Why American Gold?
Don StottI now (after a lot of e-mails) realize that my idea of using Silver Eagles at their face value ($1) to purchase or sell real estate at 6 times its value, to avoid taxes, etc, was biting off a big chunk. I have an alternative, which may be easy for you to do. Thanks to a reader who noted this possibility.
Cars are the American pastime. Americans buy and sell cars with total abandon, and we love the smell of gasoline. Cars are bought and sold many times as often as real estate, so this may be very practical. Here we go again with suppose, suppose, suppose.
Suppose you want a new or used car. Suppose you know a dealer who has done very well of late, and most dealers have. Suppose this dealer has this neat $6,100 buggy he wants to sell to you, and as a matter of fact, would like to show a paper loss on a single sale. This dealer loves silver and gold, and has enough profit this year to: (1) show a paper loss on one deal, and (2) would love to own some silver as a hedge against inflation, OK?
So you go to this guy and say, "Look Charlie, I want that Hoot-o-mobile you have out there on your lot, and I'll pay you your money, but I want to give you $1,000 face value in American Silver Eagles, which will cost me $6100, but I will only have to pay sales tax on $1,000 when I register it, and you will show a loss, have to pay less income tax, and acquire 1,000 US Silver Eagles, which will go up in dollars, as my Hoot-o-mobile goes down in dollars, but I'll have a set of wheels, and you will have a loss. How's that strike you Charlie?"
You will save about $400 in sales tax, and maybe a lot more, depending on how Hoot-o-mobiles are registered and taxed in your locality. If it is based on actual purchase price of $1,000, you will save a real bundle. Charlie will have far less income tax to pay, and may even sell it to you for far fewer Silver Eagles, since it will be a technical loss. You, of course, will buy them from me, but even if you don't, it is using the US official silver coin at its face value…ONE DOLLAR
The US mint brochure, according to another reader, guarantees the American Silver Eagles to be "worth at least $1.00" Duh. So much for cars. Translate that into other venues, and have a ball with it, if you are so inclined. Like to eat out? Leave a Silver Eagle as a tip, and your waiter will be ever so delighted, because most people, who know no better, often think they are worth $50, they are so pretty.
Maybe an individually owned hardware store, would like to have Silver Eagles for a new lawn mower. Maybe a mechanic, tree trimmer, or some other independent businessman, would like the same. Notice that China Marts can't do that, and please stay out of them anyway. I was thinking the other day about the China Marts, Home Depots, Bed & Baths, etc, and how much they must ship off to China. It has to be in the hundreds of millions of dollars of US capital every year. What happens when we have no more capital to send them? Will we be another Argentina? They use dollars to attempt to become a major economic and military power in the world, and already, it is said, control both ends of our ex-Panama Canal, which we paid to get rid of. (Don't get me started on that)
I am reading a book titled, "The Coming Collapse of China," and I'll give you a report on it when I am finished, but I can't imagine how it could happen, unless it is from the utter stupidity of a communist-socialist-totalitarian state, which China is. Is it possible they could be so bureaucratic and stilted, that they throw away the largess they are getting from silly Americans?
I guess what I am suggesting, is that actual barter is grand, and that if you can barter and fool the tax collector, it is all the better. Many of you write or call me, and want my opinion as to the ultimate demise of the dollar, and the necessity to actually barter for food and other needs. I don't think that will happen. Why? Because if the dollar becomes worthless, the entire world will be in upheaval, and wholesalers and manufacturers can't take barter for their stuff. Farmers can, and independent retailers can, but not the chains, distributors, and manufacturers. They need a method of accounting, and it has to be a dollar, euro, or something that can be put on paper or a ledger. Barter is fun, and garage sales are classic examples of that. Silver Eagles may buy you a whole lot more than dollar bills will, at garage sales. Try it! I have, and it works wonderfully.
The buck will continue on the downgrade, as each month and year passes, and as more and more citizens notice it, they will get out of dollars and into gold and silver. The ignoramuses will just watch and hope for relief…which will never come. I just got an e-mail from a new client who had enough, when his savings account interest went to .87%. That's less than 1% per year! He got out of those absurd dollars, and into silver.
And don't be fooled by comparisons between the yen, dollar, and euro. They are all mere pieces of paper with ink on them, and are being printed with all dispatch everywhere around the world. All are going down, as all their numbers are increasing daily. The euro is supposed to be "backed 15% by gold," but no one has yet identified where the gold is, how much of it there is, and in some way proved it. It's just a piece of paper with ink on it. Now the US is going to make colored dollars to flush out the dope dealers, they say. It is just another way to fool everyone into thinking there is some value there.
Hundreds of millions, and even billions of people on earth, have had their savings (surplus assets) wiped out, because of saving in currencies, and currencies losing their purchasing power due to endless printing press increases in numbers. Some have lost almost overnight, as have the Germans at least twice. Americans have had their savings wiped out three times already, although it took a few years each time. Currently, the dollar is losing value at least 10-12% a year, while gold and silver are going up even faster than that…in dollars. Even if they only went up as fast as the dollar goes down, isn't that reason enough to get out of dollars? I hate dollars, and with every extra one I get, I add to my safe. 10 Krugs last week, and a "bag" ($1,000 face value in pre 1965 coins) a month ago. Nice way to save, huh?
Jimmy Carter in Cuba, speaking in a terrible Spanish accent, reminds me of when he was President, paying away the Panama Canal. (Has there ever been another ex-US President, speaking against a current administration, from a foreign nation?) Remember Carter's "FIGHT INFLATION" advertising binge…while we a had 13% prime rate, and 21% mortgages? How silly. As if Americans were running the presses then or now. We don't cause inflation. Governments around the world cause it, and always have…by printing their way out of debt, and paying their bills with money they create out of nothing. Would that we could do the same.
And as usual, I urge you to protect yourself, as no one else will.
May 18, 2002
Don Stott has been a precious metals broker since 1977, has written five books, hundreds of columns, and his web site is www.coloradogold.com
Email this Article to a Friend