse.

In yesterday’s Dow Theory Letters, Richard Russell reminisces about how little it used to cost to buy a soda or go the a movie.  He wrote:

I live in La Jolla, which is a wealthy seaside town. Yesterday I stopped at an ice cream parlor for a scoop of ice cream. The price was $3.75 for a single scoop. What was more amazing was that people were lined up for ice cream cones. I remember paying a nickel for a one-scoop ice cream cone back in 1962.

And it occurred to me that a dollar bill today is like a quarter ten years ago. People today pay outrageous prices for the same stuff I used to pay a nickel or a dime for. In other words, money has almost lost its meaning and value. There is a restaurant down the street from my home that charges $8 for valet parking! And people pay it. I used to work loading trucks for $18.75 a week. I used to take the New York subway all over Manhattan, Queens and Brooklyn for a nickel. I used to eat a good lunch at the Automat for twenty cents. I used to go to a double feature movie house for fifteen cents (the Alden movie theater on 65th Street at Broadway).

Do I sound like a grouchy old man? Sorry, I’m just demonstrating what’s happened to our money and how little people today think of our money. It’s a sign of the times. We’re all frogs in the pot that’s heating over the stove. The water is 180 degrees, and pretty soon we’ll be parboiled, and we won’t know it. “Give the Fed time, and we’ll all be broke, but we’ll never know it.” “Flow gently sweet inflation.”

I found Russell’s comments very interesting because I had just finished looking at an old ledger I found from 1969 – 1970 that detailed how much I paid for mint German Lugers back then.  I only collected the highest condition guns, then and now.  (The prices quoted below are for 99% or better condition, all original items.)

The prices were fascinating because I have participated in two Rock Island Auction sales in the last four months and here is what the same variations in similar condition sold for in 2013.  This is what happened in less than 45 years.  The comparison is astounding.


In 1967-71 I sold industrial paint and resins and earned between $30,000 to $35,000 a year.  That was BIG money then.  To put it in perspective, I purchased a red Mercedes 250SL in 1972 for $10,000.  I built a beautiful four-bedroom colonial home in the suburbs for $40,000.  In general, it costs 10 + times more to buy these items today.  But gold is up 42 times and most of the Lugers are up 25 to 70 times.

Gold and these high-quality collectibles have gone up a huge amount in “dollars.”  Collecting high quality and scarce German Lugers has been an outstanding investment (and a lot of fun for an old 20th Century European history buff like me).  On average, the Lugers did as well as gold (some better some not quite as well).

Being involved with the Lugers has given me a unique perspective of inflation, or dollar debasement over time.  The guns are the same (and so is the ounce of gold) but it takes more and more dollars to buy the same item year after year.  I sold my collection in 1972.  I considered trying to buy back in a few years later but the prices had doubled.  I thought that was too much and stayed away until the last six months.  Now look what they cost!  What they chronicle is the loss of purchasing power of the dollar from the time Nixon closed the gold window in 1972 until now.