If you haven’t starting transferring your wealth/savings to gold and silver yet, watch this video!

Unless you’re totally asleep (and that’s possible, metaphorically… although if you’re reading this then there’s hope) then you’ll now that something’s terribly wrong with the economy, and there’s nothing stupid about that. Markets are tanking, credit is hard to get and the price of everything seems to have sky rocketed. So, what to do?

If you have just woken up, however, or even if you’ve been awake for a while but would appreciate a plain-speaking, non bamboozling breakdown of what’s going on and how you can protect yourself, then you’ve stumbled across the right video!

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Why Silver And Gold…?

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Keynes vs. Hayek – a musical interlude

Wow, who knew a serious economic discussion could take the form of rap music…?

If you don’t already know, John Maynard Keynes and Friedrich August Hayek were economists with opposing economic theories. What is known today as the Keynesian Theory advocates active economic policy by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government i.e. predominantly private sector economy, but with a large role of government and public sector. Keynes was in favour of low wages, low savings, high spending/consumption, and high borrowing.

Hayek, on the other hand, was a founding contributor to the opposing Austrian School of economic theory, who advocate voluntary contractual agreements between economic agents (people and banks, say), and hold that commercial transactions should be subject to the smallest possible imposition of coercive forces with an extremely limited role for government and the smallest possible amount of government intervention in the economy.

Hmm… I wonder which one would think saving in/buying silver to hedge against inflation was a good idea…? Sorry, no prizes for the right answer. 🙂

Fight of the Century: Keynes vs. Hayek Round Two is a brilliant and topical video by John Papola and Russ Roberts of EconStories.

Keynes and Hayek in da house, y’all!

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Bullion, buy what you can get.

I’ve not seen the 1981 film Rollover but, thanks to a link to it in my weekly email from silver guru, David Morgan, of silver-investor.com,  it’s now officially on my to-see list.

Why? Because, if a picture paints a thousand words, then a film has the potential to make even the most art averse person pay attention. And while Im not art averse, I do love a film that takes an intelligent look at socio-economic affairs while cutting through the jargon to get the the visceral gut of it all. Another such film, which I have watched, is Network (1976). Both films seems to lend themselves very well to these times we live in now, but where the financial situation is concerned, Rollover in particular has an almost spookily prophetic feel to it. Let’s hope it never gets that far, but something tells me that hope might not be enough.

By the way, in the first scene in the following clip, he suggests buying gold, which in 1976 was a helluva lot cheaper than it is now. It’s currently about $1,485/oz while silver, considered gold’s little sister, is still trading at a relatively affordable $43/oz. But whether it’s gold or silver, as the man says in one scene: “Bullion, grab what you can get.”

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Don’t be afraid – don’t even be very afraid… be prepared.

As I mentioned in a previous post, in my quest for knowlege about the buying of and saving in silver, I’ve come across some pretty scary end-of-days stuff. However, as one now dead American president once said: we have “nothing to fear but fear itself.” So, when it comes to my money, and especially given that I don’t have much of it, I break through the fear barrier and read anything that seems pertinent to help me stay in control of the little I’ve got, even if it scares the living bejeebus out of me. Like I said, I don’t have miuch money, but there’s a difference between ocassionally being broke and being stone cold sober, nothing to eat, nowhere to live poor.

Now, whether or not there will be marauding looters and murders on the lose, roaming the land in packs and gagging to get at your food and water supplies should, as my end-of-days friends like to say, TSHTF (the site hit the fan), the fact is, we are already witnessing riots happening around the world that have some basis in rising prices as a result of inflationary monetary policies, high food prices, increasing debt (thanks, in part, to tax payers being put on the line for the mistakes/greed of private enterprise). I’m no political or financial pundit but, with the European Central Bank having recently increased interest rates, it wouldn’t surprise me if some poorer EU countries, including some of those who have already had to be bailed out, will see more rioting on the streets pretty soon. I say this as I know that we in the West or so-called developed nations tend not to view troubles in far off lands with mostly swarthy skinned populations as anything that we need to worry out heads about, and the media coverage of demonstratios and riots on our own streets tends to gloss over the issues at play, somewhat, especially if it’s possible to attribute such frays into to a fringe element. Think again.

Whether you believe that the reasons our governments have entered into the Libyan fray have to do with humanitarian reasons or to protect our access to oil, or control its output and distribution, the fact is, serious money is being spent on the military effort in Libya right now. Given that the US and Britain, at least, have huge public debts, where, exactly, is the money coming from to finance this estimated ÂŁ2,000,000 (two million pounds) a day military intervention? YOU!! That’s right! And if I could be bothered, this is where I’d use one of those pointing Uncle Sam pictures. More money gets printed and you, whether in the form of higher taxes, higher fuel and food prices or public spending cuts, get to pay for it.

