Podcast

James Turk: Gold Is Our Defense Against the Fiat Currency Graveyard

Tuesday, July 12, 2011, 10:44 AM

“The rule of law has basically been thrown out the window. Moneyprinting is the order of the day. And when politicians take control of central banks, which they have done in the United States and they are also doing in Europe, that basically destroys the currency. It puts the currency on the road to what I call the Fiat Currency Graveyard, so I expect there are going to be massive currency problems as we go forward. The financial crisis that we have been dealing with for the last several years has not been solved.”

So cautions James Turk, widely-respected precious metals expert and founder/chairman of GoldMoney. In this detailed interview (recorded in June), Chris and James explore the probable outcome of the current US debt-ceiling operatics, the likelihood of future Fed money printing, and strategies for preserving wealth. In short, James believes we are witnessing the decline of the world's major fiat currencies and expects gold to be remonetized in the aftermath.

James explains why he expects:

  • The US Government to raise the debt ceiling in August, which will require the Federal Reserve to print more money in order to soak up the new debt, sending gold and silver prices much higher this summer.
  • Holders of fiat currencies to experience increasing losses in the purchasing power of their wealth, contrary to those who hold precious metals, who will see the reverse.
  • This pattern of currency devaluation to be similar to the many other examples seen throughout monetary history. In short, the “unthinkable” event of a dollar collapse is a much more probable event than most consider.
  • Precious metals to be an excellent vehicle for preserving purchasing power through this next transition, and whatever future currency emerges, their historic role as money to be restored.
  • The end of the bull market in precious metals is years away. We’ll know its ending when holders of PMs begin trading them for other assets (e.g., property, securities) that have become overly undervalued.

Click the play button below to listen to Chris' interview with James Turk (runtime 49m:11s):

You are missing some Flash content that should appear here! Perhaps your browser cannot display it, or maybe it did not initialize correctly.

Download/Play the Podcast
Report a Problem Playing the Podcast

Or start reading the transcript below:

Chris Martenson:  Welcome to another Chris Martenson.com podcast. I am your host of course, Chris Martenson. And today we have the distinct privilege of speaking with James Turk, founder and chairman of GoldMoney which offers investors an easy and inexpensive online solution for buying precious metals with international storage options. James is one of the foremost authorities on precious metals and has long offered market forecast commentary including co-authoring The Coming Collapse Of the Dollar and How to Profit From It, with our good friend, John Rubino, of DollarCollapse.com. He has built his career on decades of experience in international banking and finance spending many of those years living outside of the US, which gives him a critical advantage to look at our economy with an outsiders eyes. I am really delighted to have you here, James, and I have a tall stack of questions prepared for you. Are you ready to dive in?

James Turk:  I sure am, Chris. It is a pleasure to speak with you.

Chris Martenson:  The pleasure is mine. So, short-term, what I’m really interested in here is to start diving into where gold is going to go short-term. Where do we buy gold? Do we buy it now? Over the short-term people are very concerned about the price of gold and where it’s at and where it might be headed. So with QE2 ending here at the end of this month – we are in June right now – how do you expect the precious metals to be impacted?

James Turk:  Well I think the precious metals are going to do quite well this summer. And I don’t agree that QE2 is going to end in June. It may “end” in June, but it is not going to end on August 2nd because on August 2nd the US government is going to increase its spending limit probably by $2 trillion and the Federal Reserve is going to have to step in and start buying some of that government debt and run the printing presses again with all this new money creation. And I think that is what is going to light a fire under both gold and silver this summer. 

Chris Martenson:  So you are of the view that QE whatever, 3, is a done deal because they are in something of a box. The federal government has enormous borrowing needs and you are of the opinion that really without the Federal Reserve being there, there is insufficient buying power for all the borrowing needs they have?

James Turk:  Yes that’s exactly right. Look at what has happened since August of 2010 when the Federal Reserve announced QE2. During that period of time, up to the present, the US Government debt has increased about $900 billion, about $500 billion of that has been purchased by the Federal Reserve. What is happening is that the US Government is spending so much money it is forcing it to borrow more money than the market is willing to lend to it. When that happens, only two things can happen: spending has to be cut back or the Federal Reserve steps in and buys that government debt and turns it into currency. And that is what QE is all about. This policy of buying government debt is going to continue once the debt limit is increased on August 2nd. Maybe the Federal Reserve will claim victory and say that they will stop QE on June 30th but the reality is it is only going to happen until the debt limit increase is approved. And I do believe at the end of the day, despite all the posturing we are seeing now Congress and the President are going to approve a $2 trillion debt increase by August 2nd

Chris Martenson:  So really we are talking about July as a possible pause. And I have my concerns about that because we are looking at the data here for the first week in June roughly and what I’m seeing is a lot of weakness out there. The Fed’s so-called mandate around employment, around economic growth, there is a lot of weakness in that data right now. So you are of the opinion that QE if it does pause will only maybe for a month. 

James Turk:  Yes, maybe for a month unless Congress finally chooses to act sooner than August 2nd, although I don’t expect that to happen. It is really just a question of numbers and mathematics, Chris. The US Government has to stop spending so much money or the Federal Reserve has to come in and turn that government debt into currency, those are the two alternatives. And I don’t see any discipline or intent by Congress to stop spending.

Chris Martenson:  Yes, everything they have done so far is a bit of a dog-and-pony show without much substance; $30 billion, $90 billion. Please, that is meaningless at this point. And when we go over to the other side of the pond, we see that Europe also has just extraordinary funding needs right now. They are using all sorts of fancy terms for a Greek default which will probably be the first of several shoes. But when you add it all up, it looks like there is, again, enormous funding gaps there and the need for a massive amount of liquidity. What is your view of Europe then? Is Europe going to print? The ECB – are they too in a box or will they actually go for austerity and allow the chips to fall where they lay?

James Turk:  No, they have been printing all along and, in fact, I think they are going to continue to print as well. You know, the turning point here in Europe was last May, May 2010, when the politicians got together when the Greek crisis sort of erupted and became quite serious. And on Monday morning after the politicians met, Mr. Trichet, the President of the European Central Bank, said that he is going to start buying Greek bonds, despite his pledge not to buy sovereign debt of any country. And despite the fact that it is against the EU Constitutional Principals for the ECB to be buying and sovereign debt. You know, the law is basically just being ignored. It is being ignored by 13 of the 16 Euro-zone countries who have debts exceeds 3% of – deficits, excuse me – 3% of GDP. So the rule of law has basically been thrown out the window. Money printing is the order of the day. And when politicians take control of central banks, which they have done in the United States and they are also doing in Europe, that basically destroys the currency. It puts the currency on the road to what I call the Fiat Currency Graveyard, so I expect there is going to be some massive currency problems as we go forward. The financial crisis that we have been dealing with for the last several years has not been solved.

Click here to read the rest of the transcript.

Note: listeners interested in the conclusions expressed within this interview will also want to read Chris' recent report on The Screaming Fundamentals For Owning Gold And Silver, which takes a deep dive into the data behind the supply and demand imbalances in the bullion markets.


James Turk is founder and chairman of GoldMoney which offers investors an easy and inexpensive online solution for buying precious metals with international storage options.

James is one of the foremost authorities on precious metals and has long offered market forecast commentary including co-authoring The Coming Collapse Of the Dollar and How to Profit From It with John Rubino of DollarCollapse.com. He has built his career on decades of experience in international banking and finance spending many of those years living outside of the US.


Our series of podcast interviews with notable minds includes:

Related content

37 Comments

h2oBoy's picture
h2oBoy
Status: Bronze Member (Offline)
Joined: Jun 18 2009
Posts: 52
Taxation on gold appreciation

I've heard and read about the various aspects of of owning gold and silver, however, I have not seen much on if the appreciation will be, or be able to be, taxed. I currently have the majority of my gold/silver in miner stocks and coins in my Roth. The cost of buying gold American Eagles is more, however not paying taxes on the appreciation seems to me to be the better way to go. I am able to take possession of them any time I choose, though they would then become outside of my Roth. Are there any thoughts regarding this strategy or any others?

Johnny Oxygen's picture
Johnny Oxygen
Status: Diamond Member (Offline)
Joined: Sep 9 2009
Posts: 1441
Electronic Gold Transfer

Great Interview.

Thanks Chris.

In regards to electronic gold transfer as a way to conduct transactions; something tells me this could be electronically manipulated rather easily. Wouldn't this put us back into the same position we are in now if enforcement was lacking in proof of physical ownership?

PastTense's picture
PastTense
Status: Bronze Member (Offline)
Joined: Dec 13 2010
Posts: 47
"And when politicians take

"And when politicians take control of central banks, which they have done in the United States and they are also doing in Europe"

I completely disagree; the situation is in fact the reverse: Wall Street and the big banks control both the central banks and the politicians.

rhare's picture
rhare
Status: Diamond Member (Offline)
Joined: Mar 30 2009
Posts: 1271
Price to buy buillion

In the interview James Turk talks about the price to buy physical bullion being in the 7-8% range unless you are buying 400 oz bars where they charge 2.5%.  You can get a lot lower than that buying 25oz at a time from Tulving.  You can buy a kilo bar (32+oz) at $2 over spot.  That  0.12%.  You can get eagles at under 4% over, and 1oz bars at 1.3% over spot.   You just have to shop around - but paying 8% unless your buying a single coin would seem to be really high.  Of course then you have costs associated with storage....

Nacci's picture
Nacci
Status: Silver Member (Offline)
Joined: Apr 22 2009
Posts: 194
PastTense wrote: James Turk

PastTense wrote:

James Turk wrote:
And when politicians take control of central banks, which they have done in the United States and they are also doing in Europe

I completely disagree; the situation is in fact the reverse: Wall Street and the big banks control both the central banks and the politicians.

PastTense's comment is spot on.  Did Turk misspeak?  If not I would like to see this peculiar view followed up on.

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
shipping gold?

rhare wrote:

You can buy a kilo bar (32+oz) at $2 over spot.  

Just curious.  How do you plan to ship that kilo bar when the time comes to sell?

rhare's picture
rhare
Status: Diamond Member (Offline)
Joined: Mar 30 2009
Posts: 1271
By armored bicycle messanger of course!

ao wrote:

Just curious.  How do you plan to ship that kilo bar when the time comes to sell?

I actually wouldn't buy kilo bars unless I had a whole lot of money to put towards PMs.  I was just pointing out that the prices James Turk was quoting seemed a bit high.  Even the smaller 1oz coins/bars are a lot cheaper than he quoted, and I think a better deal in a blackmarket/flee the country situation.  Although a couple kilo bars might be appropriate to buy a house or farm. Smile  I think I've already shown where most of my funds went, solar!  Which is paying off quite nicely already.  My gardening attempts have so far been less than successful.   I've heard you can't kill mint, but that's wrong..... Frown

Marteen's picture
Marteen
Status: Bronze Member (Offline)
Joined: Sep 29 2010
Posts: 40
what about the masses

Considering that only 2% of the population has some gold or money to spare to buy gold this system is just for a limited number of people.

What about the masses?? and how do you want to pay your taxes?? 

There are also many other ways of exchanging goods and services like local currencies.

I see gold still as my back-up plan or better as an insurance policy.

Marteen

thc0655's picture
thc0655
Status: Platinum Member (Offline)
Joined: Apr 27 2010
Posts: 584
rhare

You killed mint?  That is probably a marketable skill itself!  I know we would've paid $20 to have you kill ours in the garden we had 30 years ago...

DonnyCMU's picture
DonnyCMU
Status: Member (Offline)
Joined: Jul 13 2011
Posts: 1
Gold? Bitcoin would be a good alternative

Assume the meltdown, and people resort to gold as a better store of wealth and medium of trade....

..... How are you gonna buy lunch with a bar of gold?

There's this decentralize digital currency called Bitcoin. It's an open-source project.

- Owned by no organization (open source, transparent)

- give 100% control of ownership

- completely secure and anonymous

- can not be shut down (it's decentralized peer-to-peer network)

It's the hot new thing right now. Google it.

rhare's picture
rhare
Status: Diamond Member (Offline)
Joined: Mar 30 2009
Posts: 1271
Bitcoin versus Metals

DonnyCMU wrote:

- completely secure and anonymous

- can not be shut down (it's decentralized peer-to-peer network)

"Completely secure" - that would explain what occurred at MtGox.  Granted this was an exchange being hacked but it shows things can happen.  Also, anything that requires a robust interconnected network is at risk.

Anyway, here are a couple of interesting articles:

Of course there are quite a few "bitcoiners" who think Doug Casey doesn't get it, is just pushing gold, and is old. Undecided

For me, I look at Bitcoin as an interesting alternative currency, which I think there should be many to compete against the fiat currencies we have now (of course Bitcoin is fiat).  I don't see that it offers any advantage over metals, and there is significant risk with anything software/network based. While I might consider using Bitcoins for small day-to-day holdings and transactions, I would not risk any significant amount of wealth using it as a wealth storage mechanism.

rhare's picture
rhare
Status: Diamond Member (Offline)
Joined: Mar 30 2009
Posts: 1271
All plants fear me!

thc0655 wrote:

You killed mint?  That is probably a marketable skill itself!  I know we would've paid $20 to have you kill ours in the garden we had 30 years ago...

Yes, the funny thing, the stuff growing wild outside - doing okay, the stuff I planted in a pot indoors - dead.  So clearly it is my care that took it out.  I've also done well at killing thyme, oregano, and rosemary!  I'm the Grim Reaper for plants. Surprised

Angel of Death

SingleSpeak's picture
SingleSpeak
Status: Gold Member (Offline)
Joined: Dec 1 2008
Posts: 430
It's the hot new thing right now.

DonnyCMU wrote:

Assume the meltdown, and people resort to gold as a better store of wealth and medium of trade....

..... How are you gonna buy lunch with a bar of gold?

There's this decentralize digital currency called Bitcoin. It's an open-source project.

- Owned by no organization (open source, transparent)

- give 100% control of ownership

- completely secure and anonymous

- can not be shut down (it's decentralized peer-to-peer network)

It's the hot new thing right now. Google it.

DonnyCMU,

Welcome to the site. Bitcoin has been discussed in "The Screaming Fundamentals for Owning Silver and Gold" and other threads on the site. You probably were not aware of that, but as a new member that's understandable. Many new members can't wait to share their favorite "hot new thing" on this site and at some point someone might actually do it, but usually if you search for your topic, there is already plenty of discussion about it on past threads. I'm not trying to pick on you but actually just giving a heads-up to you and new members in general. 

..... How are you gonna buy lunch with a bar of gold?

How are you going to buy lunch with bitcoin? If you transfer it to the restaurant's bitcoin account, assuming they have one then fine. But, you could transfer your gold to their Goldmoney (or equivalent) account (within 4 cent increments) assuming they have one also. I have nothing against people using bitcoin or any form of money that they prefer, but don't assume that to use gold you always have to use bars.

     SS

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
hot new thing = lemming magnet

DonnyCMU wrote:

..... How are you gonna buy lunch with a bar of gold?

I won't.  I'll buy it with a small piece of silver. 

Everything you stated about Bitcoin is the reason I will pass on it, especially it being "the hot new thing".  Buying into "the hot new thing" is almost never a good idea.  No thanks.  

gregroberts's picture
gregroberts
Status: Diamond Member (Offline)
Joined: Oct 6 2008
Posts: 1024
How are you gonna buy lunch with a bar of gold?

plato1965's picture
plato1965
Status: Platinum Member (Offline)
Joined: Feb 18 2009
Posts: 615
Do not arouse the quivering lip of the Bernank !

Doug's picture
Doug
Status: Diamond Member (Offline)
Joined: Oct 1 2008
Posts: 2747
BIS gold

Here's an interesting tidbit I ran across:

http://www.blanchardonline.com/investing-news-blog/econ.php?article=2873

Quote:

July 8, 2011

"My perception is there's less and less gold being put out by the central banks into the gold market," banker says

Central banks have pulled 635 tonnes of gold from the Bank for International Settlements in the past year, the largest withdrawal in more than a decade.

The move, disclosed in the BIS's annual report, marks a sharp reversal from the previous year when central banks added to deposits of gold at the so-called "bank for central banks" rather than lending it directly to the private sector amid growing concerns over counterparty risk. ...

"My perception is there's less and less gold being put out by the central banks into the gold market," said one banker.

Read Article

To read article requires FT subscription.  I suspect a reversal of a 10 yr trend of CBs depositing gold at the BIS is meaningful, but I'm not sure exactly what it means, aside from increased insecurity everywhere.

Doug

robbie's picture
robbie
Status: Bronze Member (Offline)
Joined: Jul 16 2008
Posts: 91
Tulving cheapest seller? and Eagle/maple question

rhare wrote:

In the interview James Turk talks about the price to buy physical bullion being in the 7-8% range unless you are buying 400 oz bars where they charge 2.5%.  You can get a lot lower than that buying 25oz at a time from Tulving.  You can buy a kilo bar (32+oz) at $2 over spot.  That  0.12%.  You can get eagles at under 4% over, and 1oz bars at 1.3% over spot.   You just have to shop around - but paying 8% unless your buying a single coin would seem to be really high.  Of course then you have costs associated with storage....

I agree. I've looked at all of the preferred web sites CM recommended in his gold buying primer and have solicited the names of other dealers (thank you fellow members), but have yet to find a better price on any denomination of gold or silver coin at or above the minimum 20 coin purchase level. Overnight shipping is included and a $15.00 wire credit is applied. There is a 2-5 day delay before overnight shipping, lesser with gold. I've made mock purchases at several different times over the month and still find the commission to be always below that of the competition (APMEX + at least 8 other sites), albeit sometimes by only a few dollars.  Has that been the experience of others? I realize there are many high quality dealers with excellent customer service that people are comfortable with, but if the sole goal is to accumulate ounces at the lowest possible price from a reputable company with insured door to door delivery, wouldn't Tulving be the clear favorite for larger (20 coins or greater) orders?

Also, looked for answers to the following questions on the site but have not been successful. Hope someone can field them here.  I understand the real and potential headaches associated with buying large denomination silver or gold bars, etc. as ao and others have mentioned. For those considering 1 oz coin purchases for an IRA, why pay more for gold and silver eagles when maples are cheaper and can be carted across the northern border tax free if necessary? Softer metal seems irrelevant if these are going to sit in a vault. And....if the dates are mixed and the coins are not in mint-sealed 2011 boxes, should I care? Why would it be about anything other than weight with non-numismatic coins? The differences in cost are not insignficant.

I'm sure I'm missing something since people seem more than willing to pay a premium for shiny new harder coins.

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 1499
Tulving

Hi Robbie,  I have dealt with Tulving and had a good experience.  My philosophy with the coins is a little different than most... I don't sweat the premium, as long as I am getting the best deal possible for the item of interest.  What I want is absolutely, readily identifiable, totally liquid forms of PM coinage in no larger than 1 oz denomination.  On the Gold front, I have therefore collected mostly US Gold Buffalos, since they come in plastic laminated mint sheets (of 20) that can be cut up into squares... each square retaining the mint stamp.  I also bought a few of the (rare) Canada .99999 pure Maples, just for the unique package each one comes in (attesting to ppm-level purity assay).  My last purchase of an individual Buffalo from Gainesvillecoins.com was actually a slabbed MS-69 grade... and I think I paid only $69 over spot.  Again, the slabbing attests to the authenticity better in my mind than having a loose coin.  If the SHTF and I need to use some of my coins to get my needs met... I don't want there to be any questions about their authenticity.  Just my 2 cents....  

kron's picture
kron
Status: Member (Offline)
Joined: Mar 10 2008
Posts: 13
Chris' ratio for deciding when it is time to think about selling

Chris,

during the conversation you mentioned a ratio you use as an indicator that it may be time to think about selling pm holdings.  I don't think you actually got back to it and told us what that ratio is.

Thanks -- very interesting stuff

sundarb's picture
sundarb
Status: Bronze Member (Offline)
Joined: Jan 10 2011
Posts: 72
PastTense wrote: "And when

PastTense wrote:

"And when politicians take control of central banks, which they have done in the United States and they are also doing in Europe"

I completely disagree; the situation is in fact the reverse: Wall Street and the big banks control both the central banks and the politicians.

Well, it is a symbiotic relationship. Congress authorizes bailing out the big banks, thereby privatizing profits and spreading the losses to public. Federal Reserve keeps the interest rates low artificially so that Congress can continue to spend beyond its means.

I think what Turk is referring to here is that a central bank that favors politicians' unreasonable policies is unsustainable, by definition.

Second Hand Lion's picture
Second Hand Lion
Status: Member (Offline)
Joined: Jul 14 2011
Posts: 1
Using Gold (or Silver) as a medium of exchange

Maybe I am the dense one here, but I read comments on How are you going to buy your lunch with an ounce of Gold? and other very limited remarks as such. I have used silver on day to day transactions with private indivuals. I purchased two chickens that at auction would have cost $27FRN, but I offered them90 cents in pre-1964 silver coins (2-Quarters and 5-Mercury dimes). If you are limited in thinking only in terms or kilos and ounces then you do not really understand the paradigm shift amoungst people already using gold and silver as a currency or medium of exchange. I had a friend that purchased a used pick up truck for his farm for one ounce American Eagle. Great deal for him since he had paid $600 years ago for the ounce, but the price tag on the truck was $1400FRNs.

As for taxes on the appreciation of exchanging gold/silver for goods and services, or exchanging them for FRNs, I will only ask this, can I claim a loss on the devaluation of my FRNs in savings due to massive printing by the FED? No? Then I don't plan on reporting the "appreciation" of my gold and silver holdings. I see no current vehicle for the IRS to even track or report such activities.

When you start holding the actual physical gold and silver and stop being a Gold/Silver paper whore then you will start to understand true freedom.

plato1965's picture
plato1965
Status: Platinum Member (Offline)
Joined: Feb 18 2009
Posts: 615
Nacci's picture
Nacci
Status: Silver Member (Offline)
Joined: Apr 22 2009
Posts: 194
Tea leaves on when to buy

James Turk wrote:
 This policy of buying government debt is going to continue once the debt limit is increased on August 2nd.  I do believe at the end of the day Congress and the President are going to approve a $2 trillion debt increase by August 2nd.

To me this is the most salient point of The turk interview and this is how I understand it from the perspective of someone who is looking for another buying opportunity in PMs; the debt ceiling will be raised, the government will begin to borrow $2 Trillion right off the rip, there will not be enough buyers for this debt so the Fed will have to step in to buy it.  This will be inflationary and drive up PMs, it is being priced in as we speak.  

I have been waiting on the buy call from Chris but this scenario rings true to me.  It looks like the train may have left the station.  Any thoughts?

thc0655's picture
thc0655
Status: Platinum Member (Offline)
Joined: Apr 27 2010
Posts: 584
The silver train

Nacci wrote, "I have been waiting on the buy call from Chris but this scenario rings true to me.  It looks like the train may have left the station.  Any thoughts?"

I too have been waiting for a big dip in gold/silver (to at least as low as $30/oz for silver) to make a purchase.  It may yet drop back down there between now and Oct., but I made my purchase Tues based on some things I was seeing/hearing that Chris hadn't mentioned.  I bought at $35.80 spot on Tues, and Fri night I Iook like a minor genius as it's over $39.  It does feel like the train has left the station this evening.  Let's see if I feel just as smart later....  If I'm lucky that big dip will hold off until Oct or later and I can buy in again.

SagerXX's picture
SagerXX
Status: Diamond Member (Offline)
Joined: Feb 11 2009
Posts: 2115
Nacci, thc:

I expect one more meaningful dip in PMs before the big rip. But timing, duration and bottom unknown. I was bugging my brother to get in under 1500 a few weeks ago but I don't think he did. Here's hoping he will when the next dip arrives... Viva -- Sager

dps's picture
dps
Status: Martenson Brigade Member (Offline)
Joined: Jun 27 2008
Posts: 442
SagerXX wrote:I expect one

SagerXX wrote:
I expect one more meaningful dip in PMs before the big rip. But timing, duration and bottom unknown. I was bugging my brother to get in under 1500 a few weeks ago but I don't think he did. Here's hoping he will when the next dip arrives... Viva -- Sager

I appreciate the input.  I've been sitting here trying to figure out what's next.  Clearly they will raise the debt ceiling.  Clearly, Greece & others will eventually default.  Not so clear:  will the flight be to treasuries (business as usual) OR will the general public finally catch on what's happening and fly to PMs?  I just don't know.  hugs ... dons

Nate's picture
Nate
Status: Gold Member (Offline)
Joined: May 6 2009
Posts: 461
Nacci wrote: I have been

Nacci wrote:

I have been waiting on the buy call from Chris but this scenario rings true to me.  It looks like the train may have left the station.  Any thoughts?

I have also been waiting for another entry point. For the past few years I have been dollar cost averaging but feel the time is very near to back up the truck and load it up.  I listened to FSO this weekend and Frank Barbera mentioned gold and silver were short term overbought and thought another (small) pullback was in order.  My only thoughts are 1) no one is smart enought to nail the bottom and 2) in a few years the difference between $1450 gold and $1600 gold will be irrelevant.

Nate

Grover's picture
Grover
Status: Platinum Member (Offline)
Joined: Feb 16 2011
Posts: 507
Summer time lows

Nate wrote:

I have also been waiting for another entry point. For the past few years I have been dollar cost averaging but feel the time is very near to back up the truck and load it up.  I listened to FSO this weekend and Frank Barbera mentioned gold and silver were short term overbought and thought another (small) pullback was in order.  My only thoughts are 1) no one is smart enought to nail the bottom and 2) in a few years the difference between $1450 gold and $1600 gold will be irrelevant.

Nate

Nate,

I'm betting along the same path. I think that people are currently worried (and rightly so) about the debt situation in the US congress along with the financial problems in European States. Congress will come to a compromise on the debt ceiling that will satisfy no one - but will kick the can a bit further down the road. Once this occurs and the immediate crisis has been avoided, people will abondon the safety of PMs and jump back into risky equity paper in order to "earn" more money. The IMF and ECB have a more difficult situation to deal with, but I'm sure they will also kick the can down the road, thus alleviating more pressure on the PMs. This probably won't be resolved as quickly as the US' situation.

If I'm wrong, I'll have to pay higher prices, which translates into fewer ounces. If I'm right, I'll be able to buy more ounces. Either way, the price I have to pay will seem insignificant when the real dollar woes hit the mainstream consciousness. I don't have a firm timeline established in my mind yet as to when I'll pull the trigger. Typically, the summer time lows in metals prices occurs in July or August. Some years it is earlier and some years it is later. Right now, my gut tells me that the second half of August will be the time to bite the bullet.

Grover

xkguy's picture
xkguy
Status: Bronze Member (Offline)
Joined: Jan 13 2011
Posts: 46
when to sell gold

If you read FOFOA you will have a different take on this question.

He believes that going forward gold will become THE way to hold wealth as fiat currencies come and slowly go as they always do. Gold will be a stable long term wealth vehicle that might never need to be sold.

The question of when to sell is a question one would only ask if one views gold as a commodity that rises and falls with supply and demand and the position in whatever cycle one believes one is in. As the dollar fails and perhaps the Euro too then new fiat currencies will come too. Gold will be priced in these currencies and vary with how well the printer is behaving. It may never need to be sold and can be used to preserve true wealth for generations. This is the concept of Freegold he writes about. 

I have found it to be a very compelling idea and it has influenced the way I view gold completely. I suggest that if you have serious interest in gold and hyperinflation that you check his bolg out...and no I am not him...

Woodman's picture
Woodman
Status: Diamond Member (Offline)
Joined: Sep 26 2008
Posts: 1025
Reasons for gold high?

Is gold at a new high because folks are uncertain whether the US debt ceiling will be addressd or is gold at a new high because folks are certain we'll print and devalue the dollar more?

badScooter's picture
badScooter
Status: Bronze Member (Offline)
Joined: Jun 20 2011
Posts: 89
gold-n-government

Just my two bits...I wouldn't put pm anywhere the government can see it...I'm sure most folks here have heard the rumors / trial baloons / whatever about the feds mandating a portion of retirement or pension accounts be invested in treasuries.  It seems pretty far out...now...but what if we get a couple of really lousy bid-to-covers on debt auctions?

I don't really see the point of putting bullion in an IRA...remember that it is taxed at the "collectables" rate - which I fully expect to go *up* as the government gets broker and broker.  This is basically the retroactive inflation tax you get to pay for being so clever as to hold pm.

The same "collectables" rate also applies to ETF and comex silver, which is why I don't play the paper game with them.  I've been known to play Silver Wheaton (SLW) as a pm proxy (at normal cap gain rate), and I can see how you could do that with miners as well - but the risks are nontrivial.

Of course, the "collectables" rate also applies to physical...but if you're talking small enough quantities to avoid SARs or CTRs (http://en.wikipedia.org/wiki/Currency_transaction_report), and barring further restrictions on transactions by the gov't (600 dollar 1099s, anyone?),  how exactly is the government going to determine you've effectively shielded your purchasing power from their fiscal and monetary hijinks?

Cheers,

Mike

gregroberts's picture
gregroberts
Status: Diamond Member (Offline)
Joined: Oct 6 2008
Posts: 1024
Mike Maloney On Gold, Silver & Economics

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments