1. Inflation, Deflation, Hyper Inflation
As we keep printing money in the USA, which by the way we cannot stop. We have to continue printing money in order to keep the US economy moving.
You see, everyone thinks that it’s income tax revenue that runs the country. They spend time complaining about how their tax dollars are not being used to look after them in the way they want them to be used.
But the truth is a little more sinister. Did you know that 100% of all tax revenues collected in the USA go solely towards paying the interest on the debt that the USA has created through the Federal Reserve?
Not one penny of income tax revenue goes towards paying for education, healthcare or the defence budget.
This is a well documented statistic and makes sense just from a mathematical perspective.
It also means that the USA will never ever be able to come out of this debt, ever (you can see the debt clock up by about $10,000 every second on this site).
Because if the government needs to print money (using a process called Quantitative Easing) just in order to have the taps running everyday, they’ll continue printing money, continue increasing debt and that’s how they’ll fund it.
So the debt in the USA will continue going up, no doubt about it, There’s no other answer.
Gold is a great hedge against government debt as it’s always revalued itself according to the debt. And if the debt continues to go up, then Gold will continue to go up, it might have a year or two of downs, but it will continue to go up in the long term. A look a the historical price of gold against currency will show that.
Now, what’s interesting is that while we’ve had all this money being printed, base inflation between 2008 and 2014 has been really flat from a nationwide perspective.
This means that people aren’t spending their money. There are two reasons for that. The first is that, because of wage stagnation, people have less disposable income. Second, the banks got their bail out money (from the taxpayers) and then stopped lending money out to individuals and businesses.
So while the easy route for this journey was to print money and get lots of inflation, that didn’t happen.
So what might happen instead?
Well, two things can happen when you understand that debt must continue going up.
- Lending spikes upwards, people start spending and inflation kicks in.
- Or…Deflation happens, they print more money again in panic, loosening controls on lending again and then we go into a state of Hyper Inflation.
A lot of people have thought that the deflation argument for Gold and Silver is negative, but it’s really not because, remember, there is no way that the government can balance the debt.
So inflating out of debt is the inevitable answer. So how do we get there?
Inflation in 1930s Germany. Wheelbarrows of cash were needed to pay for everyday goods.
People don’t worry about whether there will be inflation or deflation with these debt levels. The concern is which route will be followed, because one of them will be the outcome and this will end badly for those holding their wealth in cash.
Did you know that even if we reduced current debt by 75%, there still wouldn’t be enough revenues from income tax to cover the interest payments and provide the services that government deliver?
The situation we’re in is shocking and the inevitable answer for any government in history in this situation is to inflate the debt away. If you hold cash, that inflation also whittles away the purchasing power of your money.
2. Gold Is Real Money And Everyone In History Knows It…
Gold has and always will be real money; in fact the State of Utah has legalised Gold and Silver as legal tender.
China is in the race to create the world’s first Gold backed currency (well, not the actual first; the first since 1971 when Nixon took the dollar off the gold standard).
India is buying 50% of the world’s total Gold supply to bolster their balance sheet.
Russia, India, China are the biggest central bank consumers of Gold right now as they can see what’s happening with the US dollar.
Currency transactions involving the dollar have been steadily decreasing since the end of World War II. Back in the late 1940’s and early 1950’s 90%+ of international financial transactions involved the dollar. Today it’s 70% and the declining trend simply points to an obvious truth: The dollar will not be the world’s reserve currency for very much longer. Once that transaction rate falls below 50%, something else will replace the dollar as the world’s reserve currency.
Societe Generale did a study which said a few years ago that if the US Dollar was to be backed by Gold to it’s pre-Nixon levels, Gold would sit at $10,167 an ounce.
And considering in monetary history ALL, and I do mean every single one of the fiat currencies (a currency backed by nothing but paper) have always failed and there’s always been a return back to a Gold backed system.
At these points in history, Gold has revalues itself to the debt that the paper currency has.
This has happened without fail to every single currency ever created like this.
And on average, it takes 40 years… and 40 years for the US Dollar ended in 2011 (remember, Nixon took the dollar of the gold standard in 1971).
Which means we’re on the last legs here and this transitionary phase can leave you with a stockpile of wealth, like what happened in 1929 in the great depression…
But only IF you take the action now.
