The Near Future of the Dollar, Gold, and Silver
Written and compiled by Andrew Meyer
Since 2001, the dollar has lost 81% of its value compared to gold. With the Federal Reserve now printing an average of $85 billion per month, the dollar is being watered down even further compared to the value of gold. Moneyball author Michael Lewis wrote in his book Liar’s Poker, “If the United States runs a persistent trade deficit, the dollar will eventually plummet.” Between the country’s decades of trade deficits and the Federal Reserve’s “QE-infinity” program of diluting the dollar like a garden hose in a grape juice bottle, you can see why many experts, including Peter Schiff in the video below, have predicted that the price of gold may soon skyrocket.
httpv://youtu.be/6MdanMn4jYU
The dollar has been the world’s currency of choice for decades, but it’s dominance is already ending. Brazil, Russia, India, and China are among the leading economies no longer trading in U.S. dollars. For years, China has been turning their dollars into tons of gold, and with the threat of a gold-backed Yuan looming, global central bankers have also been buying gold at record volumes. 1
Physical gold and silver is unique because of their unusual ability to sit outside of the banking/monetary system and to act as monetary assets (we’re not referring to “paper gold or silver” which includes various ETFs like SLV or GLD). Literally everything else financial, including paper US currency, stocks and bonds are somebody else’s liability and carry counter-party risk… but physical gold and silver do not.
This is a highly desirable characteristic that is not easily replicated.
However, the best means to retain long-term value in your savings may not be gold, but silver.
Since 2001, silver has returned an average annual return of 20% every year, the highest return of any commodity. Gold was second with a 16.8% average annual return.
Since 2009, silver has had a +32.8% average annual return.
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|
Gold % Annual Change |
|||||||||
|
USD |
AUD |
CAD |
CNY |
EUR |
INR |
JPY |
CHF |
GBP |
|
| 2001 |
2.5% |
11.3% |
8.8% |
2.5% |
8.1% |
5.8% |
17.4% |
5.0% |
5.4% |
| 2002 |
24.7% |
13.5% |
23.7% |
24.8% |
5.9% |
24.0% |
13.0% |
3.9% |
12.7% |
| 2003 |
19.6% |
-10.5% |
-2.2% |
19.5% |
-0.5% |
13.5% |
7.9% |
7.0% |
7.9% |
| 2004 |
5.2% |
1.4% |
-2.0% |
5.2% |
-2.1% |
0.0% |
0.9% |
-3.0% |
-2.0% |
| 2005 |
18.2% |
25.6% |
14.5% |
15.2% |
35.1% |
22.8% |
35.7% |
36.2% |
31.8% |
| 2006 |
22.8% |
14.4% |
22.8% |
18.8% |
10.2% |
20.5% |
24.0% |
13.9% |
7.8% |
| 2007 |
31.4% |
18.1% |
11.5% |
22.9% |
18.8% |
17.4% |
23.4% |
22.1% |
29.7% |
| 2008 |
5.8% |
33.0% |
31.1% |
-1.0% |
11.0% |
30.5% |
-14.0% |
-0.3% |
43.7% |
| 2009 |
23.9% |
-3.6% |
5.9% |
24.0% |
20.4% |
18.4% |
27.1% |
20.3% |
12.1% |
| 2010 |
29.8% |
15.1% |
24.2% |
25.5% |
40.2% |
25.3% |
13.9% |
17.4% |
36.3% |
| 2011 |
10.2% |
8.8% |
11.9% |
5.1% |
12.7% |
30.4% |
3.9% |
10.2% |
9.2% |
| 2012 |
7.0% |
5.5% |
4.4% |
5.9% |
5.2% |
11.0% |
20.5% |
4.4% |
2.3% |
| Average |
16.8% |
11.0% |
12.9% |
14.0% |
13.7% |
18.3% |
14.5% |
11.4% |
16.4% |
|
Silver % Annual Change |
|||||||||
|
USD |
AUD |
CAD |
CNY |
EUR |
INR |
JPY |
CHF |
GBP |
|
| 2001 |
-0.1% |
8.5% |
6.1% |
-0.1% |
5.3% |
3.1% |
14.4% |
2.3% |
2.7% |
| 2002 |
4.8% |
-4.6% |
4.0% |
4.9% |
-11.0% |
4.3% |
-5.0% |
-12.6% |
-5.3% |
| 2003 |
24.0% |
-7.3% |
1.4% |
23.9% |
3.2% |
17.7% |
11.9% |
11.0% |
11.9% |
| 2004 |
14.3% |
10.2% |
6.5% |
14.3% |
6.4% |
8.6% |
9.6% |
5.4% |
6.5% |
| 2005 |
29.6% |
37.7% |
25.5% |
26.3% |
48.1% |
34.6% |
48.8% |
49.3% |
44.4% |
| 2006 |
45.3% |
35.3% |
45.3% |
40.5% |
30.4% |
42.6% |
46.7% |
34.8% |
27.5% |
| 2007 |
15.4% |
3.7% |
-2.1% |
7.9% |
4.3% |
3.1% |
8.3% |
7.2% |
13.9% |
| 2008 |
-23.8% |
-4.3% |
-5.7% |
-28.8% |
-20.1% |
-6.1% |
-38.1% |
-28.2% |
3.4% |
| 2009 |
49.3% |
16.1% |
27.6% |
49.3% |
45.0% |
42.6% |
53.0% |
44.9% |
35.0% |
| 2010 |
83.7% |
63.0% |
75.8% |
77.7% |
98.5% |
77.4% |
61.2% |
66.2% |
93.0% |
| 2011 |
-9.8% |
-11.0% |
-8.4% |
-14.0% |
-7.8% |
6.7% |
-15.0% |
-9.8% |
-10.7% |
| 2012 |
8.2% |
6.8% |
5.7% |
7.2% |
6.4% |
12.3% |
22.0% |
5.7% |
3.5% |
| Average |
20.1% |
12.9% |
15.1% |
17.4% |
17.4% |
20.6% |
18.2% |
14.7% |
18.8% |
Silver is the 2nd most consumed commodity on the planet, second only to crude oil.
As modern technology has established silver as the most valuable/versatile of all metals, silver ore grades have collapsed 95% over the past 75 years according to the United States Geological Survey.
All of the 8 top silver producing states in the US have peaked out on their production. It is projected that by 2016, industrial demand for silver alone will match ALL current global mining output! The USGS also states that if current trends continue, silver will be the first element to become extinct and thus removed from the periodic table.
It’s for this reason that best-selling author Robert Kiyosaki (Rich Dad-Poor Dad) says, “Silver is the biggest opportunity I have ever seen.”
You must also consider that the historical ratio of the value of gold to silver is 17:1, the same rate of occurrence of these metals in the earth. Today, gold trades at a 61:1 ratio to silver while silver is in greater industrial demand and the supply is rapidly diminishing. So what accounts for the today’s imbalance in the value of the two metals?
In April 2010, Andrew Maguire, a former Goldman Sachs trader, went public with assertions that JPMorgan Chase and HSBC will manipulate the market to hold down the price of gold and silver. (2) For example, while today’s “paper price” of gold is $1470 an ounce in the United States, some in China are already paying $2000 for a physical ounce of gold. The banks can manipulate the market, but in reality simple supply and demand fundamentals are in play, and the price of both silver and gold is likely to skyrocket in comparison to the dollar.
As Former New Mexico Governor Gary Johnson recently said, “The most important issue is that we are printing money to pay for things we cannot afford. At some point, this will bring about a monetary collapse.” By owning precious metals, people can protect their savings. While media members and Central Bankers have publicly decried the role and value of gold, when you see that Central Banks are buying gold at a record rate, it is clear what Central Bankers really think of precious metals.
Personally, I have been urging friends and family to buy physical gold and silver since 2008, when the price of gold was $800 an ounce (and please excuse my language if you read that article). A year later gold was over $1600 an ounce. Physical gold, unlike the dollar, is not a bubble. The current dip of gold to under $1500 an ounce is a gift to those who can see what’s coming.
Just two weeks ago, I was again urging friends and family to buy gold and silver. In talking to a friend about how I could do this for a living, he said “Why don’t you sell gold?”
A week later, I chanced upon the office of the Bullion Advisory Group, LLC. The next day, I was sitting in front of H. Milton Hunter, CEO and Head of Trading of the company. Today, I am helping people hedge their core savings with gold and silver bullion that will retain its value while the dollars continues to collapse. Gold and silver are not an investment – they are the primary way that families should be protecting their savings and future purchasing power.
The Bullion Advisory Group not only sells gold, silver, platinum and palladium but can also manage client accounts with the knowledge of when to enter and exit market positions. The Bullion Advisory Groups staff of licensed and bonded Precious Metal Advisors will analyze your objectives and offer potential solutions during these challenging financial times.
For more information, visit www.bullionadvisorygroup.com or email me personally at andrew (@) bullionadvisorygroup.com *
*You have to remove the parentheses in my email address @ before emailing me, its spam armor.
Sources:
1. http://rt.com/business/bought-central-banks-gold-record-amount-390/
2. http://en.wikipedia.org/wiki/Andrew_Maguire_(whistleblower)