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Have you ever
had any doubts about gold? Does it sometimes feel like it should be
performing better? Are you concerned about its volatility? Do you worry about
how it might perform in the future? Have you ever wondered about its true
purchasing power? Maybe you're nervous about a big drop in price again? I
decided to go directly to the source to address these concerns: Gold himself.
He put his arm around me and asked me to tell you a few things…
I hear that you've had some worries about me. I
understand. Your world is a very uncertain place right now. And when it comes
to money, it looks as though your leaders don't understand some basic
monetary principles, making things even more unsettling.
But I want you to know that the problems you're
experiencing are actually nothing new. I've seen these monetary, fiscal, and
economic difficulties many times before. And I can tell you this: you're safe
with me. That's a bold proclamation, but I've provided monetary protection
numerous times throughout history – too many to count, in fact. I've
served all kinds of people over the centuries, from kings and counts to serfs
and servants.
To put your mind at ease, let's review my core
characteristics, along with some history, to show how I can protect you
against the monetary danger that's likely to worsen in your near future.
We'll also take a look at your peculiar set of circumstances to see how I can
be of service. By the time we're done, I think you'll feel much better about
my ability to help your portfolio withstand whatever is thrown its way.
Enduring Characteristics
Let's start with the basics. I have some
characteristics that no other matter on Earth has…
I cannot be:
- Printed (ask a miner how long it takes to find me
and dig me up)
- Counterfeited (you can try, but a scale will catch
it every time)
- Inflated (I can't be reproduced)
I cannot be destroyed by;
- Fire (it takes heat at least 1945.4° F. to
melt me)
- Water (I don't rust or tarnish)
- Time (my coins remain recognizable after a
thousand years)
I don't need:
- Feeding (like cattle)
- Fertilizer (like corn)
- Maintenance (like printing presses)
I have no:
- Time limit (most metal is still in existence)
- Counterparty risk (remember MF Global?)
- Shelf life (I never expire)
As a metal, I am uniquely:
- Malleable (I spread without cracking)
- Ductile (I stretch without breaking)
- Beautiful (just ask an Indian bride)
As money, I am:
- Liquid (easily convertible to cash)
- Portable (you can conveniently hold $50,000 in one
hand)
- Divisible (you can use me in tiny fractions)
- Consistent (I am the same in any quantity, at any
place)
- Private (no one has to know you own me)
I am internationally accepted, last for thousands of
years, and probably most important, you can't make any more of me.
"Gold Is Money"
You've heard that statement before – but do you
know what it really means? Money is a medium of exchange and a store of value.
Almost anything can be used as money, but obviously some things work better
than others. It's hard to exchange things people don't want and other things
don't store value well. Over thousands of years, I have emerged as the best
form of money (along with silver).
The paper dollars in your wallet are technically a
currency, not real money. In other words, they are a government substitute
for money. The man you call Aristotle best defined the primary reasons why
I'm considered money: a good form of money must be durable, divisible,
consistent, convenient, and have value in and of itself.
- It must be durable because you can't have your
money disintegrating in your pocket or bank. That's why you don't use
wheat; it can rot or be eaten by insects.
- It must be divisible, which is why you don't use
diamonds or artwork; they can't be split into pieces without destroying
the value of the whole.
- The lack of consistency is why you can't use real
estate. One piece is always different from another piece.
- It must be convenient, which is why you don't use
other metals like lead. The coins would have to be too big to handle
easily to be of sufficient value.
- It must have value in and of itself. This is why
you shouldn't use paper as money.
- And one more thing: I can't be created out of thin
air. Not even the kings and emperors who clipped and diluted gold coins
used paper as money. Aristotle didn't include this in his list, but it's
vital.
So you see, there's no superstition here. It's simply
common sense. I am particularly good for use as money, just as aluminum is
good for making aircraft, steel is good for the structures of buildings,
uranium is good for fueling nuclear power plants, and paper is good for making
books. If you try to make airplanes out of lead or money out of paper, you're
in for a crash.
And by the way, don't fret about those who say I'm not
as good an asset as an income-producing vehicle. They misunderstand my role.
I'm not trying to be a stock, for example. My function is as money and a
store of value, so the proper comparison is to your dollars, or what you call
Treasury Bills (of similar nominal value). And here is where I excel and
serve my purpose: since 1913, the US dollar has lost 96% of its purchasing
power. I have lost none.
Remember, I am the only financial asset that is not
simultaneously someone else's liability. I don't require the backing of any
bank or government.
The History Lesson
Because I am eons old, I've observed something
throughout history that you may not be aware of: government fiat currencies
are a relatively new invention, and none has endured. Eventually, they have
all failed. Me? I've never been defaulted on or worth zero. Remember this the
next time you have any doubts about my long-term worth.
Another of my roles is to protect your purchasing
power. Here are a few examples of how my purchasing power has endured:
- During the time of Christ, an ounce of me
purchased a Roman citizen his toga (suit), a leather belt, and a pair of
sandals. Today, one ounce will still buy a good suit, a leather belt,
and a pair of shoes.
