Making money: the Introduction

How to make money offline: You will see why I LOVE gold as an investment...

This website is about my love for the precious metals of the world and why I think you will make a killing by buying them.

Gold has enjoyed quite a run in recent times. I am happy as my portfolio has improved right along with it - hard to miss with gold shares.

But we are still in the beginnings of a very long, sustained bull run in precious metals that I think has many years to go and will trounce the highs of even the most optimistic analysts.

As far as analysts go, I ignore them. Analysts should have lots of money if they were any good at what they do. I haven't personally met any rich ones - and all the good ones tend to make their employers rich...

So, forget the analysts. Focus on the BIG picture of what is going on in the world. Whilst the harsh reality may not sound like something you want to believe, and whilst I still cannot believe that I am writing some of the stuff that I am, I am nonetheless completely convinced that the facts as they present themselves are correct. And the facts as they present themselves are sadly too big and scary not to be true. YOU need to make up your own mind as to where this is going.

So put on your thinking cap and start to question what I am saying... What does YOUR gut tell you?

One of the fundamental tenets in investing in gold is that it is a precious metal. There is good reason why the word precious is used.

Precious means valuable. Gold is precious because it is valuable. Our store in value lies only in what we place in that value. In other words, if everyone decided tomorrow that gold was not valuable, then it would not be valuable. It would be worthless.

Exactly the same applies to every single paper currency on the planet. If everyone turns around tomorrow and says that the dollar is worthless then this is what will happen. As we have seen the Zimbabwe dollar suffered this fate.

What is different about the US dollar?

350 million odd people and the world's biggest economy might make a difference. And it has over the last 60 years. Pax Americana is here, but it won't be staying for very long.

The only difference between the Zim dollar and the US dollar are the politicians behind it. Mad Bob Mugabe is distinct from any US President only by the territory he rules. The US has a constitution as does Zimbabwe. US citizens have a vote, as do those of Zimbabwe.

It can't happen in the US!

Oh yes it can, and yes it will!

For instance, for the last 35 years, adjusted for inflation, the average American worker's salary has remained exactly the same! In other words, in 35 years the nett REAL increase in salary for doing the same job, has not risen one iota. Compare that with China today and you'll see what is happening very clearly.

The point is this. The dollar is worth nothing other than what we say it's worth. The Zim dollar got devalued because Mad Bob went Mad and ran the country into the ground. From a one million dollar note to a 100 billion dollar note in under a year is not a mistake. There is NOTHING behind this dollar of any perceived value, hence it's massive devaluation.

The US Dollar will suffer the same fate. What's behind the US Dollar? Nothing but a promise to pay. In US dollars! US assets that back the dollar are what precisely? Land? Businesses? These are in the hands of private individuals. Unless the government confiscates them... Which is likely to happen - Fannie Mae and Freddie Mac have been nationalised already.

The trouble is that the assets that the US government back its dollars with are far, far less, that the quantity of dollars that the US government OWES.

When you owe more than you are worth you are bankrupt!

BUT, if you can devalue the amount you owe by paying the debt with the same quantity of less valuable currency, then you can get away with being bankrupt IF nobody notices. Pity for Mad Bob Mugabe from Zimbabwe that everyone DID notice along with the realisation that there were NO assets left in the cookie jar - Mad Bob having helped himself to the lot years ago.

Oops.

So why is the US dollar any different?

I'll tell you why. It's because the US is the world's biggest economy and it can't be allowed to happen.

But it is. This is why the gold price is going up. The cost of the only thing we understand as true money is increasing as the value of that other thing, the US dollar, is decreasing.

And the process is accelerating. As the Federal Reserve simply prints up more dollars, faster and faster, because they can create as many dollars as they like without ANY constraint whatsoever, the price of everything else goes up!

So... the only difference that lies between gold and the dollar: Politicians.

Since 1971 when the dollar moved off the gold standard, politicians have been the only voice of 'value' behind the dollar. There is nothing else behind the dollar.

And that is the harsh sad reality. Difficult to swallow and difficult to accept. But those in charge of the dollar, and in charge of any paper currency, have nothing backing their currency other than their word. Nothing.

Gold does not have the entire world population of politicians behind it. And if you like me, believe that absolute power corrupts absolutely, all politicians in today's modern world have been corrupted absolutely. The mere clampdowns on our financial privacy (you no longer have any), our increasing tax burden (in the US alone more than 50% of total income - and up to 95% by the time you die), and the ongoing machinations of government fighting more and more expensive 'wars' against less and less obvious 'targets' quite frankly spell it out.

Gold, as a store of value, cannot be printed up as can dollars or rands or pounds. When a dollar is printed, what is the value that backs the brand newly born Greenback?

The simple answer is that there isn't any value. Whereas when an ounce of gold is minted, teh store of value in it is immense. It has had to be mined at considerable expense and then refined at further expense.

And the rate of supply of gold increases at around 2% a year. Compare this to the percentage increase in the number of dollars printed in any given year and you can see WHY the dollar was uncoupled from the gold standard.

If gold was coupled to the dollar today, the dollar gold price would immediately be well over several thousand dollars an ounce...

It is a lot harder to for governments to manipulate gold than the dollar or any other paper currency. It is thus in their interests to push their paper based currencies - more can be printed to balance the books. And if that doesn't work you can print more to pay over the holes - for a buck there is always a propaganda spin to be tailor fitted to the size of the hole created.

Accounting back to a gold standard means a far higher degree of transparency and duh, accountability...Which is why the gold standard is history!

So that's that. I don't really care if you agree with this analysis or not. The fact of the matter is that I respect your right to believe whatever you want about paper based currencies - and it took me well over ten years to reach what I call the age of reason - realising that paper based currencies are NOT a store of any value whatsoever.

One ounce of gold in 1922 bought you a good suit. It would cost you less than a dollar. Today a dollar wouldn't buy you a Big Mac. An ounce of gold still buys you a good suit today. There has hardly ever been a time when an ounce of gold could not buy a good suit.

This is what is meant by a store of value. Gold does not deflate. It is not affected by inflation. It is not affected by what politicians say or do - by and large every time a politician opens their mouth on the topic these days your investment in precious metals increases!

The times are coming when an ounce of gold will buy you 10 good suits. Gold loves uncertainty. And it loves war. The dollar does not.