What’s even more interesting , and why I think Silver is a more magical investment than Gold is this…
Historically the Gold to Silver ratio has been around 1:16 when this revaluation happens. What this means is “how many silver ounces does it takes to buy an ounce of Gold”.
Right now that ratio is fluctuating at somewhere between 1:60 and 1:80.
That ratio is a monetary ratio. The physical ratio – how much silver is there in comparison to gold on the planet – is a different ratio. That’s about 1:9 (i.e. there’s 9 times more silver than gold).
Except it’s not that simple. Silver gets used up in industrial processes whereas gold doesn’t. So that 1:9 ratio of physical gold to silver is misleading. It’s likely to be lower, maybe 1:5 or 1:6.
Gold is currently $1,285.41 per ounce and silver is $18.38 (the prices will be different when you read this post).
That means it takes 1285.41/18.38 = 70 (rounded to nearest whole number) ounces of silver to buy one ounce of gold. So the ratio is 1:70.
Now let’s look at something really exciting, if the ratio reverts to its historic norm of 1:16…
Silver would be 1285.41/16 = $80.34 per ounce.
Now, out of pure speculation, if Gold revalues to $10,167 an ounce (where it would be at if Nixon hadn’t broken with the gold standard)…
How much should a Silver ounce be valued at?
10,167/16 = $635 an ounce.
Now go take a look at today’s Silver price and tell me that’s not an amazing Return on Investment (ROI).
In fact, lets assume the deflation supporters are right and it just gives us HALF the ROI, is that still good for Gold and Silver from today’s prices?
It’s a pretty good ROI (3,455%).
And remember this adjustment in the monetary system is not only coming, but it’s required and the US government if it needs it to inflate the debt away.
3. We Missed The Previous High By 66%!!!
Gold and Silver prices peaked back in 2011 and those prices have not been seen again in the last 6 years. You see a lot of media saying that Gold and Silver reached those previous highs and that was really great but then the prices crashed so it’s all over.
True, if you bought a load of precious metals in 2011, you’re probably feeling hard done by because if you have to sell, you’ll realize a loss on your investment.
The truth is, is that mainstream media is assessing this performance incorrectly.
When they talk about how Silver hit its 1980 high of $49.45 an ounce, and then they talk about it reaching the 2011 high of $48.70 an ounce, they’re not looking at the inflation adjusted price levels.
$49.45 in 1980’s dollars is NOT worth $49.45 in 2011. It’s worth $146.19 in 2017 dollars (see here).
Silver in 2011, missed the inflation adjusted previous high by a huge 66% when you look at inflation adjusted figures!
And these numbers are just to BEAT the previous high, they’re not taking into account the huge demand now coming from the East which wasn’t there for the metals in 1980.
They’re not taking into account the huge debt that the US has now accumulated.
You see at MINIMUM, your opportunity right now in Gold and Silver is the previous high.
And past that its the inevitable revaluation in Gold prices according to government debt and inflation.
It’s the revaluation in the Gold/Silver ratio from 1:60-1:80 back to a historical average of 1:16.
It’s the HUGE demand coming from China, India, Russia.
Your opportunity in Gold and Silver is now global and everything is lining up perfectly for the prices to sky rocket.
All you’ve got to do is get involved in a smart way, buy at the right price and stay in the game.
For people who need to bolster their retirement fund or just want to make huge gains the next 5-10 years doing it easily and simply, Gold and Silver are providing the right scenario and some amazing opportunities.
Can you feel how big the opportunity is right now in these metals?
Can you see why all the Billionaires, wealthy families and smart Central Banks are so excited right now?
This is going to be amazing and it’s as simple as buying Gold and Silver for YOU to be involved and to profit.
If you’re prepping for retirement, can you see why Gold and Silver should absolutely be within your portfolio right now?
Can you see how, even if you’ve had investments that haven’t gone exactly how you’d hoped in the past and are worried about abundance in your retirement, Gold and Silver is a great opportunity for you?
And can you see how if you’re already comfortable and retirement is looking comfortable and you’ve been successful and planned your retirement well that Gold and Silver can not only protect it, but maybe give it a safe, sound, conservative boost and just maybe give you that extra holiday a year, that additional car to make it easy for family, that dream wedding for your children, funding your child through college…