{"id":68686,"date":"2015-02-26T17:40:39","date_gmt":"2015-02-26T22:40:39","guid":{"rendered":"http:\/\/countingpips.com\/?p=68686"},"modified":"2015-02-26T18:18:18","modified_gmt":"2015-02-26T23:18:18","slug":"do-you-have-a-gold-and-silver-seat-belt","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2015\/02\/do-you-have-a-gold-and-silver-seat-belt\/","title":{"rendered":"Do You Have a Gold and Silver \u201cSeat Belt\u201d?"},"content":{"rendered":"
February 26, 2015<\/div>
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By\u00a0David Smith<\/strong><\/p>\n

In just about every state, it\u2019s the law that you must wear a seatbelt when driving down the road. Putting aside the question of whether the government should mandate this, most of us understand that the reasons for individually choosing to do so are valid.<\/p>\n

It\u2019s been a long time since I\u2019ve been in an accident, but it\u2019s a habit to buckle up every time I get into the car. I don\u2019t look back at my most recent trip and think \u201cGee,\u00a0so far<\/span>\u00a0nothing has happened. So why did I bother wearing my seatbelt for all those years?\u201d
\n\"Buckle
\nTake a quick look at our financial system. Have things really improved since the entire global system almost went down in 2008?<\/p>\n

Sure there have been \u201cchanges\u201d \u2013 for example, your bank most likely has a \u201cbail in\u201d provision added to the fine print of your accounts, letting you know that if they go under due to their own mismanagement, you may be forced to help out with some of your hard-earned funds.<\/p>\n

And try to withdraw a significant amount of money during a financial crisis \u2013 odds are you\u2019ll be informed that you can only take out a relatively small amount per week, and oh, by the way \u201cHow do you plan to use that withdrawn money?\u201d<\/p>\n

Money market funds and \u201csavings\u201d accounts now pay virtually no interest, but (so far) that\u2019s at least better than in some European countries, where hapless account holders actually have to\u00a0pay<\/em>\u00a0the bank<\/em>\u00a0for the privilege of leaving money in their account.<\/p>

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Massive government debt.<\/strong><\/p>\n

Underfunded pension plans.<\/strong><\/p>\n

Trillions of dollars in artificial derivative trading vehicles created by over-leveraged banks, backstopped by Federal government printing of unlimited amounts of paper money.<\/p>\n

\u201cOfficial\u201d statistics which are constantly \u201crevised\u201d a month or so after they have been released to the public.<\/p>\n

Published inflation rates which don\u2019t include most of the things we use and do on a daily basis. The list goes on and on.<\/p>\n

Illuminating Experiences on My Recent Trip<\/strong><\/p>\n

to the \u201cLand of Silver\u201d<\/strong><\/p>\n

Last month, I spent two weeks in Argentina fly fishing for monster Rainbows in Jurassic Lake, and Brown Trout \u2013 what the locals call Sea Trout \u2013 in Tierra del Fuego\u2019s Rio Grande. In Buenos Aires, Calafate, Ushuaia, and with my fishing guides, I had some interesting \u2013 and illuminating experiences, when comparing the response to\u00a0sound money<\/a>\u00a0(silver) with that of a paper promise (pesos).<\/p>\n

I took along a tube of\u00a0one-tenth ounce .999 fine silver bullion rounds<\/a>\u00a0courtesy of Money Metals Exchange, and from time to time, I handed them out to taxi drivers, waitresses, airline stewardesses and fishing guides.<\/p>\n

Speaking in my limited Spanish, I would tell them, \u201c\u00a0Para usted, esta es la d\u00e9cima parte de la onza de plata pura.\u201d<\/em>Which means, \u201cFor you, this is one-tenth of an ounce of pure silver.\u201d<\/p>\n

Without exception, the look on their faces was amazing.<\/p>\n

Without discussion, after realizing what they were holding \u2013 and rubbing the bullion coin between their fingers \u2013 their eyes lit up, they smiled, and thanked me profusely. All of this for just one-tenth of an ounce of silver!<\/p>\n

Ironically, Argentina means \u201csilver\/coins\u201d in Latin. In Spanish, it translates as \u201csilvery.\u201d In a common border with Uruguay, the massive river flowing alongside the capital\u2019s doorstep is called the\u00a0Rio de la Plata<\/em>\u00a0\u2013 \u201criver of silver.\u201d<\/p>\n

You Must Own Gold and Silver<\/strong><\/p>\n

When the Currency Is Being Debased<\/strong><\/p>\n

Several times during the last few decades, Argentina has experienced runaway inflation, to the extent that the currency became virtually worthless, impoverishing millions of people. In some cases, family fortunes generations in the making, were destroyed.<\/p>\n

I have often thought of what it might have meant to a middle-class family, if they had possessed only a few ounces of\u00a0gold<\/a>, or perhaps a tube or two of\u00a0one-ounce silver rounds<\/a>. In some measure, they would have been protected, as millions of people have, over thousands of years been, when financial unrest became the norm. It has always been thus when paper money\u2019s value eventually accelerates into a downhill run towards its intrinsic value \u2013 ZERO.
\n\"Coins
\nSadly, the ruling elites seem to have learned little from the fiscal mismanagement of their predecessors. When I first traveled to Argentina in 2009, the exchange rate was 3:1 \u2013 three pesos for one U.S. dollar. Now, just 6 years later, the official rate is 8.5:1 \u2013 but street-side in the \u201cblue market\u201d you can get 12-15:1.<\/p>\n

Inflation runs 25 \u2013 30% per year. At a restaurant, you are asked\u00a0not<\/span>\u00a0to post a tip on your charge card, but instead remit cash. Offer a $50 bill for a $20 tab, and the receiver wants to hand you pesos, rather than dollars. Hapless touristas \u2013 myself included \u2013 are charged the official exchange on a purchase, which is half the \u201cblue\u201d rate.<\/p>\n

Exchanging some of your \u201cpaper promises\u201d (currency) for the physical financial reality of gold and silver<\/a>\u00a0on a regular basis makes more than just good business sense. It helps make sure that come what may in your financial life, your \u201cfinancial insurance policy\u201d will be there to help you out,\u00a0when<\/em>, not if, the chickens from so many years of unsound government policies come home to roost. Look toward Argentina, Venezuela, Russia and others as harbingers. Even now, the U.S. inflation rate is arguably several percent higher than the \u201cofficial\u201d figure. You would do well to pay attention and plan accordingly.<\/p>\n

Simon Black, in his newsletter discussing the virtues of international diversification, recently wrote:<\/p>\n

Safeguarding a portion of your savings by moving it outside of the system (not just holding everything in banking or traditional retirement accounts) is like wearing a seatbelt. There\u2019s no downside. But if the worst happens, it could save your life. Or at least your livelihood.<\/p>\n

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\"DavidDavid Smith<\/a>\u00a0David Smith is Senior Analyst for TheMorganReport.com<\/a> and is a regular contributor to Money Metals Exchange<\/a>. For the last 15 years, he has investigated precious metals mines and exploration sites all over Argentina, Chile, Mexico, China, Canada, and the U.S. and shared his findings and investment wisdom with readers, radio listeners, and audiences at North American investment conferences.<\/p>\n

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 <\/p>\n","protected":false},"excerpt":{"rendered":"

By\u00a0David Smith In just about every state, it\u2019s the law that you must wear a seatbelt when driving down the road. Putting aside the question of whether the government should mandate this, most of us understand that the reasons for individually choosing to do so are valid. It\u2019s been a long time since I\u2019ve been […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-68686","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/68686","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=68686"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/68686\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=68686"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=68686"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=68686"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}