first majestic silver

An Argentine Trailer

December 28, 2001

I was in the theatre business for 11 years. I had 6 theatres, and a lot of fun. I'd like to have a dollar for every hour I have spent in a projection booth. Of course there is no longer a trade called "projectionist." Everything is automatic. The whole show is loaded onto a platter, and it is a continuous loop. No more arc lamps, no more changeovers, and no more operators or projectionists. The candy girl turns it on, and slams the door on her way out of what remains of the booth. If a film breaks, the thing shuts down and the house lights come up automatically, and the same when the show is over. What does this have to do with Argentina? Not a damned thing, but it has allowed me to retrogress a bit, because I love machinery and the old fashioned projection booth was a fascinating place. However, the "previews" are called "trailers" in the trade, and this DOES have to do with Argentina.

Argentina's economy, is in the process of biting the dust. It is over for the dollar pegged Argentine peso. The goods and services that Argentina produces, cannot come up to the dollar, so pegging the peso to the dollar had to be a lost cause. Not only that, but like any other welfare program, the partakers of such, are usually destroyed. Argentina has a $132 billion debt, thanks to the IMF, who loves to pass out our dollars to every whifty sand patch around the globe. Argentina is not a whifty sand patch, but it did slurp at the welfare trough, and it did insist on pegging its peso to the dollar, which was similar to pegging the dollar to gold. The buck may be a "strong" piece of imprimatured piece of paper, compared to the yen, or Argentine peso, but compared to real value, it is a joke.

So now the political shuffle is underway. Joe Doaks is out, and John Smedley is in, or similar. The politicos come and go, and the nation of Argentina suffers. Now, as in all currency devaluations, there are riots, looting, tear gas, and violence from the know nothings, who all the sudden find their "money" won't buy much of anything. It's too late, but the politicos will always come and go, and blame everyone but themselves. Each one promises pie in the sky, or two chickens in every pot. As the Argentine economy collapsed, what happened, was exactly as myself and others have predicted over and over again, and that is the simple fact that it is tangibles that will save you, not pieces of paper with ink on them…no matter how fancy or government guaranteed. The Argentines have bought up all the Mercedes-Benz autos, as an example. Why not? When the devaluation happens, they will cost twice as many pesos! The Argentines were frantically removing their pesos from the banks to buy tangibles, when the government placed a limit on withdrawals. When it was too late, the general public had a sudden revelation. We'd better get out of pieces of unbacked paper with ink on them, which have an official government imprimatur, and get into something tangible. We'd better get beans, oil, cars, gold, silver, or anything but pesos. Then, the government, which of course, always takes care of its citizens, and never looks out for itself, put a stop on withdrawals. Government has power, but no heart or consideration.

Geez, didn't FDR do that in 1933? Didn't FDR order everyone to exchange their gold coins for paper? Then he raised the price of gold from $20.67 to $35…after everyone had turned theirs in. Didn't he close the banks too? Yep. Did all the tom-foolery Roosevelt and his Democrat camp followers did, help us out of the depression which government caused? Nope. He had to get us into WW II to get the depression over with, and then we had 50% inflation in 4 years, plus 365,000 American boys dead. Nice guy, that FDR, and especially when he ran on a platform of not sending boys overseas, or getting us into war.

So how is Argentina a "preview of coming attractions," or trailer? Simple! When it hits the fan, it will be too late for bargains in tangibles here, as in Argentina. Argentina is a preview of coming attractions, or a trailer of what is in the future for America. When? I don't know, as I have repeatedly said, but don't get caught. Silver is 13% higher than a couple of months ago, and gold is 10% higher. Both have just begun their ascendancy in dollars, as have other tangibles. Everything "goes up" under inflation. Inflation is a disease that is begun and transmitted by politicians and government to its citizenry. Inflation, inevitably becomes uncontrollable, because if the presses stopped, and the politicians became honest, they would all become lame ducks at the next election. We can't allow that to happen, so we all watch prices go up, and the currency debase…just as in Argentina. Slowly so far, but is the Enron debacle the beginning of the end? How many of such can an economy stand before the presses go onto overtime? Hundreds of billions have already been injected in the last couple of months, and it continues. Goldman Sachs, Citibank, and others have been mortally injured it is said, but we still will have to see if it is true. Who knows?

Since Argentina owes $132 billion, and everyone else owes everyone too, why not just erase the entire thing, and start over? Good idea, and it may happen, but those who had saved their surplus assets in currency denominated accounts, would lose everything. If the Argentines debase by 50%, those who have a savings account in pesos, automatically have half that much value, and purchasing power, even though the number of pesos remains. Look at silver at $4.66 an ounce, vs $4.06 per ounce, or gold at $258, vs $278. Is the gold worth more? Is the silver worth more? No, because it is the same silver and gold. Only the currency you buy it with changes.

A new novel is out, and titled "Patriots, (surviving the coming collapse"), and it shows just how quickly a financial panic can happen. I have a couple of books from the 1970's that had the same theme. It didn't happen then, and it might not happen now, but it will eventually. Will the Euro hurt the dollar? When will people want things rather than pieces of paper with ink on them? I don't know, but my insurance isn't from Metropolitan. My insurance is in my safe, and it is denominated in ounces, not dollars. Enron came down overnight, as did the NASDAQ. Now I hear the fed is printing hundreds of billions more to bail out the Argentines, which won't help them. It will only make the dollar weaker, and every thing we buy cost more…in dollars.

Why silver and gold? Simple. They don't spoil in the refrigerator, or with too much heat, as do wines. They are compact, easily stored, and liquidated. They are universally respected, loved, and desired. They don't need license plates or insurance, as in antique autos. AU & AG have been actual money for thousands of years. They are at the virtual cost of production in gold (AU), and far under production cost in silver (AG). And of course there's the fact that "everyone is not doing it." That's the biggest draw to me. When "everyone" is doing something, I always do the opposite, because in 99% of the cases, "everyone" is wrong. When "everyone" decides the buck is useless, and wants gold and silver, or Mercedes Benz autos, the prices will be similar to the NASDAQ at 5000. "Everyone" deciding to do something or buy something, always makes the price in currencies ridiculous, be it a fad car or Christmas toy. Do something, not because "everyone" is doing it, but because it makes sense. "Everyone" was begging for gold at $850, and silver at $54 in 1980, and it was too late. I told them no. I'm saying YES now.

Yes, I still am sending out my book, CONSEQUENCES free, by e-mail. No physical copies, as they are all gone. Ask, by e-mail, at [email protected], and it shall be sent to you by e-mail. No, I don't keep a mailing list, and don't keep a record of who gets it. It's just a free book with no strings attached.

Have a happy New Year good people!

In 1933 President Franklin Roosevelt signed Executive Order 6102 which outlawed U.S. citizens from hoarding gold.
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