Mike Maloney with goldandsilver.com gave a webnair last Tuesday evening (9-16-09). I have complied my notes here in this post.
If you are not valuing your investments in terms of “real things”, then you will miss the biggest wealth transfer in history. You can use this information to know when to buy an investment now, and when to sell in the future. Learn and understand this concept. In the past 20-30 years, if you bought stocks or real estate, it probably went up in price and value. But now, those types of investments may go up in price, but not necessarily value. We will talk more about this later in the post.
Base money (M1) (bailout money) is stuck in the banks. When they decide to lend again (or are forced to by the government), this money will be multiplied 10 times. This flood of money will cause a hyperinflation and probably a currency crisis. It is also possible that the national debt will be 23% of GDP. In history, a currency crisis occurs with a 5% debt of GDP. It is possible that this scenario will occur 2010-2012….collapse of the dollar. The government will revalue the dollar (how, is still in question). When they revalue the dollar, all investments in dollars will be revalued as well (and probably not for your benefit). Calculating your investments in precious metals will provide consistency during this time.
Side musing: debt is when expenses are more than income at the end of the year. Deficit is the total debt over a period of years.
Both debt and deficit in the US are not pretty right now and calculated by the government in a very optimistic way.
DOW/gold ratio:
When the DOW (or S&P500, real estate, anything) is measured in terms of the number of ounces of gold (or silver), it takes to buy one share of the DOW, a value of 4 oz. is a fair value. Looking at the last 100 years, when there is a period of over pricing of the DOW (such as we had thru 2008), there is an overshoot on the downside. Mike expects the low in the DOW to be ½ oz. of gold. That means when it takes ½ oz. of gold to buy one share of the DOW, it is time to consider buying the DOW. However, many other things need to be considered at that time, such as are we in the middle of a currency crisis, is the government getting ready to revalue the dollar. Coming from the other direction, this means that if the DOW is $30,000 per share, gold should be $60,000. This illustrates how the cost of the DOW doesn’t necessarily mean value. These scenarios are possible in 2-5 years.
Right now, in Mike’s opinion, it is possible that gold will deflate or move sideways for a little while longer, before a large move up. He agrees with what I have been saying in this blog that gold at any price right now is cheap.
When you value the DOW and S&P500 against gold for the past 10 years, gold has gained 250% and the DOW has lost 25% and the S&P500 has lost 35%. But if you are looking at dollar cost, you may miss that truth.
This is what Mike means when he says this is a stealth, wealth transfer. The people have been fleeced of their money and no one knows it. This will get worse, not better with the continued printing of money. The dollar is a smoke screen for the fleecing of your money.
It is Mike’s opinion (and mine) that in light of this wealth transfer, physical gold and silver are the safest and easiest investments to own.
Mike covers fool’s gold as well. See this post for more information.
Some may say, this is a similar situation to the gold bull market of the 1970s. This is not the case, this is the run up to a currency crisis. There is at least 10 times the amount of investing money chasing precious metals this time around. China, Russia, India, and South America are now investing in this market, they were not involved in the 1970’s bull market. The internet has made a trader of the common man, creating a new dimension to this bull market. Today, there is 1/3 oz. of gold per person and 1/14 oz of silver per person. This is one reason, why Mike believes silver will do better than gold.
In the middle of the webnair, Mike invited a representative from the American Estate Trust, LC. I know nothing about this company…good or bad. But this sales pitch had some good information about how you might go about investing in physical gold and silver through your IRA/Roth IRA. This company hosts your IRA, there are flat fees to set-up and maintain. Some companies charge a percentage of the investment, so be careful. There are also storage fees for Brink’s at Salt Lake City.
Currently the tax on gains for physical gold is 28%. This high tax, I have never worried about. If I am doubling/tripling my initial investment, even with taxes, I am still beating the stock market. Some people may be concerned about the 28% tax, so a retirement investment may be a better option. Keep in mind that these tax percentages and structures could change at any time.
There will be a time when you should sell your precious metals and purchase stocks or real estate, because it is a better value. But if you calculate your investments in dollars, you may miss that opportunity.
If you wish to purchase precious metals from goldandsilver.com, there is a discount code (GSAET09) valid through 10-15-09.
Mike had a question and answer period as well. One bit of information that he has stated before: he believes that when 500 pieces of silver will purchase a single family home, that is the time to switch from silver to real estate. (Actually, Mike thinks it might be 50-60 oz., but the publisher would not let him put that in the book, it was too extreme.) Mike says he will always hold some precious metals. He also feels that real estate will fall 90% from the high when valued in silver. (See this website’s charts for more information.) From my research, I agree with Mike’s predictions.
This is a stealth, wealth transfer. Make sure your investments are on the winning side of this transfer. If you wait until it is “sexy” to own gold and silver, it will be too late.
Side musing: it looks like goldandsilver.com is going to have more in-depth education on the gold and silver market and the collapse of the dollar via a “university”. I urge you to sign up for their free email notifications (they don’t bombard you), in order to get this information in the future. Click here to sign up for free. I get nothing from the websites I link to. These are the tools/information I am using to navigate this crisis.
I have sworn upon the altar of God eternal hostility against every form of tyranny over the mind of man.” Thomas Jefferson
This fleecing of the American’s retirement savings and investments via the smoke screen of the dollar is a “form of tyranny over the mind of man”. Get educated about these concepts and preserve your capital.
This is HUGE folks… When the markets believed that foreign demand was increasing, foreigners were actually shying away from Treasuries (just as I said)! Which, if the market participants are thinking that as long as foreigners are “buying into our deficit spending” then the dollar will be on terra firma.
