My thoughts on Gold and Silver Investing
To be a successful Investor, you must be willing to hedge(bet) against the consensus... and be right more than 50% of the time. Most individual Investors own no physical Gold or Silver and see it as a "losers" game. But if you research the portfolios of the banks and most Wealth Management Funds, they have between 10% to 15% of their wealth invested into physical Gold and Silver. You should ask yourself, if Gold is only for losers, why has the price of an ounce of it gone from $32 in 1967, to $1750 in 2019 ? Are the CEO's of the major banks losers for purchasing so much Gold? And why does the USA Treasuries have over 8000 tons of Gold? The US dollar is the preferred World Reserve Currency, but these "losers" are still holding onto a whole bunch of Gold. And that begs the question, why are there so many “Investment Professionals” out there suggesting that only losers invest in physical Gold, when some of the most influential players in the financial markets see and take advantage of the many benefits of holding physical Gold and Silver?....just maybe there's something to it !
If you’ve spoken with a successful professional Financial Adviser who truly had your best interest in mind, they likely informed you that Gold and Silver have historically been used as the absolute determination and protection of wealth for thousands of years, and continues in this role to this very day. The USA has been the premier Reserve Currency around the world for many years now, but why? Mainly because of one fundamental reason that has stayed the test of time. They have more Gold to back up their financial system, than any other country on earth.
First of all, let me start by stating this one main fact that can not be disputed. If you had invested $20,000 into physical Gold in 2000 (50 oz’s), as of April 2017, you would be sitting on $88,000+. As of September 2019, that increased to $102,750. That’s an increase of 513% !
Secondly, most people are not aware of how Canadian banks are allowed to operate, and why a currency collapse is a certainty. Prior to 2014, the backs used to have to follow strict “Fractional Reserve Banking” requirements, which meant they could only loan out about 10 times more money than they actually had in assets. But now, that safeguard has been abolished, and the banks can loan out as much money as they want!…..money they don’t have. So virtually every cent of interest they collect, is free money for them. Hopefully now you can start to understand how the banks are reporting profits in the Billions of dollars every quarter. But the scarier part is that this practice is causing huge inflation, which is not sustainable. Sounds unbelievable doesn’t it, that the money the banks loaned you for your house mortgage, does not and never did exist, till they created it. So you and all your neighbors are paying the banks real money in interest fees, on money that the banks never had in any asset holdings. Pretty sweet deal for them, but it’s totally unsustainable in the long term, and one day soon, the entire system will be forced into devastation, and a new currency will have to be created. And along with it will be enormous human suffering. Only people who have true items of wealth will be protected, while the majority of individuals will have to start all over again, just like our great grandparents did when coming to this country in the early 1900’s.
But before you start to convert your hard-earned paper money into Gold, you'll first need to research the history of it, and compare it to what you probably know best, paper money. Here, I'll share with you some basic starting points that you should consider, but is definitely not intended as an exhaustive argument for investing into gold, but rather just some points of discussion that you may want to consider.
When people ask me, "Why invest in Gold rather than RRSP's", the first thing I usually share with them is something they already know..... Gold has been used for thousands of years as a transfer of wealth (currency). RRSP's have been around for, oh let's say, about 65 years. Gold has stood the test of time, and has many uses as a commodity as well.(jewelry, computer circuits, etc). In a crisis, RRSP's are good to start fires with, but that's about it, as they're just paper. Gold has always been sought after, and is always high-priced, relatively speaking as compared to paper money. There is no time in history when Gold became worthless, and people just threw it out. However, that's what happens to RRSP's and Paper Money Currencies quite often. A rule of thumb is that throughout recorded history, an ounce of gold has enough value to sustain a family of 4, for half a month. And 5 ounces of silver is equal to a day’s pay….. more on this later.
Back in 1972, the USA went off the "Gold Standard" and went to a "FIAT Currency System". The Gold Standard is where a country backs its currency with a physical Gold. The more gold the country owns, the more credibility it has to prove to its trading partners that they are what they say they are, and are able to pay back loans, etc. if needed, just by selling their gold reserves. The Fiat System on the other hand, is based on nothing. It's basically an understanding that groups of counties have with each other, that they will all be truthful when it comes to how their country is doing financially, and that they will be able to "pay up" anytime it's required......can you see the problem with this? If you can’t, might I suggest you do some research into all the ramifications of currency failures over the years around the world. No non-precious metals currency has ever survived.
