No Interest Paid
I hear it all the time, and it's true. "The trouble with your gold and silver is that they pay no interest." (Of course silver went up 69% last year, and gold went up 28%, but admittedly it paid no interest.) No cash flow, in other words. Look guys, I deal with a lot of wealthy people, and a lot of medium income people, and maybe even a few poor people, but I doubt the latter, because a poor person needs all the failing, depreciating, fiat dollars they can lay their hands on, just to stay alive. There are thousands of you readers of my drivel, who are retired, maybe don't enough of a pension to live comfortably, or depend on unSocial Security to eat and buy gas for the buggy. So when you buy gold and silver, you put it away, and do damned well. But there's no "income." Many of you have scads of dollars, and you don't want them all in gold and silver, and you'd rather get some return on them.
For those of you who have toyed with the idea of selling high and buying back low, I suggest that it would be an error. On Tuesday, metals took a small tumble, while the Dow fell out of bed. If you can't sell silver at a top and buy it back at least a dollar less, you won't break even. The difference between Monday and Tuesday's silver price was 58 cents, so even if you sold on Monday, and bought back on Tuesday, you would have taken a bath in silver, not counting the trouble of packing it, and going to the post office to ship it. Gold was a bit different between Monday and Tuesday. Gold fell $26, and with a spread of from $9 to $20, you might have come out OK, at least with Krugerrands. Not with Maple Leafs, because Maple Leafs have a spread of $20. You sell the metals at the "bid price," which with silver is at least 50-60 cents under the "ask," or buy price, and then you have to ship it, which may cost another 15 cents an ounce. When you buy it back, you are going to buy it at the "ask" price and pay me a 1.5% commission, which includes shipping. If you had picked the top price of Krugerrands, not counting the trouble, you might have cleared a few bucks an ounce, IF YOU KNEW THE TOP AND BOTTOM!
Who can predict a top anyway? No one! No one has a crystal ball. Nothing is more frustrating than predicting what will happen tomorrow or next week. A year from now? No problem. Probably another 69% for silver and 28% for gold, but no one knows. We can only predict. When you buy futures contracts, the estimate from responsible people, is that only 5% of investors come out ahead. Bad idea to sell and buy back physical, or play the futures markets, in my opinion, based on hearing hard luck stories, and after losing thousands myself by betting on the future via the futures markets.
You out there who have a lot of surplus dough, and want a yearly salary of maybe 10%, listen up. Go to the web site www.ifa.com, and take the quiz. Then, call my son David, at either his cell phone ( 1-808-345-6151) or (1-877-373-9934) and ask for David Stott. This is a tried and true index fund outfit, which has an unbelievable record, even when the stock market falls out of bed as it did Tuesday. Will it be known as "Black Tuesday?" You can get from eight to fifteen percent a year in return if you need a cash flow. The rates are seven tenths of one percent to put it in or take it out, not the stock market brokerage costs, which will be several times that. This isn't for poor people! The firm will not take your money for less than $100,000. This is an index fund. Not for me, because I have an income from my gold and silver business, but if you want a cash flow, this might be a good place to place $100,000. I can't think of a place with a better record, or more dependable and reasonable. Go to the web site and take the quiz! www.ifa.com, and reads the web site, about Index Funds Advisors, which is rated #1.
I am certainly NOT telling you not to save in gold and silver! I am merely telling you of a supremely reliable place to place a hundred grand if you want a cash flow and have lots of bucks. Silver and gold have been true money for thousands of years, and this fact will never change. But, of course, no interest is paid with them. Only increases in dollar prices, which is OK with me. I am 73 now, and still have never had a savings account in my entire life. What for? One or two percent interest? Not me!
Every day, and especially when the market is violable, as it was Tuesday, people ask me if it will be lower tomorrow or higher. I can tell you that it will be one of three things tomorrow. Prices will be lower, higher, or the same! Any of those three. If I knew what tomorrow would bring, rather than being at my desk, I'd be in some lush resort, taking my ease. Of course, I have been predicting a stock market crash. It had to happen, because it was a bubble. I predicted a real estate crash too, as it was a bubble. But I never gave the dates! No one could. I only knew that both were way out of proportion.
No one knows when that certain something will ring a million bells in a million brains, and tell a million souls to sell. It's uncanny, really. Something just hits millions of people, and seemingly all at once. Either buy or sell, but they all seem to do it at the same time. Especially selling stocks. Boom! It hits the market and the flood gates are loosed. Sell, Sell, Sell those stocks, or buy, buy, buy, that gold and silver. Everyone buys when prices of gold and silver go down, and that is to be expected, but who knows what mysterious thing causes the Dow to fall out of bed? Did China's fall the previous night start it? No one really knows, other than it was too high and had to come down. Like an avalanche. One little trigger or a careless skier can loose a whole mountain of snow.
The beauty of placing a hundred grand in a well managed index fund with a long, prosperous record of dollar profits, is that the fund buys a dozen different funds, which consist of perhaps hundreds of stocks. Not just one stock, as most investors do. When gold and silver go down, people automatically buy on the dip. Smart move! Eventually, I am afraid, it may not dip, if the economics of the U.S. and world come to a screeching halt. Gold and silver may go straight up, and not have any dips. In 1980 that happened, and it may again. Only more reason not to sell and hope to buy lower to take a profit. It's paid for and is a wonderful security. Why gamble with it?
One thing I'll have to hand to the chart guys. Gold and silver have established a huge "base," which means that as long as it doesn't go below that base, the chances of a huge correction become less and less. We've come a long way protecting ourselves from the paper dollar, haven't we? Those glittering pieces of precious metal have simply done what they are supposed to do, and that is: Protecting yourself!
March 1, 2007
Don Stott has been a precious metals dealer since 1977, has written five books, hundreds of columns, and his web site is www.coloradogold.com
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