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The number one reason to buy physical gold and physical silver (not paper
gold and paper silver, which is not the same thing) is very likely not what
you think it is. I can deduce the number one reason why most people buy gold
and silver simply from the disproprotionate amount of questions I receive
about buying gold and silver whenever gold and silver prices are rising
significantly versus when gold and silver prices are falling. In other words,
most people believe that that top reason they should buy gold and silver is
to profit from rising prices. However, this is far from the best reason to
buy physical gold and physical silver. The number one reason to buy
physical gold and silver, bar none, is the global currency rot that
is happening today, that is relentless, and that Central Bankers are now
helpless to stop (though they are responsible for creating it). Of course,
some may say that benefiting from rising fiat currency prices of gold and
silver is the same reason as protecting onself against currency rot, but in
reality, these two reasons for buying gold and silver are as different as
night and day, and here's why. Of those that want to benefit from rising fiat
currency prices of gold and silver, the vast majority are looking for a quick
score, and they buy gold and silver for this reason without even taking the
time to truly understand the value of gold and silver. Those seeking a quick
profit from ownership of gold and silver typically fail to understand that:
(1) the true value of gold and silver is immutable and defined by its
weight in grams or troy ounces;
(2) that gold and silver should never even be priced in terms of
illegitimate fiat currencies; and
(3) during periods of time when fiat currency prices of gold and silver
drop, a dropping fiat currency price is only indicative of an incredible
opportunity to buy similar values (weights) of gold and silver while spending
less fiat currencies to do so.
As an example of this incorrect mindset, a the end of this past May, I
informed a couple of friends that gold was making a short-term low at about
$1200 and silver was doing likewise at $16. Because both PMs have risen
considerably in fiat currency prices since then, one of these friends
incredulously asked me at the start of this week if he should sell his gold
and silver because both PMs had moved significantly higher in such a short
time-span. In hearing this inquiry, I realized that he didn't understand the
number one reason to buy physical gold and physical silver in the first place
- the protection it affords all of us against Central Banker-induced global
currency rot.
Everywhere you look, there are stories from every continent in the world
regarding currency collapse and the hundreds of millions of lives ruined by
Central Banker-created currency rot. Of course, you will never hear of this
critical global issue promoted by the banker-bought-and-paid-for
mainstream media even though these unfolding tragedies should be front and
center on page 1 as these are critical stories of which everyone should be
aware. And because these stories are largely ignored by the
banker-bought-and-paid-for mainstream financial media, this is the number one
reason most people are shockingly unaware of the global currency rot that is
happening right now. Fortunately, with a tiny bit of effort and just a little
bit of research online, one can easily track down and uncover these stories.
If you haven’t been asleep for the last five years, if one knows nothing
else about this super important story of global currency rot, the main
story of currency rot everyone knows about is the rapid collapse of the
Russian ruble from about mid-2014 to the end of 2015. Since then, the ruble
has recovered slightly, but not enought to save anyone that stored large
amounts of their wealth in rubles during this time period. Many times, people
make the mistake of thinking that because their domestic currency has
only devalued slightly up until now, that there will always be time to exit
the currency and move to a sound currency like physical gold and physical
silver. Thus, they endlessly delay executing strategies they know they should
have executed at least a year ago, due to this “slow burn” that can be quite
deceptive. For example, from early 2012 to the end of 2013, over 2
years, the Russian ruble lost 3% of valuation against the US dollar, a “slow
burn” that tricked many Russians into remaining complacent about their faith
in an unsound fiat currency. And in the first 7 months of 2014, the ruble
lost another 3%. Again, many Russians were unhappy with the devaluation of
the ruble, but they felt as though they could live with such devaluation and
would take action if it became necessary, thinking they could front-run the
event, even though warning after warning and red flag after red flag in the
form of ongoing devaluations had already occurred that should have prompted
every ruble-owning Russian to convert their fiat currencies into the sound
money of physical gold that was far more stable. Then, while most Russians
were still ignoring all the previous warning signs from July to the end of
the year in 2014, the ruble fell off a cliff and collapsed, rapidly lost a
massive 50% in purchasing power, and unfortunately, for the
procrastinators, rapidly destroyed their savings in the process. In
other words, by the time the “event” happened for which Russians were waiting
to trigger action, it was already too late to act. What about those
that converted rubles to gold in mid-2013 because they had the foresight to
plan for the time in which Central Bankers would ruin the ruble fiat
currency? From mid-2013 to present day, their gold, priced in rubles, has
risen by about 120%, more than enough to preserve their purchasing power in
their home country and more than enough to help them avoid the fate of most
of their fellow countrymen that lost much of their life savings in a very
short period of time.
