History, Hint, History

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Silver
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History, Hint, History

Post by Silver »

History: The price of gold was only $35 when I was young and I aint' that old.

Hint: Gold, get some. Or, silver, the favorite of the common man.

History: There has never been a paper currency that lasts forever. The printers of paper currencies cannot endure the temptation to create the image of wealth and always, always, always, debauch their fiat money via over-printing.

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gkearney
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Re: History, Hint, History

Post by gkearney »

Several points here, the reason gold was $35 oz at one time in the US is because the US government set the price at that level in 1933 and then banned the private holding or sale of gold. This continued into the 1970s when the law was changed and gold returned to the US commodities markets.

This setting of gold prices had the effect of inflating the price of silver which was not so regulated and silvers price rose to ove $50 oz at one time before falling back to its more recent levels. As a boy we had a neighbor who was financially wiped out in the silver market buying at the high point of the market and then watching a the price collapsed.

Commodities are no place to be unless you have plenty of financial testosterone.

The last point is that in the modern world the supply of money has nothing whatsoever to do with the printing of banknotes. The money apply today exists in electronic form of interbank transfers. This means that to add or remove money from the supply does not require the printing or removal of paper notes. It's all done invisibly by computer programs so it is very hard in most cases to apply the older models. There are of course exceptions like Zimbabwe where the printing presses ran wide but that happen in mostly cash based developing nations.

Silver
Level 34 Illuminated
Posts: 5247

Re: History, Hint, History

Post by Silver »

As I always say, don't buy precious metals until you've completed your food storage and other preps. Also, precious metals are not an investment. They are simply trading dishonest money for real money. Since history has proven that no fiat currency survives, why not own something real.

For every anecdotal story about people who lost money there are stories of success. The key is to diversify away from debt = federal reserve notes.

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Robin Hood
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Re: History, Hint, History

Post by Robin Hood »

When family members asked us what we wanted for Christmas we told them to get us silver Britannia's.
They did, so we have kicked off our collection of precious metals.

Silver
Level 34 Illuminated
Posts: 5247

Re: History, Hint, History

Post by Silver »

Robin Hood wrote:When family members asked us what we wanted for Christmas we told them to get us silver Britannia's.
They did, so we have kicked off our collection of precious metals.
Awesome. If only everyone did that.

2EstablishZion
captain of 100
Posts: 337

Re: History, Hint, History

Post by 2EstablishZion »

gkearney wrote:Several points here, the reason gold was $35 oz at one time in the US is because the US government set the price at that level in 1933 and then banned the private holding or sale of gold. This continued into the 1970s when the law was changed and gold returned to the US commodities markets.

This setting of gold prices had the effect of inflating the price of silver which was not so regulated and silvers price rose to ove $50 oz at one time before falling back to its more recent levels. As a boy we had a neighbor who was financially wiped out in the silver market buying at the high point of the market and then watching a the price collapsed.

Commodities are no place to be unless you have plenty of financial testosterone.

The last point is that in the modern world the supply of money has nothing whatsoever to do with the printing of banknotes. The money apply today exists in electronic form of interbank transfers. This means that to add or remove money from the supply does not require the printing or removal of paper notes. It's all done invisibly by computer programs so it is very hard in most cases to apply the older models. There are of course exceptions like Zimbabwe where the printing presses ran wide but that happen in mostly cash based developing nations.
It's not often I catch you in error, but you are quite wrong on most counts here.

The explosion of silver prices happened in the 80s, after Gold was deregulated, therefore the locked price of gold had no influence on the silver price explosion. What happened was the Hunt brothers tried to corner the silver market in the late 7os which drove the price up to almost $50/oz.
Nelson Bunker Hunt and William Herbert Hunt, the sons of Texas oil billionaire Haroldson Lafayette Hunt, Jr., had for some time been attempting to corner the market in silver. In 1979, the price for silver (based on the London Fix) jumped from $6.08 per troy ounce ($0.195/g) on January 1, 1979 to a record high of $49.45 per troy ounce ($1.590/g) on January 18, 1980, which represents an increase of 713%. The brothers were estimated to hold one third of the entire world supply of silver (other than that held by governments). The situation for other prospective purchasers of silver was so dire that the jeweller Tiffany's took out a full page ad in The New York Times, condemning the Hunt Brothers and stating "We think it is unconscionable for anyone to hoard several billion, yes billion, dollars' worth of silver and thus drive the price up so high that others must pay artificially high prices for articles made of silver".[1]

But on January 7, 1980, in response to the Hunts' accumulation, the exchange rules regarding leverage were changed, when COMEX adopted "Silver Rule 7" placing heavy restrictions on the purchase of commodities on margin. The Hunt brothers had borrowed heavily to finance their purchases, and, as the price began to fall again, dropping over 50% in just four days, they were unable to meet their obligations, causing panic in the markets.
So you see, even someone trying to fairly corner the market can have the rules changed on the midstream and get wiped out.

As far as money supply, yes physical notes have little to do with actual money supply. However, the money supply isn't just magically managed by computer programs either. It is still fiat, whether paper or digital 1s and 0s, and the inevitable result of overcreation will bear the same fruit as overprinting has always caused, and before that debasement by mixing base metal with precious metal and trying to apss the coins off as of the same value as the pure coins. It's just a different variation of the same game.

