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Q:  My wife and I believe it might be a good time to sell our home. We would then rent for a couple of years until we retire and then build a new home where we wish to retire. The only think holding us back is what to do with the proceeds of the home sale. If I had confidence in the dollar, it would be simple to just put the money in a bank, or buy T-Bills. However, that seems to be a risky strategy given where things are heading.

Buying gold or silver and hanging on to it for a couple years would seem to make sense. But metals are so volatile and manipulated there is lots of risk that they could be worth much less in a couple of years too when I would need to sell them.

Another option is to simply not sell our current house until we are ready to move. At least then we are working within similar markets.

I fully buy into owning PM’s as a long-term strategy. But with a couple year time-horizon it is a tough call.

Any thoughts on using PM’s in a situation like this?

David Schectman’s Answer:

You have already thought this through yourself.  If you are looking for a “guaranty,” it doesn’t exist.  If you are looking for an “opinion,” I can give you mine.

First of all, you have to make a choice.  Doing nothing and staying in your house is a choice.  There is growing evidence that the housing market is turning over and your ability to sell your house at a higher price than you can get now is questionable.  Interest rates should be higher in two years and that is a negative.

Selling it now and parking all of most of the proceeds in precious metals has some risk, but a two-year time frame, one not set in stone, greatly minimizes it.  I would be very surprised if gold and silver are not substantially higher in 2016 than they are now.  In fact, a double would not be an unreasonable assumption.  In 10 of the last 13 years, gold and silver have done very well.  Actually, let’s make that 11 of the last 13 years, since gold is UP around $100 an ounce since the first of the year.

If it were me, I’d take the educated risk that compared to anything interest-bearing or even appreciation on your current home, I would be way ahead in gold and silver.  I make a somewhat similar decision myself in 2005 when I took out an interest-only mortgage instead of paying cash for our new home financed by selling some of my physical gold.  Gold was $500 at the time.  It was the right decision.  In your case, as well as in mine, the bet is that gold would rise faster over our time frame than dollars.  I am certain that Andy Hoffman and Bill Holter would agree.

You may even find out that holding on to the gold (and silver) and continuing to rent for a few more years than you are anticipating may be a very wise thing to do.  Especially if real estate is falling back hard and your gold is rising.  A double win for you.

Your final safety net is the fact that you are not boxed in by a defined “sell date.”  If you have to wait two and a half years, or even three years but can walk away with a double or better, you can stretch the time out a bit.  You may not need to though.

Good luck with your decision.

Q:  First off, I would like to say that I thoroughly enjoyed Andy’s and Bill’s presentations at the 2014 Sprott Natural Resource Symposium last week!

I am wondering if you guys would be willing to write an article regarding the effect that the fall of the US Dollar would have on Canada’s economy and the Canadian dollar.

In your opinion, is the Canadian dollar something to hold or is it still better to convert Canadian dollars into gold?

Also, as gold is money, it protects purchasing power during inflation but does it also maintain comparable purchasing power to fiat currencies during deflation?

Thanks for your time and the great work you guys do!

Bill Holter’s Answer:

Thank you Chris, Andy and I enjoyed doing the conference!  As for the Canadian dollar, in my opinion the Canadian economy may feel a pinch initially as the U.S. dollar drops.  I say this because Canadian manufactured goods would immediately become more expensive and tougher to sell to the U.S.  That said, longer term the Canadian economy should benefit as raw materials increase in price/value as Canada is resource rich.  Please remember that the Looney is still a fiat currency and in my opinion will also greatly devalue versus gold and silver.  Jim Sinclair’s favorite 2 currencies are the Swiss Franc and Canadian dollar for funds that you must hold short term and in a fiat currency.  These two are the “lesser of evils” when it comes to global fiat currencies.

As for deflation, we have written about this many times.  The inflation case for gold is obvious but the deflation case is actually better based on history.  Remember, gold is “money” and in a deflationary environment “money is king.”  “Money” appreciates versus real goods and services which is why you want to hold “cash” going into a recession…because your “money” will buy more at a later date.  It is important to understand the difference between “monies,” fiats are currencies and gold is actually the money that fiats are (were) based upon.  Fiat currencies are nothing more than derivatives of gold where the “link” has been cut over 40 years ago.  I believe that “deflation” is exactly what we are headed for, however not in dollar, euro, yen or any other fiat terms, no, we are headed toward a massive deflation in terms of gold.  Another way to say this is that “there is not enough gold available …at current prices” or conversely, “the price of gold will need to be marked up to reliquify the system.”  I hope this helps.

Q:  Is it plausible that somebody could destroy the paper market on an expiry day?  I mean, could Putin wake up one day at the end of the month and make a $250B play on the COMEX to stand for delivery?  Wouldn’t that end the paper price-suppression game all together or am I missing something?

Andy Hoffman’s Answer:

Absolutely, although you can bet the CME would do their best to prevent that from happening.

Over the years, we have seen countless instances of “cash settlements” which, by definition, are illegal according to the pre-eminent COMEX expert, Harvey Organ.  However, nearly everything that occurs on the COMEX is fraudulent – as discussed for decades by Ted Butler, going all the way back to the COMEX “changing the rules” in January 1980 to destroy the Hunt Brothers.  In fact, I wrote specifically of COMEX deception in today’s article regarding PM manipulation.

That said, if Putin or some other “strong hand” wanted to take out the COMEX in this manner, he could do so easily.  Even the fraudulent likely overstated PM inventories are miniscule in size; and thus, a motivated physical buyer like Putin could take it out with “pocket change.”  And at some point in the future, he or someone else like him will.