Though there are literally dozens more examples I can provide that are
comparable to the story above and I will provide one more example in this
article of a failing emerging market fiat currency, people that live
in industrialized nations tend to believe that there domestic currencies are
“safe” because they fail to understand that Central Bankers are ruining
currencies in every single country in the world today. They make a
huge mistake of thinking “I don’t live in an emerging market, and that
problem in Russia is an emerging market and third world country problem that
will never happen in my country.” They further mistakenly believe, “A
50% devaluation of my fiat currency in 6 months can never happen. That is a
problem of emerging markets and not industrialized, ‘modern’ markets.” Thus,
they mistakenly conclude, with great confidence, that the process of fiat
currency devaluation in their country will
be much less volatile, and therefore provide them with much more time to
react to the problem when it develops. In other words, they believe that
there is no need to plan because they can just react to warning signs in the
future without realizing that multiple red flags and warning signs are
already here. The free fall in purchasing power of the Ukranian hyrvnia, the
Russian ruble, the Venezuelan bolivar and the very significant 20% to 30%
devaluations of fiat currencies in several industrialized nations and dozens
of other emerging markets ARE the red flags for which residents of
industrialized countries are waiting, but have failed to identify.
Let’s use Canada as an example to make my point. No one ever thinks of
Canada as anything but a modern, industrialized nation that would not suffer
the same fiat currency problems as an emerging market country, and indeed, if
you are not Canadian, you may be entirely unaware of the real and very
significant struggles that have afflicted the Canadian dollar, or looney, in recent
years. Like the Russian ruble, for the past two years, the Canadian dollar
suffered some fairly significant swings in value against the US dollar but
nothing that concerned most Canadians, though these swings should have been
massive red flags to all Canadians of the already unstable nature of
the looney. In 2011, the Canadian dollar swung 5% higher and nearly 7% lower
from its starting point against the USD during the year but by year’s end was
nearly unchanged, so most Canadians did not believe there was any need to
diversify out of the Canadian dollar into a sound form of money like physical
gold. The following year in 2012, during the course of the year, more red
flags materialized as the volatility of 2011 continued, but again, the year
closed with the Canadian dollar nearly unchanged against the USD, so most
Canadians continued to ignore the massive red flag of currency volatility and
instability, falsely believing that they still had time to respond
reactively, instead of proactively, to the unstable Canadian dollar. However,
as was the case with the Russian ruble, the fall came quick and hard for the
Canadian dollar and in just 2-1/2 years, from mid-2013 to the end of 2015,
the Canadian dollar plunged by more than 30% against the USD. Again, for those
the Canadians that understood that Central Bankers are destroying fiat
currency valuations in ALL countries and consequently moved out of the
Canadian dollar intogold before this significant currency rot, their gold
appreciated significantly in Canadian dollars over this same time period,
helping to preserve one’s purchasing power, versus the substantial losses in
purchasing power one suffered if one had just held devaluing Canadian
dollars. If one needs to be reminded of how quickly a "strong" fiat
currency (an oxymoron of word association) can unravel, merely recall the
successful Brexit vote last month that caused the British
pound fiat currency to plunge to 31-year lows in a single day.