Now maybe you're asking, "Why is Gold the metal of choice?" The main reason is very basic. Think of the saying, "an honest day's pay, for an honest day's work". Gold is difficult to get. There are no easy short-cuts to get Gold. Whether it's through mining, prospecting, or buying from a dealer, it's a hard thing to get, or it costs a lot. There's a lot of physical labor, sweat and tears involved, so to get more Gold from the earth, it takes an honest day's work. Now let’s compare that to Paper Currency. When a country wants more, they just hit PRINT on their computers, and another 50 million in $100 bills are printed. How easy is that? It takes virtually no physical effort or real work. In a few hours, the country just declares itself worth millions more in value, but did not do any “work” to get there. It simply created wealth out of thin air. I hope you’re seeing what I see, that the Fiat System is a flawed system that cannot sustain itself indefinitely.
When the currencies in North America fail, Gold and Silver will be the only financial instruments that will allow you to maintain your wealth. You can go anywhere in the world with these precious metals, and the amount of wealth you put into them, can be easily traded directly for food, etc., or converted into the local currency and be utilized that way. Or, if you stay in your country, once a new currency is started up, you simply sell your Gold or Silver for the new currency, which will have extremely higher purchasing power per dollar than the old currency. All your RRSP's and old bank accounts which are tied to the old currency will NOT be convertible into the new currency, therefore, for all intents and purposes, will be totally worthless and VOID.
Now for a quick word on whether to buy physical Gold and Silver, or Exchange Traded Funds (ETF's). Well, the main reason that Gold is a great financial instrument, is that you have “real” estate…..or, “the real thing”. A real piece of Gold in your hand has real value. A piece of paper that has some ink on it which states you supposedly own some Gold somewhere, is not really worth anything. Liken it to a situation where you were lost out in the forest, and you needed a match to light a fire so you didn’t freeze to death. What would you rather have… one match that you had paid $3 for, or a piece of paper that stated you had a box of 500 matches that had cost you only $25, but were safely stored in New York somewhere? Might I suggest that this your answer to this question should help you when you evaluate the ETF’s as an investment option.
Also consider the reality that ETF's are leveraged at an extremely high ratio of real physical Gold, to their issued ETF amount. Explained in basic terms, for a minimum of every 50 ounces of Gold you purchase from them, they only have 1, yes, ONE ounce of real Gold in their storage facilities. BlackRock, a Gold ETF company was recently forced to stop selling, as their ratio grew to over 157 to 1. I believe you can imagine what will happen when even 2% of the fund holders decide to cash in their ETF's in return for real Gold. The company will instantly go bankrupt, and everyone who has invested into those funds, will be out all of their investment. At that time, it won’t matter what the value of "my Gold" is according to that piece of paper, as the true and realized value will be zero.
TAXES - CAPITAL GAINS / INCOME
When investing in precious metals, whether you’re purchasing the physical metal, or you’re buying stocks or other on-line products, it’s all subject to being taxes. There are a couple of options available, such as deeming it as Capital Gains/Losses, or as Income Gains/Losses. But this is best left up to the professionals, so please consult an Accountant before making any decisions on what and how to invest.
ETF(no physical) FEES
Also, when you purchase ETF's, consider that although you may believe you’re paying far lower fees than purchasing the physical metal, but the fees are actually higher. Because you're not really buying any gold, the price you pay per share is nowhere close to the price of gold per ounce. This is so that you can't know how much you "pay per ounce". Firstly, the ETF's are not tied directly to the physical SPOT price, so if SPOT goes up by let's say 2%, the ETF doesn't necessarily go up by that same amount, so you loose there. Then they take their fees out of the price every day, which means even if the price were never to change, the value of your investment decreases every day. Then when you sell, again, because the price of your ETF per share isn't the SPOT price, you have no idea how much money you lost as compared to if you purchased the physical. Those in the ETF world joke about this by saying, "it's just like taking money from a baby".
