first majestic silver

You can't Eat Gold!

March 18, 2002

You keep hearing people say: "You can't eat gold!" Those who say that imply gold is will be totally useless. If they don't say that they say: "Well gold doesn't pay any interest." They say that to prove it would be a bad investment. Well, I want to give my fellow gold-bug a way to respond to that put down. This is an answer that for those who might have some doubt about buying gold and its usefulness.

First by saying "You can't eat gold," you make it sound like that it is the end of the argument. But let's consider using the argument in a different way.

  • You can't eat shelter!
  • You can't eat health care
  • You can't eat the things for protection and self defense like guns or how to fight
  • You can't eat art

And I am sure if you think about it there are many other things you need, but you "can't eat."

As for gold not paying interest, you can argue, due to all 12 Greenspan interest rates cuts, the banks aren't paying interest either. Those who argue about interest and gold are arguing about making money. If you are interested in making money as an investor you should know there is a time to make money and a time to save money. Or as Kenny Rogers says in his song The Gambler, "There's a time when to hold them, a time when to fold them, A time to walk away and a time to run." Gold is for the time you want to save, or when you find it necessary to either walk away or run.

Strictly speaking, you can't eat paper money nor does the change in your pocket pay interest. You use it to buy the food you need. And if you want to take risk, there are ways to get interest payments on gold. Since money and gold can be used for the same purpose, I think I should define what both are and the difference between the two.

Money, whether is paper dollars, booze, drugs, gold silver, land, or whatever, is what you use to trade one item for another. The common feature of using money in trade is everybody usually accepts it. The different between paper money and gold is more people will accept gold than paper. Most people will accept paper. Using paper, things have a habit of going up in price. Not so with gold and silver. You may not always be able to buy things with paper dollar, pesos, pounds, lira, and so on. You can always buy something with gold or get the paper money if you so desire. That's the reason more people will accept it. The only exception is in the Western Nations where people have been made ignorant of what gold and silver are. Gold and silver always have been known as "Real Money."

Gold works best in uncertain times. You can use gold to buy things if times get hard you can buy food, medicine and shelter and other things you will need. Silver - and because we have had so much inflation - possibly copper may be used for small purchases. The same may not be true with paper money. With the stock market, various scandals, terrorist acts, war, unemployment, Greenspan, Argentina, Japan, there are lots of uncertainty.

I believe we are headed for hard times. You can argue K-wave theories, Biblical prophesy, your observation the younger generation is doing less well then previous generations since now takes the income of two to provide for your family or whatever reason hard times are coming. The nature of man does not change. He will have to be able to work today to pay for the things he needs tomorrow. How does he pay? Studying history, those who have saved and saved in gold and not paper, suffered the least.

So I have gold so spend. What can I buy? Food. There is always someone willing to sell food for gold in the hardest time. Hopefully, I have the wisdom to stock up on food so I don't have to pay black market prices. If not, I trade my hoard of real money for the seller hoard of food.

Another thing I could buy is shelter. If the markets crash, there will be a lot of people who have extra houses and real estate they don't need, but will need to raise cash. I don't own a house. My generation fate is a lot of us will never get to save enough to own our own houses free and clear. Most will have mortgages. They are counting on inflation, especially hyperinflation, to win the chance of owning their homes free and clear. If they are lucky to be able to keep their job… they won! There will still be many of my generation who won't have that chance, unlike their parents. I will need another method and some luck. I know of the hyperinflation of Germany in 1922/23. The few who had foreign currency or silver were able to buy houses. Those with gold were able to buy entire businesses. I remember reading a story where a bellboy was tipped with a gold coin. He saved it, and later was able to buy the entire hotel where he worked with that same coin.

