Silver and Gold. An Interesting Scoop.

I have to admit that I’ve never been big on gold or silver investments. Historically, the stock market has been a much better investment over the long haul that silver or gold, but there are times when silver and gold make sense in your investment portfolio. Let’s take a look.

According to Wikipedia from 1970 to 2010, gold’s growth was 3,792% while the Dow Jones Industrial average was 1,280%. That makes gold look like a very good investment tool! However, from 1975 to 2010, the Dow Jones outperformed gold 1,259% to 929%, and depending on the day, gold is actually down around 7% from it’s $1,410 value in 2010. Gold peaked around $1,800 in January 2011. Now trading around $1,300, that represents a 27% decline in value.

Now what about silver? In 1970, silver was valued at $1.63 per ounce. In 2010, silver’s valuation had grown to $20.19, a 1,138% gain per Wikipedia. Those numbers however, only tell part of the story. In January 2011, silver’s value peaked near $50 per ounce. Today, silver’s valuation fluctuates around $17 per ounce. That’s nearly a 65% decline in value from it peak in 2011! But still, if you had purchased at just the right time, silver would still be a viable investment tool, and you may have benefited from it.

As a savvy investor, investing in silver or gold appears to be an inferior investment tool compared to the S&P or the Dow Jones. However, there are times when silver or gold do make sense in an investment portfolio, and if you are looking deep enough for the right signs, you may just be able to benefit from buying some silver and gold. Perhaps one of those is upon us now.

Sometimes the best investment decision is to follow the leaders. In this case, the leaders are some very well known players in the financial world. Let’s start with Russia and China. Russia and China have both been acquiring gold at the state level as they both move away from US Dollar holdings, according to Bloomberg.com. You can see the aggressive acquisition of gold by both Russia and China with the Official International Gold Holdings.

Another major player to watch is JP Morgan Bank which has aggressively been acquiring silver since 2010 and now holds the largest ever quantity of silver reserves in history. In 2014, this article at the Market Oracle was published related to JP Morgan’s acquisition of silver naming them as the largest silver holder in history. It is estimated that JP Morgan may be sitting on as much as 700 million ounces of silver. So you have to ask why? Considering silver is down 65% from it’s high in 2011, JP Morgan stands to make a bundle as the prices return, but you may do well to think that they may know something that we do not.

The last indicator is to see what billionaire investors are doing like Warren Buffett. In recent years, we’ve seen Buffett buying up infrastructure and energy. Another way to look at this is that he is buying up transportation of goods and oil, which is a commodity similar to silver and gold. Buffet has in the past been a silver buyer himself to hedge against market collapses when he acquired 129 million ounces of silver and held it from 1998 to 2006.

So while I’m not an avid gold and silver buyer myself, the signs are all around us that power players are preparing for something, and we would be wise to pay attention.

Primer on how to buy silver

Tips on buying gold

Great silver and gold vendor

 

Danger. Economic Turmoil Ahead. Be Prepared.

I’m going out on a bit of a limb here to highlight some financial stuff and economic signs that aren’t being covered in the news, but I think it’s necessary. As I bring this stuff up with people in my circles, they are unaware. These things are happening around us, and many people are going to be caught off guard.

The Economic Signs

Last year, I read one of Jim Rickards’ books called the Death of Money. Jim is a former financial analyst for the CIA along with many other qualifications. While Jim included quite a bit of useful information, there were a couple of things that really stood out to me.

  1. Jim highlighted that America came off the gold standard in the early 1970s. That is when our money ceased to backed by gold or any “asset.” However, Jim also highlighted that Russia and China have been working to accumulate gold. I’ll speak more on this later.
  2. In the early 1970s, the US dollar was setup to be the “World Reserve Currency” by an agreement with OPEC to price oil in USD. That has helped to cement the United States as the world power that it is. It is what has allowed America to impose sanctions to such “wayward nations” as we saw fit…mainly to strong arm America’s or the western countries enemies.
  3. Since the Bush administration and more specifically during the Obama administration, have accumulated mountains of debt. In additions to this debt, the US Government and Federal reserve have printed trillions of dollars. This has served to greatly destabilize the value of the USD. Interestingly enough, we have not fully seen the repercussions of this yet which will be mass inflation.

The Death of Money was published in 2014; I read it in 2017. In the book, Jim made several projections which are now coming true.

  1. Russia and China are accumulating gold for the purpose of challenging the USD as the world reserve currency. Without adding too much detail, it is estimated that the top four gold holding entities are 1) the European Union with 8,500 tons, 2) the US with 6,500 tons, 3) China reported 4,500 tons (estimated to be much more), and 4) Russia with 1,500 tons.
  2. China along with Russia would provide an alternative for international trade by allowing oil to be traded with the Yuan, now a gold backed currency.

Normally, projections like this get forgotten over time, however, both of these projections have now come true. In early 2018, China opened oil trading based on the Yuan (Bloomberg.com) thus challenging the Petro Dollar as the only world reserve currency. Iran, Venezuela and other countries are beginning to use the Yuan for international commerce as well. Other news sources covered it as well, RT.com

Cementing the challenge to the US Petro Dollar, Russia is in talks with Saudi Arabia about production agreements that could last 10-20 years. Reuters.com Now this may actually be a good thing as oil and gas prices would stabilize over longer periods of time allowing the world economy to experience less volatility on several levels.

The other big piece of information I have for you is a series of articles related to JP Morgan Chase Bank. In 2011, JP Morgan Chase began acquiring silver. Lots of it. On the books, they’ve acquired 150+million ounces of silver. Unknown, it’s estimated they may have acquired as many as 500 million ounces of silver. By the numbers, that’s about 5,000 tons and $2.5 billion in silver or it could be 15,600 tons and $8.2 billion.

So now you have Russia, China, and JP Morgan Chase all acquiring huge amounts of precious metals (silver and gold) beginning around 2009. You have to ask, “who else might be acquiring large amounts of precious metals? Why?

In reading Jim Rickards’ book about the coming economic collapse and the death of money, he made projections that have now come true, and now we see JP Morgan Chase following one of Jim’s recommendations to protect wealth. Coincidence? I don’t think so.

Okay. So What Now?

So what should we do? I wish I had all the right answers, but I don’t. What I can do though is continue to learn and prepare as best I can.

  • I’ve recently purchased Jim’s latest book, Road to Ruin and I’m eager to see what other nuggets he has for me.
  • Don’t hold too much cash. Inflation causes your cash to lose value. During hyper inflations cycles, it loses value fast.
  • Buy some silver. How To.
  • Buy some gold. How To.
  • Stick with solid financial principles. Pay off your debts. Don’t waste your money.
  • Don’t be too heavy in stocks. Economic turmoil could cut the stock market by 1/3 to 1/2. Diversify your wealth to protect yourself.

Historically, I’m not a silver or gold buyer, but now I am. Gold and silver have not been great investments when compared to the S&P, real estate or other investment options. However, during an economic upheaval, you’re not looking for investment returns. You are looking for financial stability and protection. Gold and silver have been present in the global financial system for over 3,000 years. The USD has existed for a little over 200 years which exceeds the lifespan of typical fiat currencies which is about 27 years.