Fees for physical, are black and white. Here's the cost that you can expect when investing in physical gold and silver. When you purchase, for gold you can expect to pay between 3 and 5 percent above the SPOT price. For silver, it's between 10 and 16 percent, depending on whether you're getting coins or larger bars. When it comes time to sell, you can expect to get between 94 and 100 percent of the current SPOT price, and for silver it's between 90 and 100 percent. Again, depending on what form it's in. You pay the higher premiums for coins, but then when you sell, you're getting the higher percentage of SPOT, so it's all relative. So please understand that in deciding what form and size of coin/bar you purchase, really doesn't matter, as it just comes down to personal preference. But keep in mind, that the larger and more expensive the items are, it does limit the ease of access to interested buyers when you want to sell.
SILVER, throughout history has been valued to reflect the worth of the average person's work. One ounce of silver would be equal to a half hour of work for an average person. Back in 1960 when our currency actually contained silver, a decent hourly wage was $3.00 per hour, for a total of $24.00 per day. Each Canadian dollar coin contained .60 ounces of silver. So $24 in wages would be equal to .6 ounces x 24, or 14.4 ounces of silver per day. Back then, silver was around $1.50/oz. So 14.4 ounces of silver, times $1.70 per ounce, equals $24.48, which means whether you were paid in silver or in dollars, both had the same value. And this is why you can calculate that even today, you can still purchase about an ounce of silver for every half hour of the average person's wage. The reason investors like to hold silver instead of the fiat currency, is because if a financial crisis hits, history shows us that the value has always stayed in the silver metal, where as the fiat currency collapses to zero, and a new currency is started up.
The Silver to Gold ratio throughout may years, has been in the neighborhood of 25 to 1. 25 ounces of silver would buy you 1 ounce of gold. But welcome to the manipulation of the COMEX paper trading system. Since this corrupt system has been allowed to operate, the ratio has been artificially distorted. The ratio as of May 2019, now sits at 85 to 1. One day soon, I speculate that the ratio will have to return to the normal, as that's that ratio of what really comes out of the ground when it's mined. The tricky part is knowing which of the two possibilities will happen. Will silver spike up and be worth $70 per ounce (1/25 of the current gold price), or, will gold fall back down to $500?(25 x the price of the current silver price). Knowing that, can hopefully help in making prudent investment decisions.
After sharing all this information with you, for legal reasons I must make mention that I make no claim to be a certified financial advisor, nor have any training in the investing business. Everything I have expressed here is based on information as I interpret it, after working for several years a physical precious metals dealer. I would suggest it’s mandatory for your to continue doing your own research on these matters, which should include consulting a certified Accountant and/or Financial Advisor, before you make any decisions on where and how to invest. All the information and views presented above is my opinion only, and is not guaranteed to be accurate, nor is it to be presumed correct.
"INVEST IN THINGS NOT CONSUMED BY FIRE"
There's a lot of people out there telling of all the reasons you should buy gold and silver. But life's too short to be caught up in all the hype, and to continually focus on the impending dooms-day scenarios.
In my opinion, if you want to learn about the history of money, do your investing, then get on with the rest of your life, I'd highly recommend the video series, Mike Maloney's "Hidden Secrets of Money". It's the best information I've found, where you can learn what money really is, and how to preserve your wealth..... using history as his platform. It'll take some time to watch the whole series, but trust me, it'll be worth it.
Below you'll find a history video, about the life of Charles Ponzi. I'd recommend you take the time to watch and learn about his methods, then decide for yourself......what investment today sounds like a Ponzi Scheme? Is it the age old, tried and tested Gold and Silver markets? Or could there possibly be other things like, Amazon, Bitcoin, Madoff, or even our own government Treasury?
Watch and decide for yourself.
Do you believe that Canada can not, or will not ever be in one of these reports?
News Report May 19, 2017
Investing is a serious endeavor, but every now and then, we need some humor to put a smile on our face. For those of us that remember Sesame Street, here's a great educational video about Bitcoin. We all know that Bitcoin will be worthless in the coming years, but in the mean time, a lot of people will honestly be dishing out their nickels to those shifty guys like Lefty. Have a watch