But don’t woryy, it can get scarier. I was reminded today of an article I read a couple of weeks ago called The Silver Bullet And The Silver Shield, which goes to great lengths to explain why buying silver can be both a quietly revolutionary action as well as personal security measure. As I’ve said before, saving money is cash is, at this point in time, a mug’s game. But of you’re not awake to that fact yet, then read on, cos here’s the scary bit:

The more money/debt chasing after fewer goods and services is what causes inflation. Ultimately, people’s faith in the currency will fail world wide. It will become evident that the Elite intend to print the currency into oblivion, ruining the main function of money as a store of value. When this happens people will literally throw their depreciating currency at any tangible asset they can get their hands on. Precious metals will be the main beneficiary of this because of their unique properties, such as they do not deteriorate, and universally accepted. The frightening thing is that it is not just American citizens, it this will be the first time in human history where the entire world is so interconnected and all on the same basic fiat monetary illusion. Stop thinking of another Great Depression and start thinking another Dark Ages. My suggestion would be to, beat the rush and panic now!!

The bold emphasis is mine but, while fear-mongering isn’t generally my thing, if you have to be scared in order to get prepared…

You can read the rest of The Silver Bullet And The Silver Shield by clicking here.

And if you can’t be bothered to read it, here’s a video about it indstead.

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Silver investing or saving?

My journey on the road to silver ownership started as a quest to find somewhere safe to save my money. I’ve earned, and squandered, decent amounts of money in the past and I’ve occasionally saved decent amounts too. But my current savings are pretty much nil, thanks to a six month stint of unemployment and now, even though I’m earning less than I was once used to, I’m looking to start saving again, albeit smaller monthly amounts than I once used to.

It’s difficult not to get caught up in the various blogs and YouTube videos that celebrate the ever-increasing price of silver. It’s infections, it’s exciting, it’s where I want my money to be! There’s a saying used by one Mr Norm Franz, author of a book entitled Money and Wealth in the New Millennium, which goes: “Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves.”

Now, being the ambitious little diva that I am, I’m looking to jump straight from slave to gentlelady – none of that peasant malarkey, thanks. Fortunately, it’s also widely held that, while gold is a good way to store wealth,  silver, as well as preserving wealth, is a good way to get wealthy. It’s true, you can make shed loads of money on the rising price of silver. If you bought silver back in the 80s when it was about $4 an ounce, today, at about $38 an ounce, you’d be well within your rights to feel pretty pleased with yourself. Chances are, however, that everything has gone up in price since then so, while the $ worth of your silver has gone up, so has the $ price of just about everything. So, while you may or may not have become wealthier, you certainly have not lost your purchasing power. If, however, instead of buying silver, you’d put that money into a bank savings account, you’d be well within your rights to feel pretty pissed off with the banks (and yourself) right now.

While there’s every chance that you could make a short-term killing on investing in silver, whether it be via the stock market or buying physical silver and then selling it at a higher price, if it’s savings and the means to preserve your purchasing power in the future that you’re really after, then silver savings are the way forward because, while the price of everything in the future will indubitably be higher, the store of wealth built into silver will mean that you won’t have to resort to performing menial, and possibly even demeaning, tasks to afford a ÂŁ100 loaf of bread because you’ll have enough silver to buy shed loads of bread – or at least the purchase of one loaf of bread, because you have your wealth in silver, will feel pretty much like buying a loaf of bread today (i.e. no big deal). Having said that, the video I’ve posted below was made in September of last year and cites silver at $28/oz, while it’s currently about $38/oz. So woohoo to whoever decided to sell this week the silver they bought last September. Good investment!

And so to the video and, as usual, it seems, there’s someone out there who can illustrate this point even better. He’s Canadian, goes by the YouTube moniker RightSideofHistory, and uses US and/or Canadian dollars in his illustration, but it works the same way whatever currency you’re in (or trying to get out of). Take it away, Canadian dude!

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Let’s get physical

So, in my quest to figure out how to best buy silver instead of saving in cash, the main argument seems to be whether to have it in physical form or to buy it in paper form. The difference…?