- In 400 BC, during the reign of King
Nebuchadnezzar, some scholars reported that an ounce of me bought 350
loaves of bread. Today, an ounce still buys about 350 loaves ($1,700
divided by 350 = $4.85/loaf).
- In 1979, my average price was $306.68. This bought
an average-priced full-size bed. Thirty-three years later, $1,700 would
still buy you a nice full-size bed (and then some).
You can rest assured that over time, I will hold my
value. And when you near the end of your life, you can pass me on to your
loved ones, knowing full well they will have something that cannot be
devalued, debased, or destroyed.
What Color Is Your Money?
Like you, I'm concerned about the current state of
fiscal and monetary affairs. It seems your government leaders have boxed
themselves into a corner. They've incurred too much debt
and are spending too much money. It's important that you
understand some lessons from history about this kind of behavior so that
you're certain of what I can do for you.
The common denominators that lead to the downfall of
every fiat currency are the two big Ds: debts and deficits. With that in
mind, consider the following:
- Morgan Stanley reported that there is "no
historical precedent" for an economy that exceeds a 250%
debt-to-GDP ratio without experiencing some sort of financial crisis or
high inflation. US total debt currently exceeds GDP by roughly 400%.
- Detailed studies of government debt levels over
the past 100 years show that debts have never been repaid (in original
currency units) when they exceed 80% of GDP. US government debt will
exceed 100% of GDP this year.
- Investment legend Marc Faber reports that once a
country's payments on debt exceed 30% of tax revenue, the currency is
"done for." By some estimates, the US will hit that ratio this
year.
- Peter Bernholz, a leading expert on
hyperinflation, states unequivocally that "hyperinflation is caused
by government budget deficits." Next year's US budget deficit is
projected to be $1.3 trillion.
The solution many of your leaders are pursuing is to create more currency units. Here's an updated picture of the
increase in the US monetary base vs. my rise in price since 2008, when your
problems starting surfacing.
The monetary base has grown 205.8%, while my price is
up 65.8%. This alone implies that my price in dollars is likely to climb much
higher.
This is also the reason why I'm not in a bubble, as
some have tried to claim. It is your central banks and bond markets that
are in a bubble. The fact that my price is rising is a warning that what
your leaders are doing is unsustainable and potentially dangerous to your
currency.
Think about this: the US has debt backed by debt, based
on debt, dependent on debt, and leveraged with debt. You can, for example,
buy a bond (i.e., lend money) on margin (i.e., with borrowed money). This is
not a sound way to run financial markets.
Meanwhile, the warning bells continue to sound
regarding Europe's debt crisis. In just the past 30 days:
- Moody's cautioned that it may cut the triple-A
status of France, Austria, and the UK; and it downgraded six other
European nations including Italy, Spain, and Portugal.
- Standard & Poor's cut the triple-A status of
France and Austria, while Italy, Spain, Portugal, Cyprus, Malta,
Slovakia, and Slovenia were downgraded.
- Fitch downgraded Belgium, Cyprus, Italy, Slovenia,
and Spain, and stated there was a 50% chance of further cuts in the next
two years.
- Standard & Poor's downgraded 34 of Italy's 37
banks.
- Moody's warned just last week that it may cut the
credit ratings of 17 global financial institutions and 114 European
ones.
The European crisis is far from over; and the path of
least resistance for politicians is to create more currency units. This
action can and will have clear and direct consequences: currencies will
devalue, and inflation – perhaps hyperinflation – will result.
Once again, I encourage you to use me to protect some
of your wealth.
How Much Is Enough?
Given the state of your monetary system, you should
accumulate me (and silver) on a regular basis. Just buy some every month and
put it in a safe place. After what I've witnessed throughout history, and
based on the current path your government leaders insist on pursuing, I
suggest using me as your savings vehicle instead of putting dollars in a
bank.
If you don't own enough of me when these fiscal
troubles really accelerate, I fear you will regret it. I've warned many in
the past about the dilution of nations' currencies, and those who didn't heed
my warnings experienced severe financial pain. Excuses won't pay the mortgage
nor feed the family when the effects of currency debasement hit your home and
pocketbook.
Make sure you own enough of me to make a difference to
your portfolio. This means having more than a couple coins or a few shares of
GLD, the latter of which is only a proxy for my price.
How do you know if you own enough? Ask yourself:
• If inflation returns, or even hyperinflation hits…
• If the economy is flat…
• If uncertainty and fear continue around the globe…
• If stock markets languish…
• If the amount of spending from the world's governments proves
futile…
• If government interference in the economy continues to
increase…
• If the value of the US dollar takes a major fall…
• If the world enters a recession or depression…
• If you wonder if you have enough "safe" money…
… would you feel that you own enough of me?
Buy a sufficient amount so that as your currency
continues to lose value, your portfolio won't. If you do your part, I promise
I'll do mine.
Your monetary friend,
Gold
[Now that you know the truth about gold, how do you
start buying it and investing in it? Download this free report to get the answers and get started today.]
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