-- Posted 2 May, 2011 | | Discuss This Article - Comments:
In April, we had a record month in buying and selling silver and gold. Business volume increased 57% over our prior month's record.
Many customers are walking in, and saying, "I need silver." Not "I'd like to buy". Not "I want". But "I need."
Most of our customers mention that they are aware of the recent government budget battle and near shutdown of the government. People are aware that the government's budget is short by $1.6 trillion, which is $1600 billion dollars-- that they are printing, to meet the "need," and yet, the political parties were arguing over a mere $30 billion difference. (And yet, investment demand for silver stands at a paltry 250 million oz., at $50/oz, which is a mere $12.5 billion.) Our customers are aware that there is zero political will (neither among the politicians, nor among the population) to even remotely fight for something close to a balanced budget for nearly the next two years, until after the next election in the fall of 2012. They say it would be one thing, if the budget fight was whether to cut $500 billion to $700 billion from the budget, but it was nothing like that. They are aware that the current crop of politicians are so weak, and so ineffectual, even with the new tea party tax cutters in office, that inflation is guaranteed for the next two years or many more. People are aware that the entitlement mentality in America is now so strong, and since so many people are "on the dole" from the government, that they will likely continue to vote for more government spending for decades to come.
I'm 41. For the first time in my life, an older customer actually apologized to me. He apologized as a representative of the older generation, to me, as a member of the younger generation, because America has been destroyed on their watch, and they know that they made our lives worse by stealing our freedoms, and by increasing our tax burden. But he said he did not know what to do about it. And I said that buying silver is far more than enough. After all, if voting counts, and if writing letters counts a thousand times more than voting, then buying silver counts a thousand times more than writing letters!
In my opinion, our customers should not be so concerned with the current new money printing, as much as they should be over all the prior money printing over the past 100 years, that has yet to show up as demand for real money.
Money in US banks stands at about $18 trillion. If 1% of that money were to be spent on silver, it would be $180,000 million. But with only 700 million new oz. of silver mined each year, that implies a price of $257/oz. for silver, which would leave no silver left over for industry or the rest of the world. Since industry and the rest of the world will need silver, too, this implies that silver prices will hit about $500 oz. or more by the time a mere 1% of money in the US tries to buy silver to protect itself from inflation.
In fact, many people are now realizing that price is simply not a factor. They know that silver, at any price, is better than paper, or nearly all the alternatives. They know that paper is merely paper, and silver is something real. Some people are now realizing that plastic forks will likely outperform the dollar now, due to inflation. People are now realizing that any real good is better than paper money.
But plastic forks don't do the job. They cost about $1 a box. Nobody wants to try to store, and then later re-sell, 100,000 boxes of plastic forks.
Even copper can't do the job. A copper brick that weighs 33 pounds recently sold for about the same price as a 10 oz. bar of silver. The silver is infinitely more portable and practical. The copper brick also had a 100% markup over the value of the copper in it. That leaves silver and gold as the only real alternatives.
None of the other major investment alternatives are even remotely attractive now.
Bonds pay next to nothing, a tiny fraction of 1% at the bank. Yet inflation is over 10%, guaranteeing your loss. And as interest rates must rise, bond values will be guaranteed to go down both numerically, but also in value as the dollar drops.
Housing remains a basket case of woes, as the banks are sitting on properties that are decaying, and prices will continue to plummet.
Stocks are still trading at up to 50 times earnings in many cases, and earnings are often fraudulent. Companies are also in debt up to their eyeballs, and won't survive interest rate hikes. Besides, most baby boomers will be selling stocks for their retirements to live on, and so, stocks will go down for the next two decades or so.
April was crazy. We had 2-3 people in the shop nearly non stop all month long. A few days, I never had a chance to eat lunch. I'm sorry I've not had time to write. I've been exhausted, and stressed.
Being a precious metals dealer in this environment is very difficult. Setting the price for metals is also difficult. If our prices are too low, we risk selling out, and then our labor and shop will be wasted. And if our prices are too high, product won't move, and then the capital is wasted. We must sell a minimum, just to pay the rent, ads, and wages of our 5 workers. The free market keeps our prices honest. Also, many other suppliers are getting backordered, and delivery times are increasing, or no metal is available at all, at any price. How do we deal in such an environment? How do we set prices if I cannot replace the exact product from any other dealer?
And then, tonight, silver prices dropped 11.5% in a few minutes, from $48 to $42. How can a dealer deal in such conditions? The underlying spot price is supposed to be rather stable. President Nixon fixed wages and prices when inflation exceeded 4% in an entire year. Prices are not supposed to move more than that in a year. Clearly, manipulation still rules the day.
To cope with the price volatility, I have widened our spreads, that is to say, I have increased the price that we sell, and lowered the price at which we buy. I apologize, but I didn't create the national conditions under which we now live and must all figure out how to adapt to, but rather, I've fought against them my entire adult life.
I urge you to buy real silver, while real silver is available. It won't always be available! Some kinds are NOT available now, not at any price! Consider the alternatives. Can you go to Wal-Mart and fill the largest U-haul you can rent with $50,000 worth of goods on a Saturday? Would you want to, if silver or gold were not available? Would that even be feasible? Would the shelves of the mega stores be empty if that were the only alternative? Prepare now. It's getting crazy out there, and the hurricane of hyperinflation is just about upon us.
Please follow me on Facebook. So much has happened over the last two weeks, I've not had time to write. Osama Bin Laden is dead. Does this mean the three US wars will end, and the dollar will get stronger? No.
Obama released his Birth Certificate, showing his real father is not an American, thus proving him ineligible to be "natural born" under the Constitution.
Ron Paul formed an exploratory committee to determine if he should run for President again. See www.ronpaul2012.com.
I strongly advise you to take possession of real gold and silver, at anywhere near today's prices, while you still can. The fundamentals indicate rising prices for decades to come, and a major price spike can happen at any time.
Follow me on facebook!
JH MINT & Coin Shop, Grass Valley, CA --
Open 10AM to 5PM Pacific Time, Monday to Friday, closed weekends and bank holidays.
-- Posted 2 May, 2011 | | Discuss This Article - Comments: