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Q: I am a long time reader and have purchased gold and silver bullion plus stocks. We plan to sell our house and move to Costa Rica or Nicaragua. I remember David’s dilemma—- pay off the renovation loan with gold or not. Is it better to build now in Central America, rent there and purchase bullion or sit in cash and build later? This would be a major portion of our portfolio. Our pensions would give us a comfortable living at the present time regardless where we live.

David Schectman’s Answer:

If you are looking for an accurate prediction of the future, one that is based on timing, no one can give it to you.  All we have are our “opinions and preferences.”

Whether it comes to religion, politics or economics, any subject in fact, all we have are our “opinions” and our “preferences.”

So, for what it’s worth, here are mine.  Not knowing anything about your pensions, I assume they are dollar-denominated.  Both pensions and dollars have their own risks.  What if your pension is cut or disappears?  What if the dollar wilts under some form of hyperinflation?  Both would happen under John William’s scenario.  So, if you sold your gold, silver and shares and relied on a dollar-based pension, you would be in real trouble.

Further, it is my personal opinion that gold and silver are very undervalued now and will rise tremendously in price over the next few years.  If it were me, my preference would be to would rent and see how things played out.  Assuming gold and silver perform the way I expect them to, you would be able to buy or rent using a much smaller percentage of your gold and silver.   Wait and see how the economy holds up and how the dollar holds up.  Right now, we are close to the edge of a cliff in both areas and should either or both tumble over the edge, you will be happy you had your precious metals, the ultimate insurance policy for these kinds of events.

There is no way, that I can fathom, that your precious metals will not be worth two or three times (or more) what they are selling for today.  They will serve you well in deflation or inflation and one of the other is in our near-term future.

I congratulate you on your decision to move to Central America.  It takes a lot of courage to leave what we know well behind.  I don’t think I could do it, even though there are times I believe I probably should.  Best of luck to you and your family.

Q: Generally, I agree with all of you folks about the PM price manipulation and all around market manipulation by the Powers that be. The problem is that the US is still very large and powerful as an economy and world power. All you have to do is Google a bar graph of the largest economies in the world, and the US is quite impressive. My point being, it is possible that the US could foreseeably “kick the can” down the roadway for years to come.

Look what is happening with PM prices right now, total suppression.

I agree with most of your commentaries that I read each day, but even you must admit, you are only (at best) pawns on this big chess board that the world PTB play.

Bill Holter’s Answer:

Yes, this is THE question on everyone’s mind, “when?”  Funny thing, I wrote about this very question for today’s blog and entitled it “When.”  Let me just say this, the U.S. is the biggest economy in the world but of lesser importance with each sunrise.  The world is moving away from the dollar which other than our military is our ONLY real power.  We are being “disrespected” left and right by China, Russia and even smaller countries some of which are/were our allies.  The situation has changed and is changing, the U.S. does not wield the power or have the respect it once had, and this is why the can will not be kicked forever.  Gold for delivery is very close in my opinion to running out …and foreigners (as well as many Americans) know that many if not all economic numbers and reports are simply “made up.”  A perfect example is the consumer confidence number released yesterday which showed consumers as more confident than at any time since 1996.  Really?  This will end badly and in my opinion not too far off in the future.

Q:  I believe that silver is a great bargain at <$20. BUT, I have observed that there appears to be a virtually unlimited supply of ‘junk’ silver at around $1 over spot. During the last silver run up, the price was closer to $4 over spot. So does not the continued low price of junk indicate that there is plenty of silver to go around and we are not close to a shortage, even though silver is under $20?

Andy Hoffman’s Answer:

Junk prices have come down in recent months, but premiums can have wild swings in very short amounts of times.  Just last April (2013), junk prices spiked to spot + $8 following the now infamous paper raids initiated one day after Obama had a “closed door meeting” with the heads of the TBTF banks.  Prices had already spiked to nearly $4 over spot that spring – following the U.S. Mint’s two week closing in January – and spike further after the raids, per below.
Junk Silver Physical Pricing
Similarly, we saw across the board shortages after the paper attacks of 2008, and the silver price explosion of 2011.  In other words, in a market that’s incredibly tight to start with, it doesn’t take much to create new shortages – especially at such artificially depressed prices, well below the cost of production.  Just look at the Shanghai silver inventories, which we discussed in today’s article, “Irrelevant Gold.”