Silver
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Posts: 5247

Re: History, Hint, History

Post by Silver »

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SUNDAY, FEBRUARY 05, 2017
Which Assets Are Most Likely to Survive the Inevitable "System Re-Set"?

Your skills, knowledge and social capital will emerge unscathed on the other side of the re-set wormhole. Your financial assets held in centrally controlled institutions will not.
Longtime correspondent C.A. recently asked a question every American household should be asking: which assets are most likely to survive the "system re-set" that is now inevitable? It's a question of great import because not all assets are equal in terms of survivability in crisis, when the rules change without advance notice.
If you doubt the inevitability of a system implosion/re-set, please read Is America In A Bubble (And Can It Ever Return To "Normal")? This brief essay presents charts that reveal a sobering economic reality: America is now dependent on multiple asset bubbles never popping--something history suggests is not possible.
It isn't just a financial re-set that's inevitable--it's a political and social re-set as well. For more on why this is so, please consult my short book Why Our Status Quo Failed and Is Beyond Reform.
The charts below describe the key dynamics driving a system re-set. Earned income (wages) as a share of GDP has been falling for decades: this means labor is receiving a diminishing share of economic growth. Since costs and debt continue rising while incomes are declining or stagnating, this asymmetry eventually leads to insolvency.
The "fix" for insolvency has been higher debt and debt-based spending--in essence, borrowing from future income to fund more consumption today. But each unit of new debt is generating less economic activity/growth. This is called diminishing returns: eventually the costs of servicing the additional debt exceed the increasingly trivial gains.



What happens when the bubbles pop, despite massive central bank/state interventions? The entire socio-political/financial system goes through a "system re-set" in which all the fantasy-based valuations, political denials, false promises and fraudulent claims collapse in a heap.
In a crisis, the privileged Elites will change the rules in a desperate attempt to expropriate the income and wealth of the bottom 99.5% to preserve their own power.
The trick is to do so in ways that won't spark an immediate political insurrection.
We can better understand their policy choices by asking: What's easy to expropriate, what's difficult to expropriate?
Those assets that are easy to expropriate will be expropriated first. Those that are difficult to expropriate are far less likely to be grabbed, due to the high costs of expropriation and the high risks of sparking a political insurrection.
History suggests the privileged Elites will pursue two basic strategies to expropriate the income and wealth of non-elites:
1. They will expropriate what is easy to expropriate: financial assets in centralized institutions the state controls: banks, brokerage accounts, insurance policies, etc.
2. They will use the time-honored "stealth expropriation" methods: inflation and taxes.
Any "money" held in a centrally controlled institution can be expropriated overnight. The rules will change without warning, so there will be no opportunity to escape the system.
Direct expropriation takes many forms. Your funds could be "bailed-in" (transferred to the bank). Large currency bills could be declared worthless. IRA and 401K accounts could be transferred into government bonds, to "protect the account owners from risky investments." (Naturally, any expropriation will be presented as "for your own good.")
Or a new currency could be issued that strips away 90% of the purchasing power of the old currency. It could be a New Dollar, an SDR global currency, or a state-issued cryptocurrency. The point is to strip away 90% of the wealth held in the old currency.
Indirect "stealth" expropriation has several forms: slow currency devaluation, also known as inflation, or higher taxes and junk fees (not called taxes, but you receive no additional value for the higher fees).
The end result of these policies is you may receive the $2,000 monthly pension you were promised, but after inflation, currency devaluation and taxes, your real purchasing power is $100 in today's currency.
So what's difficult to expropriate? I present some answers in my books An Unconventional Guide to Investing in Troubled Times and Get a Job, Build a Real Career and Defy a Bewildering Economy.
It's impossible to expropriate one's skills, experience and social capital. These are intangible forms of capital and so they cannot be confiscated like gold, currency, land, etc.
Land and homes are difficult to expropriate for two reasons: private property is the backbone of capitalism and democracy, and the state confiscating private property would very likely spark a political insurrection that would diminish or threaten the power and wealth of the privileged Elites.
Secondly, it's very costly for the state to maintain the productive output of real property it has confiscated. Guards must be posted, sabotage repaired, and the immense difficulties of coercing a rebellious populace to continue working what they once owned for the benefit of the state and its privileged Elites must be solved and paid for.
The state can expropriate farms, orchards and workshops for back taxes (or some similar extra-legal methodology), but how do you force people to work these properties productively?
As a general rule, whatever the super-wealthy own will be protected from expropriation. Private real property is the foundation of the Elites' wealth, and while the land of debt-serfs may well be confiscated for back taxes (the wealthy will buy exemptions from rising taxes), those who own land and buildings free and clear constitute a political force to be reckoned with.
As I discuss in my book Resistance, Revolution, Liberation: A Model for Positive Change, there's one other asset the state and its ruling Elites cannot expropriate: community.
The state will also have difficulty confiscating assets that are outside its reach.This explains the popularity of owning assets in other nations, and the debate over cryptocurrencies: will states be able to confiscate all cryptocurrencies at will, or is that technically unfeasible?
The main takeaway is this: your skills, knowledge and social capital will emerge unscathed on the other side of the re-set wormhole. Land and real property you own free and clear (no debt) is likely to remain in your possession, as long as you can pay soaring taxes/junk fees during the crisis phase. Your financial assets held in centrally controlled institutions will not make it through unscathed; they are simply too easy for central authorities to expropriate.

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