I haven’t been writing much. I’m kind of burned out on how
the economy is going. When I started this blog in 2006, I saw the depression
coming. It was hidden by the government
and the news. We did have a depression
in 2008 and it more or less went into a stagnant economy. But in 2008 the banks
almost collapsed. Congress had to prop
up the banks. Think about it, if the banks had failed, where would the
government borrow from? The banks didn’t
fail and we kept on putting straws on the camel’s back (the national debt).
Economics is the study of the economy and how it responds to
certain stimulus. The trouble is, economic
theory can’t predict the future; it can only explain what has already
happened. Economics is not a science. So
here we are increasing the national debt with many people retiring and the
Covid stimulus packages being paid out.
Something is wrong. Millions of
workers are being paid to not work. This
cannot continue. People need to produce
product, if they don’t, the product desired becomes scarce.
This is where inflation comes in. If the product is scarce and you want it, you
have to pay more for it. The fact not even realized is that it cost 23 cents
for a pack of cigarettes in 1962 and now a pack cost $8.00. It’s been slow and progressive.
Lawmakers know what is happening, but it is drawn out over
time. Most people will never notice
until they retire; their saving doesn’t have the buying power it had 40 years
ago. The real factor not realized, is
that the dollar saved in 1965 has the purchasing power of 4 cents, in today’s
world. Kind of mind boggling. What was saved in 1965 would pay the rent, now in
2021 it only buys groceries.
An ounce of silver
used to be a guide on the hourly wage, and an ounce of gold was a paycheck for
the week. It looks like that may still
ring true. Bear in mind that precious metals are not rising in price, they are
reflecting the drop in the value of the dollar.
As the water level rises in a lake, the boat will still float.
Right now, there are four areas of investment; Bonds, real
estate, stocks, and precious metals. The bond market interest rates are so low,
you have to ask the question, who would be dumb enough to put their cash into
savings. Real estate and stocks seem to be the markets of choice right
now. The precious metals market is kind
of an unknown. With inflation at 10% and
the cost of money at one percent, it costs literally nothing to hold precious
metals.
If you examine the precious metals; silver, gold and
platinum, you’ll notice that they fluctuate in price, unrelated to each
other. Gold is in the lead; Platinum is
underpriced and silver is trending upward. Last week, I converted my silver to
platinum. 50 pounds of silver converts into 10 ounces of platinum and doesn’t
take up much space in a safety deposit box. Also converting Gold to platinum is
rather attractive.
The thing you need to remember about precious metals, is that if this mess gets worse, you might have the cash to purchase precious metals but most suppliers may be out of product, and you won't know that until you go in to make a purchase. That has happened to me twice this year. The premium to purchase has gone up considerably especially on silver. I kind of choke on a premium of $3.50 per ounce for silver. The following 6 months could be an eye opener. The precious metals market for delivery is in a very unknown condition. Is the physical metal there for purchase?
