We are going to go over some signs that the US dollar is doomed and then we are going to discuss gold confiscations. I hope that we never see that in this country again, but we have seen it before so I think it’s worth a small discussion.
I was going to read an article from the economic collapse blog talking about 15 signs that the economy is getting worse in 2013, but I decided not to beat a dead horse on the show today. We all know that youth unemployment is way up and that the middle class income is way down and we know that inflation is getting worse, we can see that when we go into the grocery store or when we pump gas. So I decided to skip that article today.
Now before I get into that and into today’s metals pricing, I asked a question to you listeners on Monday. The question was, would you rather own silver or gold? I got quite a few responses and I just wanted to go over a few of those before we get started.
First we had a few responses on Facebook.
Maryellen said both.
Chris said Gold preserves your wealth and silver will make you wealthy.
I really liked that one and I couldn’t agree more.
Jim said Silver. Dump it off when it nears $60 an oz.
Then on YouTube we had a couple comments as well.
Silver premium is lower per ounce, hence more bang for your buck. Also silver is up and down a lot in the year giving you better buying opportunities to purchase low and sell high.
I go with silver because the ratio will close in the future.
Those are great comments and very interesting. Thank you for taking the time to leave those thoughts and comments.
My question to you today is not which precious metal do you prefer to buy but, why do you buy gold and silver. Is it because you just like to collect it for numismatic purposes or because you hope to make a profit from it or are you like me, and you just want to hedge against inflation? Please leave your feedback on our Facebook page, YouTube comments or you can email me your response at vaultcast@silvertowne.com.
Now let’s get into today’s precious metals pricing.
Gold - $1693.90 down $17.54
Silver - $32.72 down $0.73
Platinum - $1606.00 down $24.00
Palladium - $673.00 down $14.02
Financial News:
More Statistical Evidence That The US Dollar Is Doomed
The magazine The Economist has just issued their annual economic review, this year titled The World in 2013. The issue does cover a number of social and political issues. Among the highlights are individual forecasts for economies of 79 of the larger nations.
A commonly repeated observation in issues of The Economist is that nations whose governments run budget deficits of 5% or more of Gross Domestic Product (GDP) for multiple years are not sustainable. Either the government fails, or the economy crashes, or the currency collapses.
Sadly this review forecasts that governments of 16 of the 79 nations will run budget deficits of 5% or more in 2013. Here is the list.
Nation Forecasted 2013 Government Budget Deficit As A % Of GDP
Egypt -11.2% Jordan -11.0% Japan -8.2% Ireland -8.2% United Kingdom -7.8%
Sri Lanka -6.9% Lebanon -6.8% Morocco -6.7% Venezuela -6.7% United States -6.6%
Spain -6.3% Kenya -6.1% Iran -5.9% Pakistan -5.7% Greece -5.4% South Africa -5.0%
Keep in mind that these projected budget deficits are calculated on a cash flow basis rather than the more accurate accrual basis of accounting that large privately owned companies are required to use. The accrual basis American budget deficit is likely to again exceed $5 trillion in 2013 instead of the cash flow deficit of just over $1 trillion. Therefore, the actual US Federal government deficit in 2013 will actually be at least 25% of GTP and may exceed 30%.
Obviously, that insane size of a budget deficit indicates that the US government, or the economy, or the US dollar is destined to collapse in the not too distant future. Perhaps all three will fail. The US government, on an accrual basis, currently spends about $7.5 trillion per year, as calculated and reported by USA Today in May 2012. In order to reduce spending to equal revenues, the federal government would have to cut expenditures by 70%. Read More...
Gold Confiscation: Lessons from the 20th Century
TODAY’S chatter in the trading rooms says some gold owners fear a punitive US tax hike in New Year 2013, with the Obama government targeting precious-metal investors.
Hence this month’s sell-off (or so the tittle-tattle says) – akin to the move by Japanese households to sell gold in late 2011 ahead of new reporting rules for precious-metals dealers.
In truth, such a US move looks very unlikely. Ahead of needing cross-party support to fix both the fiscal cliff and debt ceiling disaster, it would be clearly partisan. (Not all US gold investors are Republicans, but very few are Democrats in our experience.) And besides, gold already attracts the higher 28% rate of capital-gains tax in the US, since it is deemed a “collectible”. Easier to raise CGT rates across the board, and whack anyone trying to grow their savings in fair measure. It would raise far more revenue, too.
Still, this chit-chat does highlight a key point about gold – the fact that, within living memory, it got special ill-treatment from government everywhere. Western households were blocked from owning gold bullion for 30 years and more after the end of WWII. Over the 20 years previous, their gold had been variously nationalized, compulsorily purchased and stolen.
Not just investment-grade bullion and not just gold belonging to private citizens either.
1935: Mussolini nabs 35 tonnes of gold wedding rings
The United States “confiscation” of 1933 is well-known (in fact a compulsory purchase, made at the then-price of $28 per ounce before the price was raised to $35.) But with gold still central to the monetary system, many governments were looking to acquire more. With a smile, of course.
December 1935 saw popular Fascist dictatorBenito Mussolini appeal to the patriotism of Italy’s wives, urging them to swap their gold wedding bands for steel rings instead. Yes, really. On Wednesday the 18th, La Stampa gave over its entire front page to this financing drive:
1939: Nazi Germany steals Czech gold in London
You didn’t need to be a private individual, nor keep your gold at home, to lose precious metals in the 1930s. Little-recalled today, the Nazis’ theft of Czechoslovakian gold reserves caused such fuss in the British press in mid-1939 that the public was fully prepared for war by the time Germany invaded Poland in September.
1966: Britain starts prosecuting gold-coin investors
Two decades after the war ended, and 35 years after Britain quit the Gold Standard, its politicians were busy meddling with gold investment. Because the Pound was falling on the currency markets. So people were buying gold, sending money overseas to buy it and so hurting the UK’s already terrible balance of trade. Thereby hurting the Pound yet again.
The moral of these tales? Because gold is no longer central to the world’s monetary system, so-called “confiscation” looks a very 20th century phenomenon today. But that may well change. Exchange controls such as Britain had in the 1970s (and which Italy didn’t lose until 1999) are more likely. Because people, like governments, want to own gold when they fear inflation, financial strife or political crisis. Holding it at home could expose them to theft or coercion. If they hold it safely at arm’s length overseas, even a secure democratic jurisdiction requires clear ownership if you are retain control.
Be sure to get it if you’re thinking about buying gold any time soon. Read More...
I don’t know what the future holds my friends. I’m really trying to remain optimistic and I believe that it’s unhealthy to spend to much time worrying over a future that we can’t possibly know. I do however believe strongly that history repeats itself. Mostly because we can review history and watch the same things happening over and over. Historically people who have owned gold and silver have faired much better during economic challenges then those who did not.
Thanks for listening to the Silvertowne vault cast. You can find our show on YouTube and I would love it if you would subscribe and as always our show can also be found in the iTunes store.
If you’re looking for great Christmas gift ideas then check out SilverTownes selection of Christmas coins and more. SiverTowne is currently offering a 12 days of Christmas special that you might want to check out as well.
For the best source for acquiring gold and silver please contact Silvertowne at 1-877-477- coin, that’s 1-877-477-2646 or you can visit us at www.silvertowne.com. Silvertowne has been a trusted precious metals and numismatics dealer since 1949.
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[Disclaimer] Shawn Ozbun is not a licensed financial adviser, there is risk associated with all investment including gold and silver. You should seek advise from a licensed financial expert before making a purchase.