Next, let’s look at the currency disaster that has afflicted citizens of
Venezuela to provide a warning to everyone as to what they need to do to
preserve their wealth during the continuing great currency rot and worldwide
fiat currency collapse that is currently under way. In 2002, a USD could be
exchanged for 1.6 Venezuelan bolivars. In April of 2016, many media sources
reported that a dollar could be exchanged for more than 1,000 Venezuelan
bolivars on the Venezuelan black market. Here’s how such a steep and rapid
devaluation translates into real world problems. As of April 2016, Venezuelan
media reported that a one kg bag of rice cost two days of wages for the
average wage earner. And as of last month, the dailycoin.org reported that
the average Venezuelan worker, if they wished to buy a plane ticket to
leave the country to escape this massive currency rot, would need to save two
years of wages to purchase such a ticket! In other words, fiat currency
collapse has ruined the life of the average Venezuelan. But what about those
Venezuelans that took their cues from the currency rot events that had
already been unfolding all around them and exchanged their bolivars into
gold? Within the past 5-1/2 years, gold priced in Venezuelan
bolivars has soared by more than 444%, and this is just in terms of
“official” government-set forex rates, which due to multiple “official”
exchange rates, bizarrely range from 9 or 10 bolivars to several hundred
bolivars per dollar. However, because the black market rate, as of Q1 2016,
frequently reached in excess of 1000 bolivars per dollar, in essence, if one
had changed bolivars into physical gold in Venezuela, and then sold some of
this gold for US dollars to later be exchanged back into Venezuelan bolivars,
not only would one be totally unaffected by the collapse of the Venezuelan
bolivar, one would be prospering in such an environment of fiat currency
collapse simply by having had the foresight to exchange intrinsically
near-worthless bolivars into gold before the bolivar collapsed. And if no one
wants Venezuelan bolivars, which is quite common, then one still owns gold,
accepted as a universal money everywhere, or one can exchange gold into
another fiat currency that is accepted. With the Venezuelan bolivar, this
fiat currency is merely in the process of returning to its intrinsic value of
zero, as is the destiny of all fiat currencies. In case one believes one is
safe from our current orgy of Central Banker-induced fiat currency implosion
by holding US dollars, remember two points.
One, the strongest option among a bunch of bad options is not a good
option, and two, the destiny of all fiat currencies is to return to their
intrinsic value of nothing, including the US dollar.
As I’ve stated above, procrastination is the enemy of wisdom, as
procrastination in exchanging fiat currencies into sound money literally
translated into an extreme difference between financial suffering and misery
and financial prosperity in Venezuela today in less than a 6-year time span.
Who will be the next country to become the next Venezuela? Most likely it
will be another emerging market, but this probability does not negate the
likely probability that these same problems will find their way back home to
the industrialized nations that started these very problems as well (well, at
least to the nations of the Central Bankers that rule these industrialized
nations). And when it does, as we have all learned from the example of
Venezuela above, you will either be prepared for it before it happens or try
to react as it happens, but react too late, and be wiped out
financially.
The Central Banker destruction of all fiat currencies in every country
of the world today demands a proactive approach and a reactive approach will
fail.
The example of Venezuela has taught us that we all have been
provided ample and adequate warning to prepare for currency rot before it
truly escalates in our own nation, but that shockingly, only a few among us
will take the necessary actions to survive it when currency rot rapidly
escalates in our own country. Unfortunately, even those that see the
beginning and intermediate stages of what has happened in Venezuela happening
in their own countries, as is the currently the case in Canada, Australia,
the UK, Portugal, Greece, Italy, Spain, Ireland, Kenya, Brazil, and on and
on, likely will still ignore these red flags, simply because banker
propaganda has prevented most of us from realizing the simplest of solutions
– converting fiat currencies into the sound money of physical gold and
physical silver.
In other words, not only is it human nature to not believe something
can happen until it actually does happen,but it is also human
nature to incredibly discredit an event as it unfolds before us, as long as
it does not directly impact us significantly, until it invades our own
personal space, directly affects us and denial of the truth is no longer
plausible.
If you have read this article and are still skeptical, I urge you to study
the current cases of fiat currency collapse that have happened/ and are
happening right now in Venezuela, Russia, Mexico, Colombia, Argentina and
Brazil. Studying and understanding the timeline of these currency collapses
should truly awaken you to the very sobering probability of severe fiat
currency devaluation and/or collapse in your country, no matter where you
live. Please refer to our prior two articles, “Three
Charts that Show We’re Just Getting Started in the Second Leg Higher For All
Gold and Silver Assets”, and “Why
Intelligent Gold and Silver Mining Company CEOs are Deferring Sales of
Current Production” to gain a fuller understanding of the global currency
crisis.
To listen to a recent interview about where silver is heading, given by
our Managing Director, JS Kim, to the SGT Report, click here.
Click here to learn more about the best junior gold and silver mining stocks
in our Platinum
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