Does Gold “Really” Preserve Wealth?
Brian Nepveux Chief Analyst, 1/6/13 revised 7/27/13
“Give unto Caesar what is Caesar’s”
as we know, this 2000 year old quote applies to paying taxes.
I agree, give unto the government what is owed.
However, did you know there is a hidden tax that steals your wealth not in the
IRS code? How does the government impose this hidden tax without your knowledge?
Is there a shelter from it? All good questions and the answers allude so many of us.
What is currency?
It’s money in any form as a median of exchange. In times of barter, If you produce
more than you can trade or store you have a few choices, trade for land or gold to
store this surplus until it is needed for other goods and services at a later
date. Also, it wouldn’t be a good idea put all your resources into one crop or
herd as it could net a total loss to drought or insects.
A farmer will grow multiple crops, raise various livestock and
produces multiple types of harvests to diversify their exposure to loss. He
understands putting all his eggs in one basket isn’t safe. In a nutshell he
works the land, plants, yields produce, trades for what is needed, then stores
surplus into gold which requires no further maintenance to preserve, no land to
till, crops to harvest, his harvest is now preserved into a handful of coins.
Gold was chosen thousands of years ago as a median of exchange for this
reason; it is indestructible, will not rust nor rot, erode or spoil. In a
barter system you plant and yield crops, raise animals for meat, and harvest
various commodities for trade. However, produce and meat have a limited shelf
life, which require trading before expiration, while gold can be stored for
eternity. Not unlike today where we keep one year or less of liquid cash for
expenses and emergencies then store “invest” surplus into stocks, real estate,
and other assets to outpace inflation and compound its value for a later date
then transfer assets to back into cash as needed.
Just as before, we all know it’s not a good idea to put all our eggs in
one basket with just a single stock as its value could evaporate and wakeup
with a zero statement overnight, Enron, Bernie Madoff, you get the picture.
Stocks, bonds, real estate, all require additional money and labor to maintain,
while gold requires nothing. Bottom line, you don’t work for gold it works for you!
So long as the coins measure of gold and denomination stays at the same
ratio no inflation exists. The Roman Empire was the first known to widen this
ratio in its coins to pay government debt leading to its demise. The Denarius
was introduced in 211 bc. It was nearly pure, close to a 95% fine silver coin at
issue. Debasing of the Denarius began throughout the Roman Empire to pay
sovereign debt by using the same denomination and rationing the amount of silver
in the coin from nearly 95% fine down to just 2% crashing their currency,
leading to the downfall of the Roman Empire!
Today we have the exact opposite of creating tangible goods first, then
storing excess into gold. We now have the Federal Reserve which creates money
from nothing, so you can buy now and pay later. The Fed controls the expansion
and contraction of the economy by controlling interest rates.
Low rates spur borrowing, expansion, and production, while high rates
curtail borrowing and contract the economy. The Dollar is a fiat currency,
legal tender for the discharge of debt. Every single dollar enters the economy
through a loan from the Federal Reserve to the government which it exchanges
bonds as collateral, backed by nothing but its power to tax. The principal is
created; however, the interest owed doesn’t exist. More borrowing is needed to
pay the past principal plus interest causing inflation.
All debt cannot be repaid to zero, as the interest is not loaned into
existence. The dollar requires more loans, more expansion to pay the past debt,
or the whole system collapses. What is this hidden tax stealing our wealth?
Inflation, it erodes our purchasing power, it is a hidden tax, a scheme for the
confiscation of wealth by government.
Never the less, Governments haven’t learned that history repeats
itself. No fiat currency has lasted due to its design based on debt, not
surplus. The Dollar is money is created from nothing, backed by nothing.
This is completely opposite of what gold represents which is wealth,
the store of production and surplus. However, interest rates are near zero the
economy is in recession, the Fed tries its last ditch effort of debt
monetization through quantitative easing (printing money to buy debt) to keep
the house of cards from crashing down.
Sounds complicated? Imagine paying off a credit card with a new
credit card you get in the mail running each one up as you go, paying off debt
with debt. Sounds unsustainable right? Yes, that’s an analogy of how Washington
and the Fed operates. Now we enter multi trillion dollar budgets per year, and
Washington’s appetite for spending only gets stronger. The Dollar is worth 3
cents of its 1913 value when the Fed created this fractional reserve system,
1% away from the Roman Empire at its collapse. Ironically “Rome” hasn’t caught on
that the dollar has no more “silver” left in it.
This is my personal story about how my parents bought their home in
1970 at $40,000 when gold was $40 an ounce. Now the home is worth $100,000!
Sounds great right? They made $60,000 didn’t they? It took 1000 ounces to
purchase this home in 1970. Today it only takes 58 ounces to equal $100,000
which is today’s home price.
The Fed creates the illusion of growth and profit while confiscating
wealth. How’s that you say? They made $60,000? Comparing apples to apples, if
you hold the same 1000 ounces today which equals $1,335,000 while the home
price is $100,000 you can buy this home and have $1,235,000 in change. I can buy
13 houses for the same coins my father used to buy one house! This is how the
Government stole $1,235,000 from my parents in lost purchasing power.
What is the Dollar really? Let’s break it down. Look at the left front
of your dollar it reads, “this note is legal tender for debts public and
private”. So what is legal tender? In its Latin root, tendere; “to stretch out,
inflate”. Inflate? Inflation is the result of debt not wealth! The “price” of
gold reflects inflation of the currency it trades against. In contrast, wealth,
by definition is, “the abundance of valuable material, possessions, and
resources”. This is exactly what gold preserves!
In short, there are two forms of money, one is cash authorized by congress
in the federal reserve act in 1913 which lost 97% of its value.
The other form of money the treasury offers is Gold American Eagles authorized
by congress in 1985, public law 99-185 gained 6300% in purchasing power.
Yet the majority of the public uses cash while those few in the know preserve their
wealth with gold.
Gold is the ONLY indestructible, non-inflatable, maintenance free,
final store of perishable resources. When it is needed in the future it buys
more resources against all currencies. How do we avoid this thief, inflation?
Fortunately, the treasury offers two forms of money; cash, or pure gold and
silver coins. The US treasury’s Gold and Silver coin mintage is limited to the
amount or precious metals available, and cannot be inflated or diluted. Protect
your wealth and secure your families legacy, simply convert the perception of
money into real money with solid gold and silver US treasury issued coins.
In 1930 gold was $20 an ounce, now $1335 an ounce, as paper money loses
its purchasing power against gold. Ask yourself this, which would you rather
find in your attic, a 1930 $20 bill worth $20 or a 1930 $20 face value one ounce
gold coin worth $1335, they were both worth $20 at issue, now the gold coin is
$1335 against the $20 bill.
What will your $20 bill be worth 20 years from now? $10 or $5, will it
even exist? The dollar is an illusion of money, our perception that cash has
value is what gives it value. Reality is, a dollar is five cents worth of paper
and ink, however, the treasury can produce a $1 or $100 bill for a nickel, in
the end it’s just paper, but an ounce of gold is always an ounce of gold.
All fiat currencies return to their intrinsic values over time, zero. At the
beginning, I asked, what is currency?
My friend, gold is the currency of kings,
barter is the currency of gentlemen,
credit is the currency of slaves.
Brian Nepveux Chief Analyst, 1/6/13 revised 7/27/13
“Give unto Caesar what is Caesar’s”
as we know, this 2000 year old quote applies to paying taxes.
I agree, give unto the government what is owed.
However, did you know there is a hidden tax that steals your wealth not in the
IRS code? How does the government impose this hidden tax without your knowledge?
Is there a shelter from it? All good questions and the answers allude so many of us.
What is currency?
It’s money in any form as a median of exchange. In times of barter, If you produce
more than you can trade or store you have a few choices, trade for land or gold to
store this surplus until it is needed for other goods and services at a later
date. Also, it wouldn’t be a good idea put all your resources into one crop or
herd as it could net a total loss to drought or insects.
A farmer will grow multiple crops, raise various livestock and
produces multiple types of harvests to diversify their exposure to loss. He
understands putting all his eggs in one basket isn’t safe. In a nutshell he
works the land, plants, yields produce, trades for what is needed, then stores
surplus into gold which requires no further maintenance to preserve, no land to
till, crops to harvest, his harvest is now preserved into a handful of coins.
Gold was chosen thousands of years ago as a median of exchange for this
reason; it is indestructible, will not rust nor rot, erode or spoil. In a
barter system you plant and yield crops, raise animals for meat, and harvest
various commodities for trade. However, produce and meat have a limited shelf
life, which require trading before expiration, while gold can be stored for
eternity. Not unlike today where we keep one year or less of liquid cash for
expenses and emergencies then store “invest” surplus into stocks, real estate,
and other assets to outpace inflation and compound its value for a later date
then transfer assets to back into cash as needed.
Just as before, we all know it’s not a good idea to put all our eggs in
one basket with just a single stock as its value could evaporate and wakeup
with a zero statement overnight, Enron, Bernie Madoff, you get the picture.
Stocks, bonds, real estate, all require additional money and labor to maintain,
while gold requires nothing. Bottom line, you don’t work for gold it works for you!
So long as the coins measure of gold and denomination stays at the same
ratio no inflation exists. The Roman Empire was the first known to widen this
ratio in its coins to pay government debt leading to its demise. The Denarius
was introduced in 211 bc. It was nearly pure, close to a 95% fine silver coin at
issue. Debasing of the Denarius began throughout the Roman Empire to pay
sovereign debt by using the same denomination and rationing the amount of silver
in the coin from nearly 95% fine down to just 2% crashing their currency,
leading to the downfall of the Roman Empire!
Today we have the exact opposite of creating tangible goods first, then
storing excess into gold. We now have the Federal Reserve which creates money
from nothing, so you can buy now and pay later. The Fed controls the expansion
and contraction of the economy by controlling interest rates.
Low rates spur borrowing, expansion, and production, while high rates
curtail borrowing and contract the economy. The Dollar is a fiat currency,
legal tender for the discharge of debt. Every single dollar enters the economy
through a loan from the Federal Reserve to the government which it exchanges
bonds as collateral, backed by nothing but its power to tax. The principal is
created; however, the interest owed doesn’t exist. More borrowing is needed to
pay the past principal plus interest causing inflation.
All debt cannot be repaid to zero, as the interest is not loaned into
existence. The dollar requires more loans, more expansion to pay the past debt,
or the whole system collapses. What is this hidden tax stealing our wealth?
Inflation, it erodes our purchasing power, it is a hidden tax, a scheme for the
confiscation of wealth by government.
Never the less, Governments haven’t learned that history repeats
itself. No fiat currency has lasted due to its design based on debt, not
surplus. The Dollar is money is created from nothing, backed by nothing.
This is completely opposite of what gold represents which is wealth,
the store of production and surplus. However, interest rates are near zero the
economy is in recession, the Fed tries its last ditch effort of debt
monetization through quantitative easing (printing money to buy debt) to keep
the house of cards from crashing down.
Sounds complicated? Imagine paying off a credit card with a new
credit card you get in the mail running each one up as you go, paying off debt
with debt. Sounds unsustainable right? Yes, that’s an analogy of how Washington
and the Fed operates. Now we enter multi trillion dollar budgets per year, and
Washington’s appetite for spending only gets stronger. The Dollar is worth 3
cents of its 1913 value when the Fed created this fractional reserve system,
1% away from the Roman Empire at its collapse. Ironically “Rome” hasn’t caught on
that the dollar has no more “silver” left in it.
This is my personal story about how my parents bought their home in
1970 at $40,000 when gold was $40 an ounce. Now the home is worth $100,000!
Sounds great right? They made $60,000 didn’t they? It took 1000 ounces to
purchase this home in 1970. Today it only takes 58 ounces to equal $100,000
which is today’s home price.
The Fed creates the illusion of growth and profit while confiscating
wealth. How’s that you say? They made $60,000? Comparing apples to apples, if
you hold the same 1000 ounces today which equals $1,335,000 while the home
price is $100,000 you can buy this home and have $1,235,000 in change. I can buy
13 houses for the same coins my father used to buy one house! This is how the
Government stole $1,235,000 from my parents in lost purchasing power.
What is the Dollar really? Let’s break it down. Look at the left front
of your dollar it reads, “this note is legal tender for debts public and
private”. So what is legal tender? In its Latin root, tendere; “to stretch out,
inflate”. Inflate? Inflation is the result of debt not wealth! The “price” of
gold reflects inflation of the currency it trades against. In contrast, wealth,
by definition is, “the abundance of valuable material, possessions, and
resources”. This is exactly what gold preserves!
In short, there are two forms of money, one is cash authorized by congress
in the federal reserve act in 1913 which lost 97% of its value.
The other form of money the treasury offers is Gold American Eagles authorized
by congress in 1985, public law 99-185 gained 6300% in purchasing power.
Yet the majority of the public uses cash while those few in the know preserve their
wealth with gold.
Gold is the ONLY indestructible, non-inflatable, maintenance free,
final store of perishable resources. When it is needed in the future it buys
more resources against all currencies. How do we avoid this thief, inflation?
Fortunately, the treasury offers two forms of money; cash, or pure gold and
silver coins. The US treasury’s Gold and Silver coin mintage is limited to the
amount or precious metals available, and cannot be inflated or diluted. Protect
your wealth and secure your families legacy, simply convert the perception of
money into real money with solid gold and silver US treasury issued coins.
In 1930 gold was $20 an ounce, now $1335 an ounce, as paper money loses
its purchasing power against gold. Ask yourself this, which would you rather
find in your attic, a 1930 $20 bill worth $20 or a 1930 $20 face value one ounce
gold coin worth $1335, they were both worth $20 at issue, now the gold coin is
$1335 against the $20 bill.
What will your $20 bill be worth 20 years from now? $10 or $5, will it
even exist? The dollar is an illusion of money, our perception that cash has
value is what gives it value. Reality is, a dollar is five cents worth of paper
and ink, however, the treasury can produce a $1 or $100 bill for a nickel, in
the end it’s just paper, but an ounce of gold is always an ounce of gold.
All fiat currencies return to their intrinsic values over time, zero. At the
beginning, I asked, what is currency?
My friend, gold is the currency of kings,
barter is the currency of gentlemen,
credit is the currency of slaves.
