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152 comments

Mem

February 29, 2008

Hey Doug, I am going to be the devils advocate here and present a contrary view. Not that I agree with the entirety of the argument but when you consider US household networth is in the low $50T mark what is $5.56T? Comparing one years worth GDP against total debt is a little out of perspective don’t you think? If its unfunded liabilities I know UK is in terrible shape and Europe even worse. I am enclosing a presentation from Arnold Van Den Berg and you will see the balance sheet for US household networth. See page 6. http://www.centman.com/PDF/2007/ClientUpdate11-10-07/SlidePresentation11-10-07.pdf
Take a look and see if that puts a different light on it.
Best regards, Mem
Doug Eberhardt

February 29, 2008

Hi Mem,

I agree that numbers can be used to slant things towards one point of view. This was not my intention.

I could play devils advocate back at you in asking why is it that a recession is defined as two consecutive quarters of lower GDP? We haven’t had two consecutive quarters of lower GDP for four years, yet we’ve had 4 consecutive years of lower GDP. The media never talks about this because of how a recession is defined. Who is behind this definition? Or a better question is who manipulated what the definition of recession has come to be known?

That said, lets take a look at the bigger picture of the 4 years mentioned in the Federal Reserve chart by Van Den Berg in your post….

In 2002, net worth was $38,830 and grew to $57,860 by 2007. This is a nice 49% gain and by any calculation looks pretty good!

Looking closer at the numbers, the growth was primarily fueled by higher prices in real estate from the Fed artificially lowering interest rates allowing the consumer to borrow from their equity and fuel the real estate market higher via speculation with their newfound wealth. As the consumer did this, you’ll see from the chart that mortgage debt also increased by about 35%.

In 2002, the U.S. dollar was trading at 120 and by 2007, the dollar was trading 34% lower. So a dollar in 2002 was worth 34% less in terms of purchasing power than a dollar in 2007. This also means that the 49% growth is reduced by 68% thus showing that real growth was only about 3% a year during this time-frame.

Now we are in 2008 and the dollar has fallen another 8%, real estate prices are declining and mortgage debt has increased. So the Federal Reserve chart that will come out this June and next June won’t be looking too pretty. Of course, as I mentioned in the blog, the Fed is doing all they can to keep the game going…and remember, George Bush says we’re not in a recession!

GDP is being hurt by the U.S. debt while individuals and other countries are trying to get out. The Fed is printing at historic rates adding to this debt resulting in increased inflation. The future unfunded liabilities will add to this and the result will be higher taxes.

If I have missed your point, please let me know.

Good hearing from you!

Doug Eberhardt
Mem

March 1, 2008

Hi Doug,

As I said I do not agree with the Van Den Berg point in its entirety and you pretty much got it in one, essentially the purchasing power of the dollar is the primary problem with his argument. I note though the increase in $20T in networth was accounted by $8T in real estate and the rest was in own business $3T, equities $4T, pensions $4.5T. My conclusion is that US households will be in good shape if those investments in equities, pensions and own business was in the sectors that will benefit from inflation. Since debt will be inflated away the real value of debt will decline and if the additions in recent years is in the right asset classes the US consumer will do well. One thing strengthens your argument is that there is a good chance that the US consumer does not know what sectors to be in. Hence, I conclude by sharing one of my favourite notions which is truth is an illusive concept and there are no absolute answers hence we must remain open minded and flexible. We’ll see how it pans out, but I don’t think things are dire in the US vis a vis Europe. Excellent work with this site, my congratulations. Mem
Phil

October 23, 2008

It’s alarming. There are still so many people out there that just don’t get it. My guess is that until it actually hits their (the people’) pocket books, they will remain in denial, and then it’s too late. Many I’ve talked to that hold individual stocks or mutual funds in one way or another and don’t even check them. They have ‘faith’ the money will be there when they need it.
Nikolay

October 29, 2008

Excelent article Doug. Love it.
Doug Eberhardt

November 2, 2008

One other note on Iceland. Their stock market has been decimated by this disaster. The OMX Iceland 15 Index was trading at 7704.84 on 11/05/07 and is currently trading at 651.36 as of 10/31/08.
Mike Harmon

May 11, 2009

Just wanted to say HI. I found your blog a few days ago on Technorati and have been reading it over the past few days.
Digger

May 11, 2009

Hi Mike, thanks and hope you enjoy…I’m working on updating graphics etc., so bear with me!
Joseph Ratliff

May 18, 2009

Doug,

Good stuff man.

The politicians always seem to propose that they want to “trim the fat” out of the budget as a political move.

They usually try to disguise what they do…because they know that if they put it in regular terms…the public would never allow it to happen.
Joseph Ratliff

June 25, 2009

Doug,

Some interesting ideas here dude.

I have read your white paper…and couldn’t put it down until I was done reading it. I don’t say that about many ebooks.

Good stuff…keep it up.

I am looking into your gold book.

Joe
Kevin Wilkerson

June 25, 2009

Spending may be out of control, but I have faith in my man Barack! Still, a good story with more alarm bells sounding than a collision warning.
Ed

June 26, 2009

Digger,

Haven’t had a chance to make my way through your blog yet, but
do you discuss “fiat” money? That’s what the dollar is – just paper with a “belief” behind (backing) it. What would happen to the value of the dollar if people just did not believe it had value?

Ed
Digger

June 26, 2009

Hi Ed,

You are correct. Currency only has value because of this “belief” that you speak of. I didn’t want to start with the heavy stuff as it’s hard to reverse the systems education process, so I am doing so in steps. Understanding the Treasury’s definitions I thought to be a good start.

People in the 1600′s at one time thought tulips had tremendous value. Then they didn’t. The book, “Extraordinary Popular Delusions and the Madness of Crowds” goes into these types of mania including that of John Law and paper scrip.

The same “belief” might be applied by some to gold now or in the future, but the difference IMO lies with 38 years of U.S. dollar existence sans gold versus over 5,000 years of existence of gold’s perceived value where it has never become worthless.

So there’s not much of a “delusion” with gold, hence my support of it. I go into the Federal Reserve involvement a little bit more in this post; http://fedupbook.com/blog/federal-reserve/the-fed-is-relevant-for-now-however/ and thoroughly address it in my white paper and book.

Hope you’re well Ed!
ahrcanum

June 26, 2009

Had Michael Jackson’s death not been dominating MSM news perhaps folks might have paid attention to today’s climate vote and the spiraling fiasco that the dollar may no longer be the world’s currency. Indeed, we are being led farther toward nationalization; but, the Fed always has been and perhaps may remain so even if The Federal Reserve Transparency Act moves along.
Arline

June 28, 2009

Well done! You most certainly covered the subject and it scares me!!
Joseph Ratliff

July 8, 2009

Doug,

Good stuff as always man! The question you ask below the graphic says it all.

And to anyone who reads this post…I have read Doug’s free whitepaper, and it’s a solid read too.
Soylent

July 16, 2009

“What is this debt that you, the one who is possessing these dollars, has to pay?”

This is backwards. Fiat money represent a debt owed to you, just like your bank account balance represents how much the bank is in debt to you. Dollars are a non-redeemable bond with infinite maturity that pays no interest. Its value is backed only by the governments ability to enforce legal tender laws and crack down on counter-feiting and the federal reserves ability to restrain itself from printing money.
Digger

July 16, 2009

Hi Soylent,

In short, the answer to whom they have to pay the debt to, is the Federal Reserve. The problem is that it’s a game that the U.S. government will never win.

Let’s say the Federal Reserve was the only entity allowed to create money and all the money in the world was $1.00 and the Fed loaned it to the U.S. Government at 5% interest. When the U.S. wants to pay back the $1.00, where will they get the money to pay the 5% interest? Answer: they have to borrow more in a never ending game that they will never come out ahead in unless of course they got rid of the Fed.

More detailed response:

My point was that dollars used to be redeemable in coin (gold or silver) and today they only represent a debt. One can’t turn the Federal Reserve Note in at a Central Bank and get anything of tangible value in return.

If fiat money truly “represented a debt owed to you,” how does one collect upon said debt? This, IMO, is different than someone retrieving dollars from their bank account. Yes, that money is a debt to the bank, but a credit to their account. They can’t turn that money over to the Federal Reserve and get anything for it whilst in the past they could.

Today, what happens is this fiat money “debt” is to be paid to the Federal Reserve in repayment of what they loaned the Treasury. What do they get in return for turning in their Federal Reserve Notes? More Federal Reserve Notes!

The problem with this never ending game is what they are receiving (more Federal Reserve Notes), is worth less than what they started with unless they put it in a financial institution and received interest. Purchasing power is diminished if Federal Reserve Notes are not invested.

The decoupling of gold versus Federal Reserve Notes that are invested has been occurring since 1971. I write about this decoupling in this article: http://fedupbook.com/blog/inflation/confused-about-gold-and-the-dollar/

Let me know if this answers your query. Perhaps I should have explained it better. I plan on going back and reworking some of the article for clarity.

Thanks for your comment.
Soylent

July 20, 2009

“Let’s say the Federal Reserve was the only entity allowed to create money and all the money in the world was $1.00 and the Fed loaned it to the U.S. Government at 5% interest.”

That’s erroneous and possibly dishonest.

When the US government wants to borrow it issues treasuries with various maturity dates, depending on interest rates and how long it wants to borrow the money for. They auction them off, and at some given price the amount of interest is enough to intice someone to buy them.

The FOMC(part of the federal reserve system) creates money by purchasing US debt(i.e. treasuries) with newly created money. If the FOMC wants to destroy money it sells treasuries back into the market to anyone willing to buy them and just return the money it created to the oblivion from whence it came.

There is nothing particularly sinister about this process of money creation; it is not a for-profit activity and they don’t get to keep any interest from treasuries they hold. They return that money to the US treasury other than the trivial amount they spend on operating expenses and wages for their employees.

“When the U.S. wants to pay back the $1.00, where will they get the money to pay the 5% interest?”

It’s tremendously bad policy to annihilate all money in a society. But lets ignore that.

It’s not easy to shrink the money supply to zero, but it is not because of any technical difficulty. Firstly you must recognize that paying down debt held by non-FOMC entities does not destroy money because this debt was never monetized in the first place.

Assume there is $100 in circulation and I buy a US T-note for $0.97 and collect my $1 upon maturity. Did 3 cents necessarily spring into existance? No, because you just paid me from money already in existance that was collected from taxes and as soon as I spend that money into circulation the US government can collect parts of it from sundry taxes and use it to pay down additional debt.

Since the FOMC returns surplus money to the treasury, there is no extra debt created by its monetization of debt. So all the government has to do is somehow convince the FOMC, which is in charge of the money supply, to start destroying money by puking up treasuries into the market. Then the government has to vacuum money out of the economy with higher taxes(very unpopular) and vastly reduced spending(very unpopular). The debt still won’t reach zero because there will be mass-unemployment, starvation in the streets and an armed revolution before you can get there; but it is technically possible to suck all this money out of the economy.

“Answer: they have to borrow more in a never ending game that they will never come out ahead in unless of course they got rid of the Fed.”

Nonsense.

“If fiat money truly “represented a debt owed to you,” how does one collect upon said debt?”

It represents a monetized slice of US treasuries. You don’t collect on it because it’s not reedemable for anything except other federal reserve notes. It’s a bond with no maturity and no coupon; valuable only because supply is limited, because the government enforces legal tender laws, has the power to tax and the federal reserves assurances that it will not enact tremendously stupid monetary policy.

“The problem with this never ending game is what they are receiving (more Federal Reserve Notes), is worth less than what they started with unless they put it in a financial institution and received interest. Purchasing power is diminished if Federal Reserve Notes are not invested.”

That’s a conscious decision to encourage investment. Having a pile of gold bricks or pale green paper slips with dead statesmen on them sitting in a deposit box somewhere only allows you to take possession of a corresponding share of the real wealth that is being produced; it does not magically increase the production of actual wealth. For that you need people to build and operate factories, farms and businesses and do other productive things; this activity is accomplished through prudent investment. Mr. Greenspan has managed to encourage a lot of imprudent investment, this is an error in judgement following the housing bubble. Gold on the other hand, makes no judgement and will sort of hobble along ignorant of the world around it; sometimes this is a good thing, sometimes it’s not.
Digger

July 24, 2009

Soylent, I see where you are coming from in your criticism of my explanation and admit it wasn’t a good example and misleading. I should have taken more time to research my reply.

An explanation of “Modern Money Mechanics” from the Fed:

http://www.rayservers.com/images/ModernMoneyMechanics.pdf

And a video explaining “How Money is Created and Destroyed:”

http://www.rayservers.com/images/ModernMoneyMechanics.pdf

Excerpt from “Modern Money Mechanics:” “In the United States neither paper currency nor deposits have value as commodities. Intrinsically, a dollar bill is just a piece of paper, deposits merely book entries. Coins do have some intrinsic value as metal, but generally far less than their face value.

What, then, makes these instruments – checks, paper money, and coins – acceptable at face value in payment of all debts and for other monetary uses? Mainly, it is the confidence people have that they will be able to exchange such money for other financial assets and for real goods and services whenever they choose to do so.
Money, like anything else, derives its value from its scarcity in relation to its usefulness. Commodities or services are more or less valuable because there are more or less of them relative to the amounts people want. Money’s usefulness is its unique ability to command other goods and services and to permit a holder to be constantly ready to do so. How much money is demanded depends on several factors, such as the total volume of transactions in the economy at any given time, the payments habits of the society, the amount of money that individuals and businesses want to keep on hand to take care of unexpected transactions, and the forgone earnings of holding financial assets in the form of money rather than some other asset.

Control of the quantity of money is essential if its value is to be kept stable.”

The beginnings

“As early bankers, Goldsmiths initially provided safekeeping services, making a profit from vault storage fees for gold and coins deposited with them. People would redeem their “deposit receipts” whenever they needed gold or coins to purchase something, and physically take the gold or coins to the seller who, in turn, would deposit them for safekeeping, often with the same banker. Everyone soon found that it was a lot easier simply to use the deposit receipts directly as a means of payment. These receipts, which became known as notes, were acceptable as money since whoever held them could go to the banker and exchange them for metallic money.
Then, bankers discovered that they could make loans merely by giving their promises to pay, or bank notes, to borrowers. In this way, banks began to create money. More notes could be issued than the gold and coin on hand because only a portion of the notes outstanding would be presented for payment at any one time. Enough metallic money had to be kept on hand, of course, to redeem whatever volume of notes was presented for payment.
Transaction deposits are the modern counterpart of bank notes. It was a small step from printing notes to making book entries crediting deposits of borrowers, which the borrowers in turn could “spend” by writing checks, thereby “printing” their own money.”

You said;

“For that you need people to build and operate factories, farms and businesses and do other productive things; this activity is accomplished through prudent investment. Mr. Greenspan has managed to encourage a lot of imprudent investment, this is an error in judgement following the housing bubble. Gold on the other hand, makes no judgement and will sort of hobble along ignorant of the world around it; sometimes this is a good thing, sometimes it’s not.”

I think you mean “leading to” the housing bubble, rather than “following” here.

Lastly, gold is not “hobbling” along any longer. I think there is a definite decoupling occurring since Nixon’s 1971 departure from the gold “backed” standard and especially since 2000 after the intro of the EURO, which has become, outside of gold, chief competition to the dollar: http://fedupbook.com/blog/inflation/gold-and-the-euro-connection-another-nail-in-the-us-dollar-coffin/

I do think there are solutions (less spending), but I think we’re in agreement that congress won’t do it. There’s wars to fight!…, among other wastes that the 300 million of us let 545 individuals tell us one thing (to get elected) and do whatever benefits special interests or themselves once in office. There is no accountability and after 4 years of service to their country, they are set for life. Nice gig if you can get it…
arline

July 29, 2009

Amen! Well Done; pray we are ready for it!
Ron

August 1, 2009

75% of Americans Want To Audit the Fed – Now Thousands Want to Abolish It!

Read the petition and the angry comments at http://www.petitiononline.com/fed/petition.html

Thanks,
Ron
Joseph Rattay

August 18, 2009

I thought that was a good post. Very insightful.
Doug Digger Eberhardt

September 11, 2009

A day later and the dollar index is down this morning hitting a low of 76.453 and gold up over $1,000 again. The DOW is up a little at the same time. If the dollar index continues to decline, gold will continue to rise. 72 on the dollar index is the key number to watch. If the dollar falls below that, you better be in gold. At present I’m watching to see if the 76 level is taken out or is a floor from which to bounce.

You can follow the dollar index live here: http://www.fxstreet.com/rates-charts/usdollar-index/

WARNING: Give it a little time to load. It’s a Java program and takes a lot of your computers memory to load. Also a warning that it’s a pretty ugly picture of the poor reserve currency of the world.

Gold buying advice: When buying gold, there will always be dips where you can secure your position.
Kim Eberhaardt

September 12, 2009

Great response!! I’m a true believer in gold (and silver) and I like to physically have my gold in my hands.
Joseph Ratliff

October 2, 2009

Digger,

Good stuff man. This recession is FAR from over, in fact, I believe there is another crash coming…and that’s not just a random guess

People should follow Doug’s advice in this post…start doing your homework now, before something worse happens.
arline

October 7, 2009

Amen!
andrew

November 16, 2009

Good article as someone who uses Elliott Wave and believes to fully understand it. I know almost all patterns can turn into a completely different patterns on a larger degree(actually all can). Also Elliott Wave is a practice in probability and anyone who claims it as certainty doesn’t understand it. However there are certain moments when the markets are very predictable using Elliott but I agree in most cases long term forecasts are barely over 60%.
quiltingsando

December 1, 2009

What a great article and explanation. Well, done.
john

December 2, 2009

never could figure out why the U.S. needed a private bank to produce fiat money in the first place.the sole power of the monies ,the coining should retreat back to congress where it belongs without interest.i say layoff everyone at the federal money machine an let the chips fall where they may.theres an old german saying “if they had to work for a living they would starve”.
quiltingsando

December 3, 2009

Wow, what a great reply. You should have your article on Lew Rockwell. I saw a Youtube, where in Zimbabwe people pan for gold to buy bread. All day these people pan to get the smallest amount of gold to trade for bread to stay alive. I guess it doesn’t matter what you call it, as long as you got it.
Doug Digger Eberhardt

December 3, 2009

Thanks quiltingsando,

I was surprised to see someone had posted it on Lew’s site.

Regarding Zimbabwe, I have some of those 100 Trillion Zimbabwe notes as novelty items. I wrote an article that suggested the people of Zimbabwe know more than their government and instead of implementing a “gold backed” standard like their Central Bank spokesperson wanted to, I suggested they be the first nation in the world to go on a physical gold standard. The quality of life of the Zimbabwean’s would greatly improve if they did.

Of course the Zimbabwe Central Bank wouldn’t go for it, but what good did they do to begin with? At some point a nation has to stand up for what’s right.
Lauren

December 8, 2009

To answer your last question: TheStreet.com almost always publishes bullish articles on gold, and I assume they published this to balance the others out/to look like they acknowledge multiple perspectives.

But, as you said, the argument is poor… so I suppose the answer is, no, don’t keep your gold in the bank.
Shiv Desai

December 22, 2009

Hi,

“If the price of a one ounce gold coin stays the same, and the value of the dollar decreases (because of more printing of dollars), your gold coin would buy you less. On the other hand, if the value of the dollar increases (contraction of the money supply), then the gold coin would purchase more goods. It’s purchasing power has increased with the rise in the value of the dollar.”

Your statement is quite in conflict with ur general stand of gold as a hedge against inflation. I think if the value of the dollar decreases, the dollar price of the one ounce gold will increase and vice versa. Ur assumptuion of price of the gold not changing is flawed. Its the purchasing capacity interms with any other product remains the same.

Please Reply.
Doug Digger Eberhardt

December 22, 2009

I understand where you are coming from Shiv. When I first wrote the article I knew that sentence might get some feedback. I should have added one more sentence to it in portraying my intent.

My purpose in writing it that way was to show that in deflationary times the purchasing power of gold increases. Deflation, defined as the decrease in the money supply resulting in an increase in the purchasing power of the monetary unit.

Roy Jastram's book, “The Golden Constant” showed the affects of inflation and deflation over the short and long run analyzing the English and American Experience, 1560-1976. His conclusion was;
Gold is a poor hedge against major inflation.
Gold appreciates in operational wealth in major deflation's.
Nevertheless, gold maintains its purchasing power over long periods of time, for example, half-century intervals.

My intent was to show that the purchasing power of gold increases during deflationary times, not just “in times of inflation” as Ramsey's quoting of Siegel suggests.

Keep in mind, I am critical of Jastram's work as well, since the price of gold was fixed by government throughout the 20th century and his book only covered six years in analyzing the dollar without gold's backing (1971-1977). He died before he could write anymore conclusions on the subject.

Thanks for the comment…hopefully this clarified things for you.
Shiv Desai

December 22, 2009

Hi,

“If the price of a one ounce gold coin stays the same, and the value of the dollar decreases (because of more printing of dollars), your gold coin would buy you less. On the other hand, if the value of the dollar increases (contraction of the money supply), then the gold coin would purchase more goods. It’s purchasing power has increased with the rise in the value of the dollar.”

Your statement is quite in conflict with ur general stand of gold as a hedge against inflation. I think if the value of the dollar decreases, the dollar price of the one ounce gold will increase and vice versa. Ur assumptuion of price of the gold not changing is flawed. Its the purchasing capacity interms with any other product remains the same.

Please Reply.
Doug Digger Eberhardt

December 22, 2009

I understand where you are coming from Shiv. When I first wrote the article I knew that sentence might get some feedback. I should have added one more sentence to it in portraying my intent.

My purpose in writing it that way was to show that in deflationary times the purchasing power of gold increases. Deflation, defined as the decrease in the money supply resulting in an increase in the purchasing power of the monetary unit.

Roy Jastram's book, “The Golden Constant” showed the affects of inflation and deflation over the short and long run analyzing the English and American Experience, 1560-1976. His conclusion was;
Gold is a poor hedge against major inflation.
Gold appreciates in operational wealth in major deflation's.
Nevertheless, gold maintains its purchasing power over long periods of time, for example, half-century intervals.

My intent was to show that the purchasing power of gold increases during deflationary times, not just “in times of inflation” as Ramsey's quoting of Siegel suggests.

Keep in mind, I am critical of Jastram's work as well, since the price of gold was fixed by government throughout the 20th century and his book only covered six years in analyzing the dollar without gold's backing (1971-1977). He died before he could write anymore conclusions on the subject.

Thanks for the comment…hopefully this clarified things for you.
Averagejoe

December 29, 2009

Does anyone know where any of the money they have spent has gone on any project, especially Fanny and Freddie, the most corrupt companies outside of Acorn? There is not an accounting of it anywhere, and the accounting they have shown us is false. I read recently that 1.7 million dollars were spent in Texas to caulk 7 houses. Things that make you go hmmm. I believe that they are after our property now and this is part of their property grab. This administration is following a doctrine to break America and turn it into a Third World country, that is what radical Left wing dictators, oops, governments do.
vinayak

December 29, 2009

In addition to all what you have said above which makes 100% sense, just the fact that gold has been around for 15 or 18 centuries as compared with any other currency (whether issued by any king in the past or recently the FED) in the history of mankind makes it an investment worth holding over the rest of our lifetimes.
vinayak

December 30, 2009

In addition to all what you have said above which makes 100% sense, just the fact that gold has been around for 15 or 18 centuries as compared with any other currency (whether issued by any king in the past or recently the FED) in the history of mankind makes it an investment worth holding over the rest of our lifetimes.
Boomy

January 4, 2010

Farmland.In another country. Everything else is a scam.
Go ahead and invest in gold. They'll know right where it is when they come to steal it….AGAIN.
Steal it they will. They'll send in the guys that ' protect and serve”, THEM, to collect.The US govt and the private reserve bank are the two biggest terrorist organizations in the history of mankind.
Doug Digger Eberhardt

January 4, 2010

Hi Boomy,

Farmland is a great place to invest for many reasons. I address this in a chapter of my forthcoming book, “Fed Up!”

Yes, they did confiscate gold back in 1933 and unfortunately today the laws are on the book that say they can confiscate pretty much anything they want, including gold. In my book, “Buy Gold Safely,” I address this and recommend how to legally counteract any potential gold confiscation. http://safelybuygold.com
Boomy

January 4, 2010

Farmland.In another country. Everything else is a scam.
Go ahead and invest in gold. They'll know right where it is when they come to steal it….AGAIN.
Steal it they will. They'll send in the guys that ' protect and serve”, THEM, to collect.The US govt and the private reserve bank are the two biggest terrorist organizations in the history of mankind.
Doug Digger Eberhardt

January 4, 2010

Hi Boomy,

Farmland is a great place to invest for many reasons. I address this in a chapter of my forthcoming book, “Fed Up!”

Yes, they did confiscate gold back in 1933 and unfortunately today the laws are on the book that say they can confiscate pretty much anything they want, including gold. In my book, “Buy Gold Safely,” I address this and recommend how to legally counteract any potential gold confiscation. http://safelybuygold.com
Doug Digger Eberhardt

January 19, 2010

Some more reasoning to trade gold in EUROs:

ECB prepares legal ground for euro rupture as Greek crisis escalates

Fears of a euro break-up have reached the point where the European Central Bank feels compelled to issue a legal analysis of what would happen if a country tried to leave monetary union.

http://www.telegraph.co.uk/finance/comment/7012...
Scott Heitmann

February 4, 2010

Hi,Doug Check out E-wave. Man,are they gloating about today's dip!!
Scott Heitmann

February 4, 2010

Hi,Doug Check out E-wave. Man,are they gloating about today's dip!!
Doug Digger Eberhardt

February 23, 2010

For some reason that article link disappeared, but you can still read some of the article here: http://www.lewrockwell.com/orig10/evans-pritcha…
Doug Digger Eberhardt

February 23, 2010

For some reason that article link disappeared, but you can still read some of the article here: http://www.lewrockwell.com/orig10/evans-pritcha…
Doug Digger Eberhardt

March 1, 2010

The day after I wrote this, the LA Times wrote this story; “Many borrowers in default stay put as lenders delay evictions” http://www.latimes.com/business/la-fi-squatters…
Doug Digger Eberhardt

March 2, 2010

The day after I wrote this, the LA Times wrote this story; “Many borrowers in default stay put as lenders delay evictions” http://www.latimes.com/business/la-fi-squatters…
Ben Banner

March 17, 2010

Hi Doug – Sounds like you have been talking about gold quite a bit. I was wondering – have you ever sold it? Thanks, Ben
Doug Digger Eberhardt

March 17, 2010

Hi Ben – Yes, I did sell gold for one of the largest Gold Dealers in the U.S. My background as a financial advisor for over 20 years along with my inside understanding and research of the gold industry gives me a unique perspective on gold and silver. A perspective that has allowed me to challenge CFP's, CFA's, PhD's, Journalists, and financial gurus when they write negative articles on gold.

Unfortunately, many investors are getting ripped off because of their ignorance of gold. We're simply not taught anything about gold and silver and the financial industry doesn't understand it either (but they're learning). This leaves the one's selling it to do the educating.

Working for the Gold Dealer gave me insight into the industry and the shady tactics that Gold Dealers will utilize in putting folks in unsuitable investments. I wrote the book, “Buy Gold Safely” after working there to expose the industry and help folks buy gold and silver the right way. I subsequently wrote a book on silver, “Buy Silver Safely” as silver has different investment characteristics than gold.

I'm combining both books into one as we speak and putting it on Amazon.com, Barnes and Noble, etc. The new book will be called “Buy Gold and Silver Safely.”

I'm also going to get back into the selling of gold and silver through one of the companies I recommend in my book, a company I approached after writing it. The reason I chose this company is they give the purchaser of gold and silver the best price. But there's much more that I'll be able to offer purchasers of gold and silver like; knowing how to buy, what to buy, how much to buy, how to profit, when to sell, where to sell, how to sell tax free and much more, including my continued gold and silver investment analysis via the articles I write.

With this precious metals sales company, which will have the same name as my book, “Buy Gold and Silver Safely,” I plan on undercutting the industry and selling gold and silver at a lower price than anyone else. I'll be writing future gold and silver articles over at http://buygoldandsilversafely.com (under construction and coming soon).

I'll be making an announcement of the change once things are up and running. I'll also be doing some press releases exposing the gold dealers and their tactics (what fun that will be!). Time to shake the industry up and help educate folks about buying gold and silver. That's why I wrote the book…to help educate!

This FedUpBook.com site will be getting more political in preparation for the release of my book, “Fed Up!” This book will be one that I hope will open they eyes of the reader to see what's really going on in America and offer much needed solutions both politically and economically (see the “about Doug Digger Eberhardt” page above for more detail).

There will also be an investment chapter (yes, I'm exposing this industry too and helping educate investors) and a chapter dedicated to gold and silver.

I want the message of the book “Fed Up!” to stand the test of time.

Thanks for asking Ben…
JSBach

March 22, 2010

The best constitutional and freedom solution by a long stretch is as follows:

1) Abolish all government control of medical insurance monopolies (in fact all insurance companies), thereby making them NO longer monopolies. They should stand on their own two feet and try to sell their fraud care, having to compete with anyone and everyone! They only take money which the consumer can spend wiser himself, and lead people into totally unnecessary procedures; notwithstanding the fear mongering which got you into such dire care and the lab results from the doctor owned labs which put the fear into you making you think you needed that deadly care. Studies have shown the comparison between those entering hospitals with and without insurance coverage, for the same condition initially: Those with insurance paid more out of their pockets ultimately, AND lived a SHORTER life expectancy!!! Insurance companies are proven to be BAD for your health. When people needed real health care, they either received real help in alternative sources, or the doctors competed making the prices lower, and the churches and friends helped them out! That is the history of our formerly great health care system in America, but you have to go back more than 40 years to see that. Government has been destroying the health care for all, for the last 45 years!

2) Abolish all government interference in the health care industry! Go back 50 years and you will see a freedom and explosion in health unlike any in history. The health care monopoly in the pharma and medical industry, against natural and alternative care, has been one of the biggest motives for monopolistic governmental control begged for by the industry itself! There is no doubt that what happened in health care yesterday was secretly pushed by the industry both medical and insurance! It is bailout money being divvied up more and more, theft to boot, from the peoples pensions, bank accounts and wealth! It makes for more costly simple health visits, more dangerous care, and shorter life expectancy. The life expectancy of Americans differs widely from rural to urban. Some studies show as much as 10 years less in the city. In rural areas it is not uncommon to find a farmer who has no insurance, and has not been to see a doc for his whole life, who can break a leg a possibly set it at home or have it casted and return home same day, who laughs at “dangerous to your health annual check ups”, and, who easily outlives his city friends! To the degree as Americans utilize the many modern pathways of “deathcare”, they also live shorter and shorter life expectancies!
On the other hand, with urban life surrounded by the wails of sirens, advertisements for drugs and procedures, fear after fear thrust down the brains of city dwellers and their employers, and a constant barrage of fear and the need to buy into the death care system, the human frame begins to suffer more degradation. This is due to the constant use of drugs and analgesics, unhealthy life style and environment, the jumping at every newfangled “cure” coming down the drug company pike, never realizing that the treatment protocols are, in themselves, destroying their longevity!

Hence, the increase of “problems”, which a recent NIH study showed, results in huge costs for the public, as well as significant increase in death rates. Iatrogenic cause of death has been on the rise for decades… ever since the government stuck its nose into the cookie jar 45 years ago at the request of the insurance companies, the AMA, and big pharma!

3) Go back to the national budget of 1998 or well before and abolish the income tax! That will free up Americans to buy what they wish and what they need. The decisions will then be made for themselves. The results of those decisions will felt also by themselves, as it should be!

Nothing has changed. Only the numbers grow and the wealth of the politically connected grows through theft.

It will soon collapse.

It is time to replace congress and erase the last 60 years of socialist and thieving fraud. The answer is simple if one reads his constitution. The will to act is slower to engage as people are disposed to suffer long. We have not quite suffered long enough.

It is my prediction that the GOP and the DNC will alike return their perfidious incumbents to congress with only window dressing change. Each Congressional district still covets it’s bacon of theft from the people, more than they do freedom and liberty, as was just seen in Texas.

The churches, as in Germany, are the most faithful to socialism and to the Fuhrer Princip… ‘The party can do no wrong’. They, as history shows, only change after destruction has performed its punishment! They are fed by blind leaders of the blind, and the Bible tells us so.

Few are the pastors who have open eyes, therefore few are the church people who will respond when the country is in danger. Most will wait for their ballots, to decide, expecting the party to select the choices for them. They. as automatons, will punch one of two holes on the ballot, regardless of both candidates being on the same train, heading to the same destination. Quigley had no fear of exposing the evil of the CFR in this twiddle Dee, twiddle Dum system, for the real sin rests with the people themselves.

Maybe it is time for http://www.GOOOH.com … or, is America finished?
JB

April 2, 2010

Another gold bug trying to get the average Joe to risk his savings in an asset that will be back down to $300 in a few years. Gold has NO intrinsic value. Period. If you want to get in on the bull market you are a few years late. I was in gold in 2001 at under $300. I sold mine recently. The higher the price goes the higher risk.
Doug Digger Eberhardt

April 3, 2010

JB, Interesting you make such a comment about me being a “gold bug.”

Perhaps you haven't read any of the articles I've written on gold you would come to the conclusion I'm a realist. Gold should be part of everyone's portfolio as insurance against a falling dollar. Period.

First of all, this entire article was centered around buying gold in YEN, not U.S. dollars.

Second, as far as your comment that gold has “no intrinsic value,” you'll be surprised to know I agree with you. Gold is just a shiny rock. It's what it is priced in that matters. You bury gold in your back yard 10 years ago, and dig it up today, clean it off, it's still a shiny rock. But why is that shiny rock worth more today in U.S. Dollar terms that it was 10 years ago? It has nothing to do with intrinsic value. It has everything to do with what that shiny rock can buy you in terms of purchasing power. The shiny rock can buy you more goods today than it could 10 years ago. Period.

Third, as far as risk goes, the risk is in the U.S. Dollar, EURO and YEN that I have written article after article about. The EURO trade in gold is up over 7% since I first recommended it in December. The YEN trade in gold is just getting started. The U.S. Dollar trade in gold is taking a breather before it moves higher. But you sold yours.

When gold breaks out to a new high as the Dollar Index falls below it's March 2008 lows, will you buy gold at a higher price? Probably not, because you consider it a “high risk?” Gold isn't the risk. It's what it is priced in that is. That's what you're missing in your understanding.
Jason

April 14, 2010

Good article. I like listening to Dave and trust him, but I think you are correct on this. He is being a little close-minded on this one. Thanks!
Jason

April 14, 2010

Thanks for the great post!
Karen

April 26, 2010

It is still necessary modifications to the order of foreclosure, primarily in the acquisition debt.
stevealverson

April 28, 2010

Great history lesson on mortgages! I look forward Part 2 & 3!
stevealverson

April 29, 2010

Great history lesson on mortgages! I look forward Part 2 & 3!
investor relations

May 8, 2010

Gold will always be where the smart money is at.
investor relations

May 9, 2010

Gold will always be where the smart money is at.
annacoulling

May 16, 2010

Gold has now broken above the previous top of $1225 per ounce and now looks set to soar. Many are worried that it cannot possibly go anyhigher. My own view is that on an inflation adjusted basis $1200 per ounce is still only 50% of the 1980 high – so there is still some way for it go and with all the short term technical indicators pointing sharply higher the recent sideways consolidation will provide a solid platform for any pullback.
annacoulling

May 16, 2010

Gold has now broken above the previous top of $1225 per ounce and now looks set to soar. Many are worried that it cannot possibly go anyhigher. My own view is that on an inflation adjusted basis $1200 per ounce is still only 50% of the 1980 high – so there is still some way for it go and with all the short term technical indicators pointing sharply higher the recent sideways consolidation will provide a solid platform for any pullback.
John

June 2, 2010

There are convincing arguments for both inflation and deflation. But, the rate of money printing can only portend inflation down the road. That combined less mining output and greater demand should make gold appreciate in value.
Derek

June 2, 2010

As with any market the ideal would be buy at the lows and sell at the highs, but thats harder to do than say. The ideal approach is to buy in increments at different prices and average your cost. If we have another crisis, gold could easily skyrocket. On the downside, I think its limited at this point
Pranay Parekh

June 8, 2010

i sold gold @ 18165 but it has gone far today it is 19050, i want reenter the market should i enter at this level or should i wait for correction please tell a what level should i enter.
Pranay Parekh

June 8, 2010

i sold gold @ 18165 but it has gone far today it is 19050, i want reenter the market should i enter at this level or should i wait for correction please tell a what level should i enter.
Pranay Parekh

June 8, 2010

i sold gold @ 18165 but it has gone far today it is 19050, i want reenter the market should i enter at this level or should i wait for correction please tell a what level should i enter.
Doug Eberhardt

June 9, 2010

Pranay, the summer slow season is approaching. Time for caution. I don't
follow the rupee, so I can't advise you except for making you aware of this
pattern which has been consistent. I work mostly with U.S. clients.
Bill Board

June 21, 2010

As you well know, when everyone wants something, it's probably time to sell. With virtually everyone calling for the inevitable continued rise in Gold prices, we could be at or near a top!? The Daily Sentiment Index recently recorded 98% bulls. This extreme optimism should limit the upside potential. Also, the precious metals complex, (silver, platinum, palladium and mining shares) made their highs two years ago. If there were runaway inflation, the commonly quoted reason for higher Gold prices, they would all be moving together.
Contrary to the other commonly held belief that Gold prices increase during difficult economic times because it is a “safe haven,” a careful analysis of past price action will reveal that Gold prices normally rise and fall with the economy. With our economy poised to resume it's decline, Gold prices should go right down with it. A sharp spike up is certainly a possiblilty but that should then be the blowoff.
My crystal ball is very cloudy but historically, Gold should start to collapse in concert with the Dow.
High price – low price? Who knows? Manias can go to extremes.
My forecast, right or wrong, is a deflationary depression with Gold and the Dow eventually matching. It ain't going to be pretty, sorry to say.
BTW, I'm not saying that one shouldn't own Gold. It's the only real money. I just wouldn't expect it to be a great investment but it can be a good hedge.
IPINLive

July 1, 2010

It could be argued that gold initially had no real intrinsic value until someone realised that it was not that abundant and could not be manufactured. Houses or property (from caves to skyscrapers) have always had their uses and demand, and will continue to do so as long as there are people living on the planet. Unless the population wanes significantly, one would suggest property is the investment, and gold is indeed the hedge.
Doug Eberhardt

July 1, 2010

Hi IPINLive,

It's a timing issue and also one of value. Right now, in the U.S., real estate is still overvalued (see my detailed analysis “Do You Buy Real Estate Now or Wait?” http://buygoldandsilversafely.com/blog/real-est… )

This does not mean that internationally there may not be bargains for investors.

But the demand here in the U.S. is reduced by the fact that 20% are unemployed, 20% are worried about becoming unemployed, 20% are just trying to make ends meet and 20% are trying to save for retirement and don't expect REIT's or anything related to real estate is a good place to put money right now. This leaves 20% that “may” buy real estate.

People who own larger homes are downsizing or trying to. Foreclosures are on the rise. The shadow inventory held by banks has yet to come to market.

Meanwhile gold is holding steady while other commodities fall. Gold is maintaining its purchasing power. Real Estate is not.

For a dose of reality about U.S. real estate, and sometimes other countries, I suggest reading http://patrick.net
Doug Eberhardt

July 1, 2010

Hi John, I have done a complete analysis of the inflation/deflation debate in my book which will be available on Amazon.com, Barnes and Noble, etc. soon.

The rate of money printing cannot keep up with the trillions of dollars moving down the liquidity pyramid I posted in the article. Deflation is occurring almost everywhere.

Gold maintains its purchasing power in deflation.

Prices, a result of inflation or deflation, can be moving higher or lower depending on demand and whether they are consumer goods or capital goods. Necessities of life will hold up better than capital goods, but they too may fall in price. In the Great Depression, they fell 20% compared to Capital goods falling 50%.

Thanks for the comment.
Doug Eberhardt

July 1, 2010

Hi Bill,

Overall I think we agree on the deflationary depression. However, gold maintains its purchasing power during deflationary times as pointed out by Roy W. Jastram in his book “The Golden Constant.”

In fact, if you look at the gold price action presently, you can see gold is holding its own while most other commodities are getting slammed. This is quite telling and not noticed by most.

I present the case for gold in a deflationary environment in my book, “Buy Gold and Silver Safely,” which I am sending off to the editors this week. It will be available soon. I devote an entire chapter to the inflation/deflation debate with complete analysis of the data.

Thanks for the comment. Will be interesting to see at what price the DOW and gold meet, whether it is a 1:1 ratio or 2:1. Either way, gold is the place to be and as you say, which I agree with…”the only real money.”
IPINLive

July 1, 2010

Hi Doug,

With respect to which is the worthier investment, I would be inclined to agree with most of your comments there. Whilst gold is holding steady at the moment, I am sure you would agree that this is unlikely to continue long term, as the property markets recover. We have seen gold slump in the past, just as we have with almost all investment vehicles over the years.

The pricier investments like real estate will always suffer earlier than “cheaper” ones, primarily due to the entrance value in getting in on the investment.

Parts of the US real estate market are still over valued, the advantage real estate has though (provided one has the liquidity) is that you can shop around for a good deal, buying physical commodities doesn't give you that option. The returning favour from commodities though is liquidity and purchasing power as you rightly state, real estate will rarely have that.

As with any investment, a lot of decisions will boil down to how much cash you can lay your hands on for a given investment.

http://www.ipinglobal.com/ipin-live/blog/259703…
Doug Eberhardt

July 1, 2010

Hi IPINLive,

Thanks for the discourse. I read your article. There's a couple issues to consider.

The first is the comment above; “I am sure you would agree that this is unlikely to continue long term, as the property markets recover.”

Being that we are in a deflationary cycle, it is important to note what happened in Japan to their real estate prices. This is what's occurring in the U.S. at present.

Japan tried the stimulus spending to no effect. The U.S. is trying to do the same thing with little effect, and now that the stimulus has dried up, the downward trend has resumed.

As far as the long term price for gold, it will depend on what value people put on it as assets flow down the liquidity pyramid to perceived real wealth. I go into detail on this in my book which I'm sending to the editors this week.

There are literally trillions of dollars of assets that are chasing a small amount of gold, so I understand your analysis of the size of the gold market. For me this just means the demand will spike up the price tremendously. Where we are in the “bubble” aspect in gold compared to past bubbles shows gold isn't close to being in a bubble.

There is a chart on this, but I can't post right now. It will be in the book though.

The other issue you bring up is Central Bank selling. The Agreements to sell gold have ended and they are now net buyers with China, India and other nations increasing their holdings. Remember, Central Banks holding of gold give the illusion that paper money is backed by it.

While real estate is a hard asset, Central Banks don't own it. I will say it only makes sense to me in owning right now if one bought a 27% discounted foreclosed property…and even then I'd expect they'd have to hold onto it for quite awhile if they expect to sell for a profit. If one was going to live in it forever and could afford the payments, then by all means, buy…at the 27% discounted rate. I made a bet with a friend that real estate prices will fall 20% here in Orange County, one of the best places for real estate, before rising 20%. I'm confident of my winning. He of course is confident of his, but can't back it up with any data, especially of late.

All of the data I analyze shows a difficult road ahead for real estate. Jobs will be the key and the report today was negative again. One has to be careful of the snowball effect of this as companies continue to cut back for lack of buyers and cash (can't borrow to expand).

There will be a time for real estate. I just don't believe it to be at present for those here in the U.S.

I wrote earlier on what Soros was up to (since you mentioned him in your article). He bought gold last year via his fund, and then trashed it this year by saying it was the “ultimate bubble.” I believe he was just doing that to try and bring the price down so he could buy more.

Thanks for sharing your thoughts. It's not all black and white and at some point real estate will be a bargain again. When it is, gold will be much higher than it is today because of the trillions chasing real money.

The psychology of the madness of crowds will be interesting to watch moving forward. http://www.thestreet.com/story/10794792/1/consu…

Let me know what you see internationally. I'm curious.
Doug Eberhardt

July 1, 2010

Hi John, I have done a complete analysis of the inflation/deflation debate in my book which will be available on Amazon.com, Barnes and Noble, etc. soon.

The rate of money printing cannot keep up with the trillions of dollars moving down the liquidity pyramid I posted in the article. Deflation is occurring almost everywhere.

Gold maintains its purchasing power in deflation.

Prices, a result of inflation or deflation, can be moving higher or lower depending on demand and whether they are consumer goods or capital goods. Necessities of life will hold up better than capital goods, but they too may fall in price. In the Great Depression, they fell 20% compared to Capital goods falling 50%.

Thanks for the comment.
Doug Eberhardt

July 1, 2010

Hi Bill,

Overall I think we agree on the deflationary depression. However, gold maintains its purchasing power during deflationary times as pointed out by Roy W. Jastram in his book “The Golden Constant.”

In fact, if you look at the gold price action presently, you can see gold is holding its own while most other commodities are getting slammed. This is quite telling and not noticed by most.

I present the case for gold in a deflationary environment in my book, “Buy Gold and Silver Safely,” which I am sending off to the editors this week. It will be available soon. I devote an entire chapter to the inflation/deflation debate with complete analysis of the data.

Thanks for the comment. Will be interesting to see at what price the DOW and gold meet, whether it is a 1:1 ratio or 2:1. Either way, gold is the place to be and as you say, which I agree with…”the only real money.”
IPINLive

July 2, 2010

Hi Doug,

The Japanese real estate market is an unusual one in my opinion, primarily due to it never really having had foreign investors entering into it. (I do appreciate the Japanese market as not been attractive financially for more than a decade!) Also, the Japanese financial culture is substantially different with it being the only major economy requiring having to “balance its books” each year in its own currency (great for the forex traders) and the fact that most Japanese keep their money in the bank and tend to invest locally, resulting in an economy that could be said to be somewhat isolated from that respect.

The government introduction of inhertiable mortgages has been an attempt to fix the situation, but much like quantative easing, all it has done is exasperate the situation further.

The advantage that the US has over Japan though with its real estate market can be seen from a couple of angles. Obviously they can see that Japan has not really got it right over the past decade, so there are lessons to be learned there. Also, the US is arguably a more investor friendly market for foreigners as far as real estate is concerned. The US has seen vast amounts of foreign investment into property, and is starting to see a new wave with the rising foreclosure rate and subsequent discounted property available.

One of the major hurdles that the US does not have though is the investment process in real estate itself, and the lack of cultural difference. If you don't speak or understand Japanese, buying real estate in Japan would be a very daunting task indeed, the US, whilst it has its own regulations of course, has a major advantage over Japan with respect to attracting foreign investment cash as a whole.

I agree entirely with your comment there about Soros, it wouldn't be the first time that kind of thing had gone on!

As a non US investor, the US real estate market for me as an industry professional holds a great deal of value right now as a foreigner looking in.

The US domestic property investment market is sitting on the sidelines, either because because it wants to, or in most cases I would suggest because it has to due to lack of liquidity.

As a result, coupled with the excess of bank owned property as you said, (which has still to be offloaded onto the market) means that prices will still continue to come down a little further, to a point.

For the larger investors this opens up opportunities to buy up low price properties as the market continues being shaky (averaging out the purchase values) and you also have the things like the Section 8 program which gives investors the ability to have their assets working for them.

http://www.ipinglobal.com/ipin-live/article/256…

“The madness of crowds” is very apt, the UK buy to let market has seen this in full effect, a situation which is now being paid for with some large changes in taxation and cuts in the UK, the reality is though that both the UK and the US are in a position to do something about it by encouraging foreign investment to stimulate their markets.
http://www.ipinglobal.com/ipin-live/blog/256910…
IPINLive

July 2, 2010

Hi Doug,

The Japanese real estate market is an unusual one in my opinion, primarily due to it never really having had foreign investors entering into it. (I do appreciate the Japanese market as not been attractive financially for more than a decade!) Also, the Japanese financial culture is substantially different with it being the only major economy requiring having to “balance its books” each year in its own currency (great for the forex traders) and the fact that most Japanese keep their money in the bank and tend to invest locally, resulting in an economy that could be said to be somewhat isolated from that respect.

The government introduction of inhertiable mortgages has been an attempt to fix the situation, but much like quantative easing, all it has done is exasperate the situation further.

The advantage that the US has over Japan though with its real estate market can be seen from a couple of angles. Obviously they can see that Japan has not really got it right over the past decade, so there are lessons to be learned there. Also, the US is arguably a more investor friendly market for foreigners as far as real estate is concerned. The US has seen vast amounts of foreign investment into property, and is starting to see a new wave with the rising foreclosure rate and subsequent discounted property available.

One of the major hurdles that the US does not have though is the investment process in real estate itself, and the lack of cultural difference. If you don't speak or understand Japanese, buying real estate in Japan would be a very daunting task indeed, the US, whilst it has its own regulations of course, has a major advantage over Japan with respect to attracting foreign investment cash as a whole.

I agree entirely with your comment there about Soros, it wouldn't be the first time that kind of thing had gone on!

As a non US investor, the US real estate market for me as an industry professional holds a great deal of value right now as a foreigner looking in.

The US domestic property investment market is sitting on the sidelines, either because because it wants to, or in most cases I would suggest because it has to due to lack of liquidity.

As a result, coupled with the excess of bank owned property as you said, (which has still to be offloaded onto the market) means that prices will still continue to come down a little further, to a point.

For the larger investors this opens up opportunities to buy up low price properties as the market continues being shaky (averaging out the purchase values) and you also have the things like the Section 8 program which gives investors the ability to have their assets working for them.

http://www.ipinglobal.com/ipin-live/article/256…

“The madness of crowds” is very apt, the UK buy to let market has seen this in full effect, a situation which is now being paid for with some large changes in taxation and cuts in the UK, the reality is though that both the UK and the US are in a position to do something about it by encouraging foreign investment to stimulate their markets.
http://www.ipinglobal.com/ipin-live/blog/256910…
Doug Eberhardt

July 2, 2010

Hi IPINLive,

I actually agree with your understanding of the markets, and what's occurring here in the U.S. We may disagree on the timing, but after reading your articles I understand where you are coming from as far as intent.

From my understanding, the foreclosure market here will generate a 27%-30% discount at present. I've been advising my sister to start looking into that market, but in general I have told her to wait a bit as I still think there is room to fall further.

I can see the benefit of investing in distressed properties, which seems to be what your company specializes in, but am still concerned about the U.S. banking situation and the properties they still have on the books that they are not letting go of.

My theory is they are not letting go of them because they can't mark to market the true (lower) value of these assets on their books. To do so would throw out of whack their reserve ratio and cause the FDIC to come knocking at their door.

From what I've seen, we are still about 10% above the mean in real estate prices here. When that number dips below 10% of the mean, I would think the timing would be better (give or take a few percentage points). And I'm only talking about foreclosed properties, not the full price one pays through their real estate agent.

For you to understand what's going on with the banks here tells me you obviously understand what the banks are dealing with. I'm not sure either of us could say for sure they are reluctant to foreclose, but the fact I know and have heard of is that many people are currently squatting in their homes (not paying anything, but not being kicked out by the bank). This tells me the worst is yet to come.

In my book I did a complete analysis of the banking situation here in the U.S. I'll send you a copy (free) once I am finished with it. I can't really say much more than I have till it goes public.

I'm not knocking your concept. I think taking advantage of leverage can make a person a lot of money if they know what they're doing, which I assume you do based on what I've read. I just think the timing is one where I would hold off a bit here till things get a little more desperate with the banks. But by then, there might be even more problems prevalent to consider.

Will be happy to continue the discussion once my book is finished. For now, I have to get busy and send it to the editor in the next couple days!

Feel free to respond as I'll let you have the last word and hopefully we can pick this up in a few weeks.
Doug Eberhardt

July 2, 2010

I meant to say, good analysis of Japan in the last email. The fact their Debt to GDP ratio is at 200% shows that government can't do anything to change the tide…

What I try to do is weigh what I read about investments with the facts presented. I try to resolve how the real estate industry looks at property versus how an economist looks at property. But even then, I have to decipher what kind of economist they are, lol.

Case in point would be Australia:

This article, written 6/22/10, says “Property investments Down Under will continue to generate higher returns say economists”
http://www.fly-2let.co.uk/news428.html

The kind of economist I trust says Australia is a housing bubble ready to pop;

http://www.debtdeflation.com/blogs/2010/01/12/h…

Note how Japan is at the bottom of that chart when you click on all the countries.

Deflation isn't necessarily a bad thing. Government's make it worse by propping up the industry. Will be interesting to see how much more propping up goes on here in the U.S. before they give up.
Oscar

July 2, 2010

I like this commentary. Seems wise and sound. Until I started reading your blog, I didn't know who Celente was. Interesting fellow.

I have to disagree with one statement though…
The U.S. needs China. China doesn’t need the U.S.

This seems a little inaccurate, or incomplete. If we stopped manufacturing in China, or buying stuff from China, they'd come after us because they need us. They need us to buy their stuff. While they don't buy a lot of our stuff, we are certainly one of the biggest if not the bigest purchaser of *their* goods, they need us indeed.

All it would take is for a few fortune500 or f100 companies to setup infrastructure elsewhere (Philippines, India, you-name-it) and use the inexpensive labor and production costs there for China to take notice. The only advantage China has over other countries that can offer inexpensive labor is that they have massive infrastructure setup and ready for production.
Doug Eberhardt

July 2, 2010

Hi Oscar, thanks for the comment. Your points are well taken.

I should restate that comment.

The U.S. consumer”needs China as I stated because of their low cost products (Same with Indonesia, Philippines, etc. etc.)

The U.S. producer can't keep pace with the low wages of these countries.

In that since, the consumer needs China. But because Chinese products are less expensive around the world, and ours more expensive, there would still be a demand for Chinese products over U.S. (more expensive) products. This is probably why the U.S. only exports 5.5% to China.

It was from this low 5.5% figure that I made that assumption. China buys a lesser amount of U.S. goods than anyone else. In fact, their imports only dipped 50 billion in the recession and their GDP increased 700 billion as they are more self sufficient. Our imports dropped 450 billion and our GDP fell 2.4%.

What will occur moving forward, based on a global economy, is our wage rates will have to come down and thus prices and theirs will go higher. I see the more likely situation being ours coming down faster than theirs going up. We're already seeing this in the wage data here in the U.S.

Thanks for the observations…
IPINLive

July 2, 2010

Hi Doug,

The Japanese real estate market is an unusual one in my opinion, primarily due to it never really having had foreign investors entering into it. (I do appreciate the Japanese market as not been attractive financially for more than a decade!) Also, the Japanese financial culture is substantially different with it being the only major economy requiring having to “balance its books” each year in its own currency (great for the forex traders) and the fact that most Japanese keep their money in the bank and tend to invest locally, resulting in an economy that could be said to be somewhat isolated from that respect.

The government introduction of inhertiable mortgages has been an attempt to fix the situation, but much like quantative easing, all it has done is exasperate the situation further.

The advantage that the US has over Japan though with its real estate market can be seen from a couple of angles. Obviously they can see that Japan has not really got it right over the past decade, so there are lessons to be learned there. Also, the US is arguably a more investor friendly market for foreigners as far as real estate is concerned. The US has seen vast amounts of foreign investment into property, and is starting to see a new wave with the rising foreclosure rate and subsequent discounted property available.

One of the major hurdles that the US does not have though is the investment process in real estate itself, and the lack of cultural difference. If you don't speak or understand Japanese, buying real estate in Japan would be a very daunting task indeed, the US, whilst it has its own regulations of course, has a major advantage over Japan with respect to attracting foreign investment cash as a whole.

I agree entirely with your comment there about Soros, it wouldn't be the first time that kind of thing had gone on!

As a non US investor, the US real estate market for me as an industry professional holds a great deal of value right now as a foreigner looking in.

The US domestic property investment market is sitting on the sidelines, either because because it wants to, or in most cases I would suggest because it has to due to lack of liquidity.

As a result, coupled with the excess of bank owned property as you said, (which has still to be offloaded onto the market) means that prices will still continue to come down a little further, to a point.

For the larger investors this opens up opportunities to buy up low price properties as the market continues being shaky (averaging out the purchase values) and you also have the things like the Section 8 program which gives investors the ability to have their assets working for them.

http://www.ipinglobal.com/ipin-live/article/256…

“The madness of crowds” is very apt, the UK buy to let market has seen this in full effect, a situation which is now being paid for with some large changes in taxation and cuts in the UK, the reality is though that both the UK and the US are in a position to do something about it by encouraging foreign investment to stimulate their markets.
http://www.ipinglobal.com/ipin-live/blog/256910…
Doug Eberhardt

July 2, 2010

Hi IPINLive,

I actually agree with your understanding of the markets, and what's occurring here in the U.S. We may disagree on the timing, but after reading your articles I understand where you are coming from as far as intent.

From my understanding, the foreclosure market here will generate a 27%-30% discount at present. I've been advising my sister to start looking into that market, but in general I have told her to wait a bit as I still think there is room to fall further.

I can see the benefit of investing in distressed properties, which seems to be what your company specializes in, but am still concerned about the U.S. banking situation and the properties they still have on the books that they are not letting go of.

My theory is they are not letting go of them because they can't mark to market the true (lower) value of these assets on their books. To do so would throw out of whack their reserve ratio and cause the FDIC to come knocking at their door.

From what I've seen, we are still about 10% above the mean in real estate prices here. When that number dips below 10% of the mean, I would think the timing would be better (give or take a few percentage points). And I'm only talking about foreclosed properties, not the full price one pays through their real estate agent.

For you to understand what's going on with the banks here tells me you obviously understand what the banks are dealing with. I'm not sure either of us could say for sure they are reluctant to foreclose, but the fact I know and have heard of is that many people are currently squatting in their homes (not paying anything, but not being kicked out by the bank). This tells me the worst is yet to come.

In my book I did a complete analysis of the banking situation here in the U.S. I'll send you a copy (free) once I am finished with it. I can't really say much more than I have till it goes public.

I'm not knocking your concept. I think taking advantage of leverage can make a person a lot of money if they know what they're doing, which I assume you do based on what I've read. I just think the timing is one where I would hold off a bit here till things get a little more desperate with the banks. But by then, there might be even more problems prevalent to consider.

Will be happy to continue the discussion once my book is finished. For now, I have to get busy and send it to the editor in the next couple days!

Feel free to respond as I'll let you have the last word and hopefully we can pick this up in a few weeks.
Doug Eberhardt

July 2, 2010

I meant to say, good analysis of Japan in the last email. The fact their Debt to GDP ratio is at 200% shows that government can't do anything to change the tide…

What I try to do is weigh what I read about investments with the facts presented. I try to resolve how the real estate industry looks at property versus how an economist looks at property. But even then, I have to decipher what kind of economist they are, lol.

Case in point would be Australia:

This article, written 6/22/10, says “Property investments Down Under will continue to generate higher returns say economists”
http://www.fly-2let.co.uk/news428.html

The kind of economist I trust says Australia is a housing bubble ready to pop;

http://www.debtdeflation.com/blogs/2010/01/12/h…

Note how Japan is at the bottom of that chart when you click on all the countries.

Deflation isn't necessarily a bad thing. Government's make it worse by propping up the industry. Will be interesting to see how much more propping up goes on here in the U.S. before they give up.
Oscar

July 2, 2010

I like this commentary. Seems wise and sound. Until I started reading your blog, I didn't know who Celente was. Interesting fellow.

I have to disagree with one statement though…
The U.S. needs China. China doesn’t need the U.S.

This seems a little inaccurate, or incomplete. If we stopped manufacturing in China, or buying stuff from China, they'd come after us because they need us. They need us to buy their stuff. While they don't buy a lot of our stuff, we are certainly one of the biggest if not the bigest purchaser of *their* goods, they need us indeed.

All it would take is for a few fortune500 or f100 companies to setup infrastructure elsewhere (Philippines, India, you-name-it) and use the inexpensive labor and production costs there for China to take notice. The only advantage China has over other countries that can offer inexpensive labor is that they have massive infrastructure setup and ready for production.
Doug Eberhardt

July 2, 2010

Hi Oscar, thanks for the comment. Your points are well taken.

I should restate that comment.

The U.S. consumer”needs China as I stated because of their low cost products (Same with Indonesia, Philippines, etc. etc.)

The U.S. producer can't keep pace with the low wages of these countries.

In that since, the consumer needs China. But because Chinese products are less expensive around the world, and ours more expensive, there would still be a demand for Chinese products over U.S. (more expensive) products. This is probably why the U.S. only exports 5.5% to China.

It was from this low 5.5% figure that I made that assumption. China buys a lesser amount of U.S. goods than anyone else. In fact, their imports only dipped 50 billion in the recession and their GDP increased 700 billion as they are more self sufficient. Our imports dropped 450 billion and our GDP fell 2.4%.

What will occur moving forward, based on a global economy, is our wage rates will have to come down and thus prices and theirs will go higher. I see the more likely situation being ours coming down faster than theirs going up. We're already seeing this in the wage data here in the U.S.

Thanks for the observations…
John

July 9, 2010

Delfation is good for gold<<

Seems to me crowding is good for gold–poeple are buying gold because it is going up (one of the few consistently rising investments, since late 2008) –that is the main reason. In the meantime gold stocks (measured by GDX) have made a series of lower highs over the last couple of years and physical demand in places like India has plummeted.

As assets are liquidated in a deflationary environment to service debt and pay for living, gold will not decouple. I do think physical gold will drop less than paper gold.
chachituna

July 13, 2010

Doug,

Great analysis. As spoken before, we need to translate knowledge into wealth.

MJB
Michael Shi

July 14, 2010

Every credit boom eventually ended up in tears in the history of finance. I don't think the US of A or China will be any exception. However, what makes the US a bit different from Japan is that the US still holds the world's reserve currency so that they can resort to printing press to alleviate pains, just as the English did before their empire fell apart.
Real Estate Advisor

July 28, 2010

yes, i would like to buy a real estate and this information will help me to buy one.

thank you for your help.
Michael Arold

July 29, 2010

Doug,
believe it or not: I agree with you. On a longer time scale, I'm bullish on Gold and probably will go long again after a correction, possibly later this year. My current short position is a “mean reversion trade”. If I would be an investor with a longer term focus, I would not sell Gold right now.
Doug Eberhardt

July 29, 2010

Thanks for sharing Michael. Look forward to following you more closely when I find the time. Right now I'm getting my book out to market and my gold and bullion sales company just came into fruition today. Appreciate you taking the time to share your thoughts on gold.
Eby3

September 15, 2010

Good luck! Gold was golden today!
Eby3

September 22, 2010

Wow! Well done, my good and “faithful” son!
Bluesmantoo2003

September 23, 2010

Of course, the prevalent notion that the American public needs “big Brother” to watch out for our interests is exactly what’s wrong with this proposed legislation and what’s grossly wrong with America. If you can’t at least access a metric grams to troy ounce converter on the web, then go to Kitco or a hundred like sites and get the latest update of current market conditions so you can see what gold, silver, palladium, platinum, rhodium or other precious metals are trading for then you don’t need government….you need to move your bum ass back into your parent’s home. You are a juvenile and too stupid to breed. And obviously, too stupid to be investing. This House bill is what’s WRONG with Congress! It’s simpleton grandstanding, concocted for a proletariat addicted to main stream news channels and pablum rather than REAL news. Congress has more pressing concerns than protecting morons from their own laziness and lack of understanding.
Rottiefan

September 23, 2010

Great post Bluesmantoo2003. You are so right, Leave the gold dealers alone. They all have web sites so it’s a matter of shop around till you find one that fits your needs at the right price. If this idiot Weiner is so intent on “protecting” precious metal buyers (going after Glen Beck’s sponsors) he might want to start looking at the U.S. Mint. I am looking at their “PRICING OF NUMISMATIC PRODUCTS CONTAINING GOLD COINS” chart and notice their prices run from $250 to $300 per ounce over spot.
Mindsquall

September 24, 2010

This is the most absurd article I have ever read. Quote, ” It means no executive order exists today to confiscate anyone’s gold.” Yes, just as that was true on April 4, 1933, no executive order existed until the following day when, oops, Executive Order 6102 was signed.
If the dollar went into a tailspin, markets would be closed and there would be banking holidays. When the markets opened back up, do you honestly believe that gold would be allowed to be traded? Hell no!
The government would likely give you fair market value for your gold (just like they did in 1933), however you would expect there to ultimately be a new currency probably backed by gold and the value would be priced way higher than the dollars you would get for your bullion. If you have a gold coin that has a collector value, you would likely participate in that appreciation.
The government likely would leave this type of gold alone (probably less than 1% of all gold), and how could they determine the fair price (that they would have to). Constitution: “nor shall private property be taken for public use without just compensation.”
Doug Eberhardt

September 24, 2010

Mindsquall, perhaps you should read the entire article instead of jumping to conclusions. How did you miss the sentence, “the government could confiscate anything they wanted
to in times of “economic emergency.”??? Click on that link and it shows we are in agreement. However, you nor anyone else can claim what the government will do. You said; “the government likely would leave this type of gold alone.” Goldline and other gold dealers use this fear tactic to then sell gold at 30% to 60% plus in premium to spot. I sell gold as close to spot as possible. My clients don’t sit and worry about the “what if’s” of our government, and they sure as heck don’t have to wait three to four years to make up for the premium paid for some collector crap.

Yes, there will be just compensation when and if there is any confiscation, just as there is today with eminent domain laws where the government confiscates property. Good luck with your collector coins. You have free will to buy them. I don’t recommend them to anyone.
Mindsquall

September 24, 2010

Doug, you can’t say that someone can’t fear confiscation because there are no laws in place and then turn around and say the can confiscate anything they want. Which one is it? If it is indeed the latter, and we have some protection from the constitution, I certainly would be willing to pay 10-20% more.
You are Weiner both have it wrong as well – “the premium over spot” is essentially irrelevant, it is only the spread between the price that you pay for your gold and the price that you can sell your gold back for. I know (as a very happy Goldline client for years), on an average European “collector” coin, they pay significantly higher than spot.
This is a witch hunt against conservatives and Goldline is caught in the middle. Investing in gold was by far the best economic decision I have ever made, and I thank my Account Executive at Goldline for providing me with incredible information on a monthly basis (which they don’t charge for). What price can you put on that? What price can you put on this single company that is spending millions of dollars and influencing tens of thousands of people to own gold (no matter what the gold), that likely will be a portfolio life-jacket in the years to come? Swindlers? Nah, I’d say heroes!
Doug Eberhardt

September 24, 2010

Mindsquall, you are misinterpreting what I said. My point is that an investor should not buy gold based on a “what if” scenario, and especially pay a higher premium for the gold “just in case” the government decides to confiscate gold again. Then, I followed that up with the fact the government, according to the GATA conversation with the U.S. Treasury, could confiscate anything they want.
The fact the folks at Goldline charge more than other companies for the same exact coins only shows that the people who pay for those coins haven’t done their research in comparing with anyone else. I know, because I worked for Goldline. I know what the sales tactics were, and I would discount 50% because of it. I knew there were companies that charged a lower premium.
No one in their right mind should pay 10% or 20% or what Goldline charges for coins that could be had elsewhere for a small percentage over spot. Lastly, the European coins are bullion coins, not collectible coins, and I said Weiner was wrong for wanting to regulate gold dealers in my other article. It is the consumer who needs to be educated and that’s why I wrote my book, “Buy Gold and Silver Safely.”
I provide free information here on this site too. I don’t even put ads on my site.
If you are happy with paying more with Goldline, then by all means, you have free will to do so, and they have free will to sell it to you. Those who read my book wouldn’t buy the higher priced coins.
Mindsquall

September 24, 2010

Doug, I know you are educated, but you have not done all of your homework. You say, “Lastly, the European coins are bullion coins, not collectible coins.” According to whom? Well, according to our very own government (The Office of Domestic Gold and Silver Operations of the Treasury Department – which regulated the ownership of gold before the legalization of gold in 1974) coins such as Swiss & French Francs, and British Sovereigns were considered to have collectible value and thus were legal to own by American citizens. Common bullion was not. Therefore, those are not common bullion coins. I can go all night. In addition, I was with another company before Goldline who indeed sold their coins cheaper, however I needed a quick cash of some coins for just under $100,000, and they couldn’t handle the transaction, and ended up getting screwed selling my coins. I likely will never have the problem at Goldline ($1B in sales).
Krakondack

September 24, 2010

The easiest target for confiscation today is the money in 401K and IRA accounts. They would still have to liquidate the securities, which is more complicated than it sounds, with the volume we’re talking about. But as long as the dollar still has value, that is far more tempting than collecting mine or your small collection of gold coins, looking for them in places we won’t disclose.
Doug Eberhardt

September 24, 2010

Mindsquall, I like how you try and play the US government history card and completely ignore the fact that the European gold coins can be bought at other dealers for much less. Lets not forget this is primarily why Weiner is complaining. The confiscation issue is a side show. The regulation issue Weiner is wrong about as I pointed out in a prior article.

As far as me not doing my homework…I submit the following;

To your point about “The Office of Domestic Gold and Silver Operations of the Treasury Department – which regulated the ownership of gold before the legalization of gold in 1974) coins such as Swiss & French Francs, and British Sovereigns were considered to have collectible value and thus were legal to own by American citizens. Common bullion was not.”

I found where you are getting your information; Goldline of course; http://www.goldline.com/government-gold-seizure – who got their information from two articles written for Numismatic News by the same person, David L. Ganz.

Ganz wrote; “Government Melted Recalled Coins” on August 30, 2010 and “Gold Ban Extended Overseas in 1962″ on Sept. 23, 2010. He evidently is the voice now for the companies who try and convince people these coins we are discussing are going to possibly be exempt from confiscation, should it occur. I remember his name from past research as having written articles on the subject.

Who is David L. Ganz? A Google search brings us to this page, that of his law firm:
http://www.ganzhollinger.com/category_detail.asp?Scode=8&mainsection=2

According to his bio page, he is 52, and at the age of 15, “served as a consultant to the Canadian Olympic Coin Program (1973-76).” Not sure how he got that gig, but congrats. His bio also says that at age 15 (1973) he graduated from School of Foreign Service at Georgetown University. I called the school and they say their undergraduate programs start for 18 year olds, but it is possible someone younger may have attended, but could not confirm anyone age 15. At the age of 16, Mr. Ganz was “appointed by President Nixon to the 1974 Annual Assay Commission.”

By age 19 and 20, Ganz seems to have been writing some law review articles (they don’t say what year he got his law degree from St. Johns University Law school, but that he attended a few other law schools too);

Law Review Articles written at age 19 and 20;

“The U.N. and the Law of the Sea”, 26 International & Comparative Law Quarterly 1-53 (1977), “Toward a Revision of the Minting & Coinage Law of the United States”, 26 Cleveland State Law Review 177-257 (1977), “Probative Value of Currency Dating for Income in Respect of a Decedent,” 51 N.Y.S. Bar Journal 487-491 (1978).”

From his bio, it is clear he is involved and has been involved throughout his career in the numismatic world. Naturally, anything he writes would be in support of it. But as an attorney, you would think he would document some of his articles better, if in fact he could. Until he does, I can discredit what he says as follows;

The paragraphs pertaining to the issue at hand, written in the Goldline article;

“As it turns out, over time, this was administratively changed so that coins made prior to 1960 were elevated to the status of “rare and unusual” which meant that they were covered by the regulations, but collectible, too.

As it turns out, over time, this was administratively changed so that coins made prior to 1960 were elevated to the status of “rare and unusual” which meant that they were covered by the regulations, but collectible, too.

Government regulations being government regulations, dozens of specific coins were listed by the now defunct Office of Domestic Gold and Silver Operations as being “rare and unusual”. These included European coins such as the Swiss 20 Franc, French 20 Franc and the common British Sovereigns (containing .2354 troy ounces of gold) minted in the millions and struck prior to 1960 (such as the 1958 sovereign, 8.7 million pieces minted). Were the United States to confiscate gold as it did under the 1933 Executive Orders, one would expect similar exemptions to apply to these coins.”

There is no proof of the first paragraph being true and it wouldn’t hold up in court either. It is simply an assumption by the Ganz. Ganz does not give any reference to this now defunct “Office of Domestic Gold and Silver Operations of the Treasury Department,” in the footnotes and then claims that European coins qualified as “rare and unusual” referencing his prior mention of “Executive Order 6260 of Aug. 28, 1933 which recalled all gold coins and bullion, but exempted “rare and unusual gold coins”.”……. Which of course this Executive Order 6260 is now rescinded as I pointed out in my article, making any prior mention moot.

Neither you or I can predict what will happen in the future with regards to these coins, but anyone reading this will know to ask each dealer selling them, “If I sold these coins back to you today, what will I get in return for them?”

So this entire conversation comes back to the fact that yes, the government can confiscate gold, and in particular Swiss and French francs and British Sovereigns. But they can also confiscate, in times of economic collapse/uncertainty (government will always do whats in their best interest), anything they want to as long as they have the police force or armed forces on their side to enforce any seizure.

Being that all prior Executive Orders are rescinded, and anything is subject to confiscation, why would anyone pay more for Swiss and French francs and British Sovereigns than the dealer down the street charges?

If a car dealer sold his car for a 30% or 60% mark up, and everyone knew the dealer down the street was charging only a 5% – 10% mark up, how long will that dealer stay in business? The fact Goldline made almost a billion dollars this year is testimony to how much influence Glenn Beck has. It doesn’t mean anything when it comes to whether or not their clients got a good deal compared to the person who bought the same coins elsewhere.
Mindsquall

September 25, 2010

Kill the messenger, not the message! The only question is if there is a precedent. Yes, there appears to be. Guess what? If you talk to anyone in the coin business who operated before 1974, they will all tell you that, yes indeed, it was legal to buy and sell Swiss Francs, French, Francs, etc. I now have well over $1M in gold. Yes, I have some modern bullion, but the majority is in European gold. My spread through Goldline is typically 15%. Is that a good deal? Is it worth it? How about the peace of mind knowing that when it is time for me to sell, I am with a company that has a 50 year track record and the funds available to buy back my gold. I have had too much bad experience outside of Goldline.
Any investor knows, you don’t make your money when you buy, you make it when you sell. Do I really want to deal with another company that works on a 1-5% commission? Are you serious? Where exactly would they pull the resources to purchase my gold?
Just count me as one happy Goldline client that is thrilled with the service, the security, and the peace of mind that they provide.
Doug Eberhardt

September 25, 2010

Mindsquall, there is a precedence of slavery in our country, will it return? How about not allowing women to vote? Prohibition? Anything is possible. I don’t recommend people live their lives on “what if’s,” especially related to their investments.

A properly diversified portfolio is all one needs. One that includes gold and silver coins. But where you and I differ, are the types of coins one should possess. For U.S. citizens living in America, I don’t recommend European coins, period.

There is one major reasons for this. If we were to go to a barter situation in America at some point, assuming the monetary system collapses, the European coins simply are not readily recognizable. American coins will be used as barter much more easily as they are recognizable and do not need to be assayed as to their value. Try taking your European coins to trade at a local swap meet that will pop up should a collapse occur and see what happens.

Your rebuttal is that you can sell them back to Goldline. For what? For American gold and silver coins? Remember, the dollar has collapsed. You have to find a buyer/trader of your European coins.

I’m sure the reason you bought so much gold to begin with was because of this threat to our monetary system right? Perhaps you can go to Europe and spend your coins. But then again, you are limited to taking $10,000 out of the country at a time.

If you are happy with Goldline and their 15% reduced premium to you, then great. More power to you. I would never recommend anyone buy European coins.

Lastly, one of my recommendations in my book “Buy Gold and Silver Safely,” is to never tell anyone what you have.
Nick

September 27, 2010

Thank-you. The confiscation ISSUE is just a way for dealers to conficate your money.
Mindsquall

September 28, 2010

Doug, I do respect your opinion however I just do not agree with it. FDR, Stalin, and Hitler have all confiscated gold, none of which bothered with gold coins that had a collectible value. If we do end up in a bartering situation (I think there would likely be a transitionary period where we change currencies), I just don’t personally believe that gold bullion would be legal – I can’t see the scenario where it would be. Who would take a gold coin that could not be used legally. That’s all, that’s why I buy the coins that were legal to own between 1933-1974.
Doug Eberhardt

September 28, 2010

Mindsquall, it’s ok to agree to disagree. After all, we are still in a free America. I have said in my past writings they would have to somehow repeal the 2nd amendment before they would ever confiscate gold in America. It’s much easier for our government to confiscate gold via the ETFs like GLD than it would be for those who own the physical and have them knock on our doors, whether it be the European coins you like or the gold and silver bullion I like.

What I would be for is the free competition in currency allowing gold to trade freely side by side with the U.S. dollar, giving the U.S. citizen a choice. A choice without a 28% tax associated with it.

Time will only dictate who is right. But again, I prefer to sell coins that are as low to the spot price as possible.

Have a good one…
Docshog00

October 13, 2010

Doug, I have a tax question involving a futures contract where delivery is taken. How shall I reach you.
Doug Eberhardt

October 13, 2010

Docshog00, my company phone number is 888-604-6534. Please note that I am not a tax advisor. I can let you know about taxes related to the buying or selling of gold and silver. Thanks!
Yankee

October 19, 2010

Dear Doug,
Where is your office located? Which time zone you are in? What is your office hours? I phoned many times, but nobody answered phone. Also do you have email address that I can communicate with you, thanks.
Doug Eberhardt

October 19, 2010

Hello Yankee,

My guess is you are calling outside the U.S. I did see some foreign numbers (more digits than the U.S. numbers) come by of late. I usually let those go straight to voice mail as I have been getting a lot of hang-ups with those kind of numbers. I’m pretty sure I know which one is yours, so I will answer next time you call. My office hours are 8AM PST – 5PM PST. I am located in San Diego, CA. I have emailed you the remaining information. Thank you…
tsjrdn

October 22, 2010

Hi Doug, I love your articles keep up the good work. I am GOLD long, in physical gold but I got in at the Top of the gold peak. I dont plant on selling at all, how far down down do you think Gold will pull back until it corrects itself? My guess, when the Fed meets in 1.5 weeks. I am in physical gold long and I am looking forward to your reply.
tsjrdn

October 22, 2010

Also Doug, how do I get in touch with your office? I am very interested in hearing your offering out because I know what’s coming. I dont want to be stuck in ETF’s only. I appreciate it and please keep the blog posts coming
united dental

November 17, 2010

Oh!…that’s great helpful, it’s so right to me! Million thanks for the article,
Anonymous

December 11, 2010

There are literally billions of dollars in assets that carry a small amount of gold, if I understand your analysis of the size of the gold market. To me, this means that demand will increase significantly higher prices.

Real Estate Omaha
Info

December 21, 2010

Good for the beginners as a first step into the market.
Edwardhersey

December 26, 2010

In Canada Guaranty Trust sells gold certificates…no need to pay assay or storage costs…..What guarantee does the buyer have that these certificates are backed by physical gold…should the buyer be concerned about “insurance” against “loss’ from the Trust Company vaults?
Anonymous

December 27, 2010

dear President Obama,
I thought I made it clear to you all that I have This Little Heath Care Bug In My Hands. And anyway from my understanding that around 20 States have filed suite over this Freedom Of Choice within. So lets make it 50 States, you say impossible, I say it is a good possibility.
First Off, it is according to your Bible Faith, It is a sin to kill or to end your on life. Unless you wish to tell God that He does not know what He is talking about.
Second, It is the Voice Of The People that say no. I say lets not destroy this Bill to Law, but build it for the Better Good Of Mankind.
I asked and posted it on my web site, a offer to all the Insurance Companies to Merger and I offered 5% income concepts, but some have stated to me they may consider at 10% of the funds they bring in. The rest goes into our Government Program, and is Governed by the Insurance Companies. To make sure that this Health Care Dollar stays for the People and not for Government spending on toys for us tots.
You sir,Mr. President was our hope to reform Government, now look where we are now. And I dont want to here about the Tax Bill, I all ready see how the system fluxed and the money is coming out at the back door. But Sir., good move anyway.
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Anonymous

January 1, 2011

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Anonymous

January 1, 2011

If we knew all the answers would not be in this mess in the first place, we came to hear the so-called experts do not use our common sense. I saw this coming, but not to the extent it is. It clear that if we continue to offer home loans and people who could pay for them by default and the banks are guilty of not exercising due diligence and other debts to buy.

homes for sale omaha ne
David

January 5, 2011

Great explanation Doug about the illusion of the rising DOW and why the Fed wants silver and gold prices down.
David

January 5, 2011

Your argument for 90% Silver Bag Coins makes perfect sense.

The only thing I would add is that it’s nice to have 1 oz coins, whether it’s SE’s or private mint coins or bars, because when you go to sell your coins or use them as currency to make purchases, people instantly know the value of the coin based on the current spot price.

With 90% silver coins, they have to calculate how much silver is in each coin times the spot price.
Roderick Eaken

January 5, 2011

Please advise your recommendation on how to purchase Silver Bullion? At the lowest price?
From Whom?

Rod Eaken reaken57@comcast.net
Roderick Eaken

January 5, 2011

Please advise your recommendation on how to purchase Solver Bullion? At lowest price?
From Whom?
Givemeliberty1776

January 5, 2011

Amen to that, brother.
GivemeLiberty1776

January 5, 2011

Mr. Eberhardt,
In all the time I have spent reading financial news and money market newsletters(18 months), I have
not found anyone who can write so concisely and
clearly as yourself.
I have just spent the last three hours reading your
articles[including the fractional reserve articles],
and I can truly say I have learned something.
Well done.
Doug Eberhardt

January 6, 2011

Thanks David,

My speculation on the quarter and dimes, as well as the Silver Eagle’s, is they all would have to be valued at time of purchase. In this case, there could be an instantly updated screen that would allow the merchant to calculate value accordingly.

If swap meets were to pop up, then the coins would be given to the assayer, and the “scrip of the day” would be handed over to make purchases. This is kind of what they did in Argentina during their hyperinflation.

Thanks for the comment.
Doug Eberhardt

January 6, 2011

Thanks for the kind words GivemeLiberty1776. It means a lot to hear.

Glad you enjoyed the articles.
Monique Baugus

January 8, 2011

Just bought your book! This is awesome info. Thanks from the bottom of our hearts!
Monique Baugus and Brian Wilson
Jack

January 9, 2011

Some good info on your site. As of January 2011 gold and silver both look to be overbought in the near term. So when a friend stated he was going
to start buying silver, he also asked if I thought this was a good time. I suggested he dollar average his purchases of silver by buying some every week or
every month. He came back to me a few days later and said he found a place to do just that at
http://www.SilverGoingUp.bigbig.com
Mark Herpel

January 9, 2011

Great article, you nailed all the critical issues with the T.V. gold ads and many dealers. You also forgot to mention Digital Gold Currency such as GoldMoney.com This is allocated gold held in storage or delivered if you request it. There are lots of advantages to owning precious metal in digital form. Keep up the great work.
Mark
editor@dgcmagazine.com
Charles Savoie

January 11, 2011

Did you forget to mention about FDR taking SILVER on August 9, 1934? Did you MISS the 312 page documentary I put out on this during Summer 2009 at http://www.silver-investor.com? I suggest you see also http://www.silverstealers.net to see WHO has attacked silver for more than a century. It isn’t “the bankers;” that’s infinitely too generic. It’s The Pilgrims Society, the British Crown’s World Money Power which, due to the Internet, we have chance to neutralize.
Doug Eberhardt

January 11, 2011

Hi Charles, I looked over your info. I see where you have a newspaper clipping stating the silver price was set at 50.01 cents using eminent domain, but do you have an executive order from FDR stating such language? Thanks..
Boogerbently

January 15, 2011

Another article with many questions and NO answers!
Doug Eberhardt

January 15, 2011

Boogerbently, please read my article; “Bernanke’s Psychological Warfare On Gold and Silver” you can find here: http://buygoldandsilversafely.com/gold/bernankes-psychological-warfare-on-gold-and-silver/
Doug Eberhardt

January 15, 2011

The only news you’ll find (besides my article) when you Google; “Bank Derivative Exposure 2010″

1/10/2011

Banks’ derivatives revenue falls while credit risk rises, OCC reports

http://westlawnews.thomson.com/Securities_Litigation/Insight/2011/01_-_January/Banks%E2%80%99_derivatives_revenue_falls_while_credit_risk_rises,_OCC_reports/
Moniquebaugus

January 27, 2011

Doug really knows what he is talking about. Listen to him!!! He knows about the New World Order and Soros’ tricks. This is the most honest gold dealer that I have ever dealt with!
Brian Wilson, Lake City, Florida
Charles Savoie

January 29, 2011

http://www.presidency.ucsb.edu/ws/index.php?pid=14741 It’s in the 312 page report which you can’t (?) find time to read; regardless, follow this link, and do the math. 50.01 cents. They could post such rate today as an “anti-inflation” measure, especially since the Silver Users Association, who would be the only ones to get any nationalized silver, always thinks their cost of acquisition of silver is unnaturally steep.
Doug Eberhardt

January 29, 2011

Charles, you mention Executive order, but you do not give the number for it. Please provide. It also states in your report, which I did look over or how would I reference the 50.01 cents, “with exceptions which include silver coin, fabricated silver, that which is held under license and that owned by foreign governments and central banks, and other minor holdings.” Silver coins, according to your own quoted (non-numbered) Executive order, was never confiscated.

Provide the Exectuive order number so I can read it. I won’t address speculation further without proof. The government isn’t going to knock on everyone’s doors and ask if they have any gold or silver without first getting rid of the 2nd amendment. It’s much easier for the government to go after 401k’s or other pentions plans wouldn’t you agree?

In times of economic crisis, the government will do whatever they have the easiest path to control. Confiscating people’s old silverware collections isn’t an easy path. They don’t even know who owns what.

I don’t advise my clients to worry about such nonsense as silver or gold confiscation, and it certainly isn’t a reason to buy more expensive gold or silver coins because of any possible future Executive order.

People simply need to buy the most gold and silver for their money. Would you agree with that, confiscation or not?
Doug Eberhardt

January 29, 2011

Thank you Brian…appreciate the comment. In February, 2010, I wrote an article on George Soros calling gold the “ultimate bubble.” http://buygoldandsilversafely.com/gold/two-faced-soros-says-gold-is-the-ultimate-bubble/

I pointed out in the article that Soros says one thing, but does another. His fund has been buying all the time while he was calling gold a bubble. Just last quarter, the fund bought $64 million more gold.

I don’t make comments on New World Order stuff on my site. I do analyze what Soros does and know he says one thing, and does another. A wealthy businessman, followed by many, is always going to try and get a better price by talking an investment down.

He also calls gold the “ultimate” bubble because it is the last bastion of wealth.
Kcolgdom03

February 16, 2011

Gold and Silver have been money for 5000 years. The US Constitution says that ONLY gold and silver are considered money. The Founders were very wary of paper and ink that is not worth anything. At 14.3 Trillion dollars of visible debt and including all of the unfunded mandates of Social (In)security, Medicare and Medicaid which makes the debt total over 100 Trillion, so am I. Has anyone ever asked the question, “How much is a Trillion Dollars?” Try a stack of $1,000 bills 63.7 miles high!
There are ONLY 2 ways out of this debt spiral in the US:
1. Government Default
2. Print into Hyperinflation
If you have “paper” denominated assets od ANY KIND you will most definitely lose everything.
If you buy gold and silver (Real Money) you will protect your assets.
Dave Ramsey needs to stick to talking to the numb sheep whose paper debts have put them in the poor house. When it comes to the understanding of economics, history and currencies, Dave knows almost enough to be very dangerous.
Manoffaith

February 17, 2011

Thanks Mr. Doug for your kindness and compassion by taking your own time to actually help others to achieve by walking the narrow road to Safety and to never ever be decieved by counterfiets on the broad road to self destruction. “As Iron sharpens Iron so One man sharpens another.” l Truly Thank you + May the Lord Richly Bless You.
Anonymous

February 25, 2011

Doug, great point about gold’s price being fixed prior to Nixon. Here’s what people need to understand about Dave Ramsey. He makes his money through his Endorsed Local Providers (ELP’s). And who are they? Financial planners (people who can only make money if you invest in the stock and bond market), and real estate agents, (people who can only make money selling real estate). Dave gets a huge cut of their commissions multiplied by thousands of financial planners and agents. So of course he doesn’t like gold and silver. He can’t make money on it. But I’ll bet he owns a lot of it.
Hunter Schiltz

March 4, 2011

Another great article Doug!
I want to add a quote from Alan Greenspan not too long ago that could go well with this post:

“If all currencies are moving up or down together, the question is: relative to what? Gold is the canary in the coal mine. It signals problems with respect to currency markets. Central banks should pay attention to it.”

Gold is the true reference point of real value to these currencies. But because there is so much intervention in the gold and currency markets, we don’t know what the real value of a dollar, euro, yen is… and therefore we do not know what the TRUE value of gold is. My guess is that there aren’t enough zero’s to put behind it!

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