I think I’ll start off with Jim Sinclair’s comments today, regarding the takedown in gold and silver:
In The News Today
March 6, 2012, at 1:31 pm
By: Jim Sinclair
Marc Faber (Gloom Boom & Doom Report) wrote:
I would store gold outside the U.S., because in the U.S., it is not completely unlikely that they will eventually take it away. Like in 1933, gold will be purchased back by the government. Gold prices will go ballistic, and the government will take away something from a minority, and not many people own gold.
Is Faber correct? Well, let me put it this way, he may be and I like to “hedge” my bets, especially when, in the case of owning physical gold, it is so easy to do and the cost is so minimal. I don’t buy gold with the goal of turning it in to the government for a profit. I buy gold precisely because I do NOT want to have my wealth in paper currencies. Otherwise, I may as well buy mining shares, which pay off in dollars. So what can you do to protect yourself against another gold confiscation? Yes, I said “another” confiscation. Most of you already know that Roosevelt confiscated gold from American citizens in 1933 and it would be naive to think it can’t happen again. That doesn’t mean it will happen, but it could happen. So, getting back to the question; what can you do to protect your gold? Here is what I have done and you should strongly consider taking one or more of the same steps yourself.
First, store (most of) your gold offshore. I have a significant amount of my gold stored with Miles Franklin’s International Precious Metal Storage Program in Canada. Andy Hoffman and I are convinced Miles Franklin has created the finest offshore storage program there is, and if you are interested in getting information on our program, talk to Andy Schectman or Joel Kravitz at 1-800-822-8080. They can explain the way it works and why it is flat out superior to anything else out there.
The best way to avoid the confiscation issue is to store your gold offshore and Canada is a very “gold friendly” country, unlikely to confiscate gold. Plus, Canada is CLOSE by and it is simple to “check on your gold,” or to drive to Montreal and pick it up, if necessary.
Another way to own gold without fear of turning it in is to buy it in the form of “numismatic” pre-1933 US gold coins. But if you choose this method, I suggest that you purchase the higher-grade coins, at least MS/63 or MS/64 and bypass the circulated or lower grade circulated varieties. That said, the circulated pre-1933 double eagles (and $10 Liberties) are so cheap now, they can be purchased for about the same price as new bullion coins and that makes them desirable – but not for confiscation purposes. If the government does decide to confiscate, they may very well decide NOT to exempt the bullion-grade, or circulated pre-1933 coins. The more expensive versions should be safe. Of course, any of our brokers can help you with this type of purchase. We sell lots of pre-1933 gold coins and know what is best for you – and we DO NOT OVERCHARGE for these coins, like so many of our competitors do.
Then, there is a third option for you to consider. Buy “gold surrogates.” First on the list is platinum, which by the way, is now very cheap, relative to gold. Platinum usually sells for MORE than gold, but currently it is selling for $75 an ounce LESS than gold. I don’t expect that price discrepancy to last. And platinum will never be confiscated. I should add that if gold were confiscated, the price of platinum would go off the charts since it would be the best replacement in a portfolio for gold and the demand would far, far outstrip the available supply. My last two purchases have been platinum, not gold, and I am seriously considering trading in some of my gold for more platinum.
And don’t forget gold’s little brother, silver. Half of my dollars in precious metals are in silver. With silver, you avoid the gold confiscation issue entirely, plus I expect silver to outperform gold by up to two-to-one over the next several years. My personal goal is to end up with 25% in gold, 25% in platinum and 50% in silver – with most of the gold being stored in Canada in our International Precious Metal Storage Program. That is the SAFEST way to invest in gold, period!
John Mauldin (Outside the Box)
I rarely feature Mauldin’s work, and it is excellent, but today is an exception. I recently had a knock-down, drawn-out argument with Backwoods Jack. I think he may be hiding out at Rim Rock, his retreat on the shores of Lake Superior. Since our last argument, several weeks ago, I haven’t heard from him. That is where he usually goes to lick his wounds. Our heated argument was over my statement that America’s greatness is behind us, we are heading for a fall and the legacy we are leaving behind for our grandchildren is an embarrasment. Check out Mauldin’s latest missive, an article by Niall Ferguson dealing with Western Civilisation: Decline – or Fall? I just sent a copy of the article to Backwoods – and if his computer is plugged in, he will get around to reading it and no doubt jump up and down shouting “America is Great, God Bless America, and roll his eyes, wondering what the Hell am I smoking! Jack – I ain’t smokin’ nothin’ and my clarity of thought has never been better! So, without further ado, here is Mauldin’s latest article. If you like it, you can sign up for his free service, Outside the Box at www.JohnMauldin.com.
Western Civilisation: Decline – or Fall?
John Mauldin | March 5, 2012
Ranting Andy Hoffman
Andy Hoffman was really angry in Tuesday’s column. He jumped all over me yesterday morning when I pointed out the “volatility” in the gold market today is exactly what Sinclair has been warning his readers about. “Volatility,” he wrote back, “volatility is when gold goes UP $100 and DOWN $100. All we ever get is DOWN. This isn’t volatility, it is blatant manipulation! I am tired of people using the word ‘volatility’ improperly. When gold goes UP $92 in a day, volatility will be here!”
Yeah, he is absolutely correct. It is a one-way street.
Here is a link to Andy Hoffman’s Tuesday Morning Commentary for those of you who don’t follow his newsletter every afternoon: