My Deepest Apologies

I've been remiss in my precious metals musings of late. Last week, when the silver/gold ratio was bouncing between 31-33, I should have said to swap a portion of your silver for gold. Alas, it's now too late, as the ratio is back up in the mid-40s.

I have not yet missed the opportunity, however, to encourage you all to take every piece of worthless paper you can spare and buy gold or silver all the way down until it bottoms out. This is not a bursting bubble, folks. This is a short-term correction. How short, I can't predict, but I can say with as much certainty as possible that these prices cannot persist as long as the Fed continues to dilute the value of their Monopoly money.

My strategy is: buy gold first, if you can find it. Someone I know when into the local precious metals dealer today with $300 and asked what they had in small-size gold. They had exactly two pieces of gold smaller than a half ounce. One was a 1-gram PAMP, and the other a 1/10 ounce Maple Leaf. Just a year ago, I could go in and browse through Francs, Marks, Guilders, Pesos, Sovereigns, Rands, and even the occasional Double Eagle. Now, you just better be prepared to buy a half ounce or more, at large premiums because all they have left is American Eagles, half ounce or bigger. Fill the remainder of your order with silver.

In any event, I still say "buy gold at any price" because it's trading debt for value. The US Dollar will be revalued at some point; I think it's too late now to avoid that. I say the same about silver, but be aware that silver is much more volatile in paper price than gold, so if you're the sort that has a weak stomach, take some dramamine before you look at the silver prices on any given day. Of course, you can only get that queasy feeling if you are still holding onto the mistaken notion that your Monopoly money has any true value.

Bear in mind, too, that unless it's in your retirement account, I mean buy physical gold and silver, not SLV and GLD and the like. Those are fine if you have money you're willing to lose completely. But your savings, at this point, should be in gold, not in a bank account where it will lose 10% or more to inflation. Gold, on the other hand, even after taking a 6% loss in the last four trading days, is still up 5.4% for the year. Silver, down nearly 30% in the last week, is still at a net gain of 13% for the year.

Let's put that in simple terms. If you had started the year with $1000 in the bank, it would have the same purchasing power now as $862 did just five months ago. If you had sunk that $1000 into physical gold, it would have the purchasing power of $1054. If silver, $1130. Purchasing power over the long term is the only thing that matters. The price of everything is skyrocketing. As Rev. Paul reported yesterday, gas is at $4.23 in Los Anchoragua. That's on the order of 35% over this time last year, if memory serves. That's inflation, my friends. Oil isn't getting expensive; EVERYTHING is getting expensive.

If freegold ever happens, you can thank me with a gram or two of gold. On the other hand, if gold prices continue to fall and you lose your nerve, give me a call around PFD time (October) and I'll trade you my Monopoly money for your gold at spot price, which is better than you'll get at your precious metals dealer.

By the way, if you don't know what freegold means, and you have a couple hours and the will to educate yourself, head over to FOFOA's blog and at least read this freegold primer.