Michael Yardney, investment property guru and wealth creation expert, once said that the worst investment advice he had ever received was that real estate always increases in value over time.
But even worse than that advice, I believe, is the investment advice from one of the worst U. S. presidents in history, Lyndon B. Johnson.
Lyndon Baines Johnson’s presidency was so full lies, corruption and mishaps that there is not enough space to cover them all. He laid the groundwork for victicrats like Jesse Jackson and Al Sharpton. Inner cities and black America have been relegated to poverty as a direct result of Johnson’s socialist policies.
And in 1965, President Lyndon B. Johnson signed the “Coinage Act of 1965”, which removed silver from circulation.
Along with the coinage act, he made a ridiculous threat:
“If ANYBODY has ANY idea of hoarding our silver coins, let me say this! Treasury has a lot of silver on hand, and it CAN BE, and it WILL BE used to keep the price of silver in line with its value in our present silver coin. There will be NO PROFIT in holding them out of circulation for the value of their silver content.” President Lyndon B. Johnson
But people ignored Johnson’s ridiculous threat and within a year… it was difficult to find a silver coin. Once silver was removed from official U.S. coinage, everyone began instinctively hoarding silver coins and silver went into hiding.
The term “went into hiding” means the public instinctively understands the implications of Gresham’s Law — bad money drives out the good. When the U.S. Government starting minting base metal slugs as official money, it didn’t take long at all for the public to withdraw the real money (silver) from circulation.
And by 2011, a silver dollar that was worth a dollar for its silver content in 1965 was worth more than $30. That is a 2,900% return on the simple, totally risk free investment plan of picking silver coins out of your pocket at the end of the day and storing them in a jar. The absolute worst case is that the silver dollar is only worth a dollar by law. You can’t get more risk free than that.
Lyndon B. Johnson’s ridiculous threat may have been the best risk free, anti-investment advice of the century.
And I don’t think it’s over.
The Obama administration is printing 75 billion each month for the big bankers while they are raising the debt ceiling every few months and adding trillions to the national debt. They are papering over all of the growing economic problems. Paper is cheap. Paper is unlimited, especially in its current digital form of ones and zeros. Silver and gold is not cheap, and it is very limited.
The following is taken in part from an article by Steve St. Angelo:
The chart below shows where the majority of U.S. personal monetary cash assets are allocated. These do not include retirement or security investments, but are rather paper assets we may label as “Cash or Cash Equivalents.”
According to the Federal Reserve Q3 2013 Statistical Release, the U.S. public held $1,174 billion in Money Market Fund Shares, $1,332 billion in Checkable Deposits & Currency and $7,723 billion in Time & Saving Deposits. Thus, there is a total of $10,229 billion or $10.2 trillion in these paper cash assets.
You will notice on the left side of the graph a small pathetic figure of $14 billion. This represents the total value of all the Global Silver ETF’s as of Q3 2013. The data for that figure comes from GFMS Thomson Reuters Nov. 2013 Silver Update.
As we can see there are 655 million oz of silver held in these Silver ETF’s. If we multiply the 655 million oz by $21, we would get a figure of $13.7 billion (rounded to $14 billion in the first chart).
This is the largest store of physical silver in the world (not including the LBMA or COMEX), its total value ($13.7 billion) pales in comparison to $10.2 trillion held in U.S. personal cash assets.
Now, if we were to include the current 182 million oz of silver at the Comex and let’s say there is another 200 million oz at the LBMA, that would add another $8 billion to the figure… giving us a total of $22 billion.
The U.S. public has $7.7 trillion stashed away in digital CD’s & Savings Deposits. I am going to disregard the other two categories as they are fiat currency assets that the public may use on a more “day-to-day” basis.
But CD’s & Savings Deposits are “extra or surplus” funds that are generally not used in the day-to-day business of Americans. Thus, the total value of the Global Silver ETF’s are 0.2% (one fifth of one percent) of the value of all U.S. Time & Savings Deposits.
This may not seem so strange to the typical American today, but just fifty years ago (when I was born), the U.S. Dollar was backed by actual gold and the coins were made of silver.
A few years after the signing of 1965 Coinage Act (removing silver from circulation), the next shoe to drop was gold. On August 15, 1971, Nixon closed the gold window, which meant foreign governments could no longer exchange U.S. Dollars for physical gold.
Because the U.S. was printing so much money in the 1960’s to cover the costs of Lyndon Johnson’s social programs and the war in Viet Nam, foreign countries were exchanging paper Dollars for physical gold. During the 1960-1968 time period, the U.S. was a part of the London Gold Pool that attempted to hold the price of gold at $35 by selling thousands of tons of gold on the market.
The biggest loser in the London Gold Pool was the U.S. as it exported over 4,700 metric tons during that nine-year time period. Here again was another example of bad money driving out good.
If we fast forward to today, Gresham’s Law is alive and well as the East continues to exchange worthless fiat Dollars for physical gold. Not only did the Chinese import a record amount of gold in 2013, they also imported a stunning 247 metric tons in January.
Here we can see that China has gone from being a big net exporter of silver, to a net importer since 2010. In 2009, (last year being a net exporter), China had net exports of 1,260 metric tons. However, in 2012, China became a net importer of 82 metric tons.
While this may seem like an insignificant figure for now, it is the beginning of another trend change (like the coinage act) that will more than likely continue to a greater degree in the future.
Furthermore, when the Indian Government cracked down on gold imports in 2013, its citizens switched to buying silver. Indians imported a record 5,400 metric tons of silver in 2013.
If we consider that the U.S. public holds $7.7 trillion in CD’s & Savings Deposits while the world has a paltry $13.7 billion in total Global Silver ETF’s, something is very wrong with the public’s ability to understand the wisdom of “real value.”
Again, less than fifty years ago, gold and silver were legal forms of money in the United States. Today, if you talk about the positive attributes of gold and silver on CNBC, you become the laughing-stock on the set.
The KEY INGREDIENT that keeps a Ponzi Scheme alive is the ability to hoodwink a new batch of POOR brainwashed SLOBS to part with their hard-earned fiat currency. SLOBS being term that the banking elite would use in describing their clients — the public.
Gold and silver have been a way of storing wealth for 5,000 years.
The Fiat Monetary System is heading toward certain death…. it’s just a matter of time.
“Paper money eventually returns to its intrinsic value – zero.” (Voltaire, 1694-1778)