The old saying goes “Don’t fight the Fed.” In other words, when you invest you should ride their coat tails and let their policy “help” your performance. This strategy didn’t work out so well last decade as both stocks and real estate were slaughtered throughout 2008-09 as the Fed pumped furiously to reflate a system that was crashing. As this decade started, the Fed doubled down several times and not only finally got the stock market stabilized but has pushed it to highs (in nominal terms). Real estate? Well, not so much… There is a small problem however, they cannot stop pumping. They cannot even slow down!
So you don’t want to fight the Fed? Buy gold and silver as they are saying AND doing everything in their power to debase the dollar. They will probably be successful and a debased dollar is exactly what we will have which means it will take more dollars to purchase anything and everything real from a cup of coffee to an ounce of gold. But what if it doesn’t work? What if the Fed cannot put money into the system as fast or faster than it is being destroyed through defaults? First off, perish the thought! Were this to happen we will be back to living like cavemen within a week or two but… gold will still be gold and you will still have wealth.
What we have been through over the last 6 months in precious metals has been entirely a “Wag the Dog” production made to herd the sheeple back in line. The Fed is actively trying to get people to spend their money. Spend it on stuff, spend it on stocks, spend it on real estate… SPEND IT on anything… except gold or it’s little sister silver. They absolutely must get velocity (remember the chart I shared a couple of weeks back) turning higher because they cannot create new money as fast as it’s going into hiding and being destroyed. The problem as I mentioned is that once velocity actually does turn upward, they may (will) have a situation where a “run OUT” of the dollar begins which cannot be stopped. This is hyperinflation.
The Fed is in a situation where no matter what the final result (inflation or a deflationary implosion) gold will be left standing as money, real money, core money, TRUSTED money! I know that people are wringing their hands and questioning their sanity; you don’t need to do this! Every single day that the Fed creates 3 billion (new) dollars and sprinkles it over the system like fairy dust… your gold becomes worth more. But… but… but “it’s going down?” As I wrote about as early as the Spring of 2007, we will one day have 2 markets for gold and silver. The “paper” market and the physical market. This reality showed its face back in late 2008 when paper silver traded to $9 per ounce yet none could be actually had for under $15. This is again happening as the paper price of Silver is $27 or so yet good luck procuring any for less than $30-31.
My point is this, relax, unless you need to use your capital right now then who cares what “they” tell you it is worth on the paper markets. The Fed is telling you that they will destroy their own product (the dollar) so believe them, don’t fight them. Just don’t let them herd you into a corner with everyone else. Just know that when all is said and done people will not count their net worth in dollars, they will count ounces. You are “riding their coat tails” by exiting dollars and “front running” where all the obliging sheeple will eventually arrive at… real money. You are not insane, psychotic or stupid. No, you are simply waiting at the finish line for everyone to finally figure it out and catch up!
Yes the Fed is trying to sucker the sheeple to spend all their money and that would be good for the sheeple if they spend it on gold and silver.
I am in my 60’s and remember hearing my great grandparents, my grandparents, and my parents talk about the great depression. The stories are very concerning and scary.
My mother almost starved during the depression and she always told my brother and I that once you let a dollar get away from you that you will never get it back. Of course my brother and I didn’t listen to such talk while we were young. We spent the dollars just as fast as everyone else.
Now both of us are so tight we can make Lincoln squall on a penny. We only buy what we need and nothing extra because we both believe we will need the money in the upcoming greater depression. I hope we are wrong, but I’m not will to chance it.
We both feel that paper fiat money will at some point become worth zero and have taken percautions.
It doesn’t take very long to realize that you can live very comfortably on very little.
If you want to play Uncle Ben’s game about the volicity of money, that is your business, however for me and my household we believe that if you let that dollar get away you won’t be getting it back.
Best to everyone.
“The Fed is in a situation where no matter what the final result (inflation or a deflationary implosion) gold will be left standing as money, real money, core money, TRUSTED money!”
Wrong. When get deflation,which is allready here and will only get worse, ALL assets will go down, including gold and silver, they will never loose their value ofcourse, but they will go massively down. but they will try to inflate their way out, and then we will get hyper inflation.
But as you say if you own physical, relax and enjoy your life.
Gold and Silver are not “assets” they ARE money! By the way, history has shown that Gold does far better in deflation than hyperinflation, the 1930’s being a prime example…Homestake mining being even more prime example as their “product” went up in price and their costs to produce it went down. As for the line that you quote, I stand by it 100%, Gold will do well which either way we tip, deflation being an almost impossibllity in today’s fiat world. No more debate on this from me, I have said my piece.
I know the end is hyperinflation, and i own gold and silver aswell. i think we disagree abit on how we will get to inflation.
You should read some of Mike Maloneys stuff.
But thanks for your thoughts, Bill. I Aprecciate it!
Looking forward to reading you and the other guys articles, fantastic stuff. Keep it up!
John
Forgive me and my, “tiny little logical brain,” but I can’t see much credence in the argument for deflation. The Fed has made it clear they are determined not to allow deflation, and any Government that has a fiat currency can, “drop money from a helicopter” if need be… They cannot stop printing / they cannot allow prices, or interest rates, to go up. Either eventuality would be a disaster with regards to their ability to keep the sheeple happy. They cannot afford what they have promised to pay (The National Debt, Social Security, Medicare, O’bummer Care, Welfare, Food Stamps, Disability, Government Pensions, Education [including now days College and I’m hearing preschool?], the list goes on-and-on) using any other method. They must print, and they will print until the payments are made with money that is worthless. But somewhere in there, before the money is worthless, we will have a total collapse of the system. Then you will see deflation, but it won’t be based on purchases made with dollars… What is coming is no joke. It will be seriously ugly. They know it too, that is why the Department of Homeland Security is stocking up on ammo and why they are trying so hard to disarm us. For those of you who may read this and conclude I’m a, “doom and gloomer” and everything is going to be just fine – you do not know how much I hope you are correct! But I would love for anyone out there to explain to me, given the reality of our situation, how it can come out any differently than I claim it will.
“The problem with Socialism is that, sooner or later, you run out of other people’s money.”
– Margaret Thatcher.
The United States Government has run out of other people’s money and now it is creating “money” out of thin air. If that could solve a country’s economic problems why doesn’t Cuba employ it? Surely they must have thought of it. WAKE UP America.
WOW Don Paul, I could not have written this any better! You wrote “But somewhere in there, before the money is worthless, we will have a total collapse of the system. Then you will see deflation, but it won’t be based on purchases made with dollars… What is coming is no joke. It will be seriously ugly. They know it too, that is why the Department of Homeland Security is stocking up on ammo and why ot will be seriosly ugly”. ………………..Seriosly ugly, yes without a doubt in my mind. “Deflation” yes! Correct…….versus Gold and Silver, the trick will be purchasing goods with metal and then NOT getting waylayed or killed by those looking to take your metal (something for nothing). Sad to say, a Mad Max mentality will also be a necessity along with ownership of metal. A very sad situation but one that is real and one that PM owners need to acknowledge and wake up to every morning. Be very careful when using metal to purchase! Another town makes lots of sense…think this through now before it’s showtime!