Well, there are those who believe that if you can’t hold it, then you don’t own it. What they mean by that is that many paper silver instruments/derivatives, such as ETFs, even when they say they’re backed by silver, don’t necessarily have the amount of silver to cover their positions. If you don’t know what I’m talking about, don’t worry, I barely understand myself… However, think of it in terms of a run on the bank. A bank will usually lend out ten times the amount of money that it actually has in deposits. So, if you put in ÂŁ10 into your savings account, the bank is allowed to lend out ÂŁ100. However, if a bank is perceived to be a financial straits and there’s a run on the bank (remember in 2008 when news channels were showing queues of people in front of Northern Rock branches waiting to collect their savings/deposits in physical cash…? That’s a run on a bank) all hell breaks out. Now, because the bank only has 10% of the amount of money it actually claims as assets, everyone coming to get their money at the same time is… Well, let’s just say not everyone (if anyone) is going to get their money – ‘cos it’s just not physically there anymore! Not all of it – they’ve loaned it out, and then some!

Now, word is, paper silver such as ETFs, that claim to be backed by real physical silver, are selling contracts at a rate of 100 times the amount of physical silver they actually have. OK… so, retail banks tend to borrow out 10x the amount of deposits they have and yet investment banks are selling contracts on 100x the amount of physical silver they actually have…? Yikes! If all the holders of these paper contracts decide they want to redeem their silver in, well, silver, then… The run on Northern Rock will look tame in comparison and we can pretty much say bye-bye to the current financial system. Which means these banks will collapse… or  get bailed out by you, the tax payer… and your cash savings will be worth even less either way.

So how do you hold physical silver? There are two ways and the main concern seems to be storage. You can buy and store yourself, or you can buy and let a third-party store if for you. In my research I came across some pretty interesting perspectives. Among the “if you can’t hold it, you don’t hold it” camp are some pretty extreme guys. I’m talking guys who believe that the dollar collapse (and other paper currencies) isn’t just iminent but that it’ll bring about the end of the world as we know it. They’re not just talking a few demonstrations and riots, but the end of civilisation as we know it. They refer to this scenario as TSHTF (the sh!t hits the fan). When/if tshtf, most trade will be done by barter and paper money will be meaningless unless it’s in the form of silver of gold. Their motto could well be summed up as: “buy gold, buy silver, buy guns!” Guns?! Yes, guns. Guns will come in handy for all that gold, silver and stored food and water that you have on your premises. And, as far as they’re concerned, the only way anyone, be it the gubment or the starving, marauding masses, is going to get at it is if they can somehow get by the lead bullets being shot at them from a nickel gun.

Now, I’ve considered acquiring physical silver in the form of bullion coins and rounds (a lot of them are very pretty, but it’s best not to get too attached) but if it gets to the point where storage becomes a major issue and the end of the world as we know it really is nigh… Let’s just say that visions of me wielding a gun and screaming “git offa mah land!” before shooting off my own foot… Enough said.

So that means getting someone else to store it. First thing to note: DON’T store it in a bank vault . Why? Well, if (when?) the financial system collapses, I don’t fancy your chances of getting anything back from any bank. Anywhere. Really. Remember, taking your savings out of paper money and into silver signifies a loss of confidence in banks and the current banking system, which is why you’re taking your paper money out of banks and converting it to silver. So that leaves private vaults, which means storage fees. Which means you can’t afford it, right? Not necessarily. There are companies, such as GoldMoney and BullionVault who will sell you silver and store it for you at a reasonable cost. GoldMoney will charge about 2 ounces of silver (or about ÂŁ55 at their current rate) to store your silver for a year, more if you’re buying over a certain amount (which I’m unlikely to exceed in this lifetime, but who knows…) and your precious metals are stored in private vaults in London, Hong Kong or Zurich. Real silver. Your silver. You own it. You can sell it whenever you want. You can convert your silver to gold if you want. They don’t lease it out and you can ask for your gold to be delivered to you. Better still, you can actually use it to pay other GoldMoney members and if they issue a debit card, which has been posited by some of its existing members, it seems fair to assume that a time will come, in the not too distant future, when you can just use your GoldMoney holding to pay for goods and services without the need to use the current banking system. Nary a gun in sight.

So, while I like the idea of having a few ounces of silver to have and hold, and many experts tend to agree that having a small amount isn’t a bad idea, actually being able to hold it, touch it, caress it, kiss it and then bury it in the swamp at the bottom of the back yard doesn’t really appeal to me (especially as the only outside space I own is a third floor balcony). Let’s face it – we tend to keep our money in banks and have small amounts at home, right? So why wouldn’t we do the same with silver – have some at home, and most of it in a safe place that allows us to access it when we need it?

So if you really want to preserve your savings and your purchasing power with silver, buy physical and stay away from paper. OK, here are a couple of knowledgeable silver suits, David Morgan and James Turk, who say it better (or at least more professionally).

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