I don't have much gold, most is decorations as part of my trumpet. If I offer what little gold I have to someone who has two houses, I do stand an outside chance of becoming a homeowner. Since the market has crashed, there will be a lot of sellers and not a lot of buyers. In normal times it is hard enough to sell something. And if a house has been on the market long enough, a seller will consider all offers no matter how low or outrageous. I can't say what the price of gold may be. Probably very high but I suspect the gold cartel has more than one trick up its sleeve to keep the price down. I offer all I have in gold. I may have to search, but I do think eventually someone will accept. They will accept for these reasons:

1. He may be able to use the gold to buy some of the other need I will explain later.

2. He sells at a loss (face value of the gold) but sometimes people sell at a loss to help someone who is worthy and to get them out of a jam.

I knew a friend who was able to buy a house far under market value. A $100,000 house for $25,000. The owner was going through a very messy divorce and wanted to just dump any possible asset so the wife didn't get it. He sold the house to the tenant renting it, a young person like me working hard but not making much. Like me not likely ever to afford a house. But the owners said: "Better him than the wife." In other words he was worthy and the owner was willing to help him become a home owner.

3. He sells because he receives no other others. There have been people so frustrated they say "For two cents, I'll sell this dump." When someone offers an extremely low price, they accepted.

I am sure you can think of other case where I find someone willing to sell me a home for my gold. So let's talk about health care.

If we are in a situation, where people won't sell food for gold, that means we are facing a massive famine. And if there is famine, there is sickness. You will want to see a doctor. And so will everybody else.

What makes me different? If there is a famine, everyone will have no food. If there is hyperinflation, money is worthless. What if I offered the doctor gold. The doctor will consider it. He knows he can trade his medical skills for food, but there may be other things he/she wants. Since gold is true money, it makes it an easier decision for the doctor to accept. He can always spend it on something, or save it without losing value. Since gold can be easily hidden, he gets to keep the money if the government tries to confiscate it. Also, he can avoid taxes as there is no paper trail.

But you argue, most people don't recognize gold. How will he determine its value?

First, learning about gold is not the hardest thing to do. You as a seller can teach him the value.

Second, I think more people will recognize gold, and know the value and be more willing to accept I, whether we have hyperinflation or depression. The factor in getting people to recognize gold will have been the new Saccawa gold coin. You and I know that bronze coin as well as being ugly is worthless. But the general public doesn't know. At first glance the color between the two is close enough so a person who is curious will recognize true gold.

Of course you could argue the government printed up those tokens as a way of getting the public to reject gold. My counter-argument is Whenever the government tried to do one thing, it usually has the opposite effect. I think of the Saccawa coin as a training tool for the public. Just as a gold prospector must first learns of iron pyrite or fool's gold, so he knows real gold, I think the public will learn about real gold from this 'counterfeit' coin.

As well as using gold to buy health care, you can use gold to save your life. Many fleeing refugees were able to escape death because they used a gold coin as a bribe to cross the border from certain death to freedom (Nazi Germany and Viet Nam prime examples).

There is only one situation I can think of in the hard times to come where gold may not be useful. That is if you have to buy a weapon to defend yourself. Just like you can't eat gold, you can't eat a gun.

I am probably the first person to argue "A gun is totally useless because you can't eat it. And you shouldn't learn how to fight for the same reason. Well, you don't want to eat a gun. It the OTHER PERSON you want to die of lead poisoning!"

A gun is a means of self-defense, and you have a moral right to defend yourself -- however the means. Just because people misuse guns doesn't mean you should forsake a means of self-defense. Now in a crisis situation you are not going to sell your guns for gold. And this brings to mind one of the best movies I ever since and it is revenant since it talks about gold. The movie I am talking about is "The Treasure Of Sierra Madre" with Humphrey Bogart as a down-and-out hobo and Walter Houston as a grizzly old prospector.

The scene is where the Bogie and Friends(?) get surrounded by a bunch of bandits. The bandits say: "You don't want those rusty guns, Why don't you give us those piece of junk! Throw them down. We give you a shiny watch for your guns.

Bogie answered "You keep your watch! We'll keep ours guns!" And then he shoots a hole in the watch.

The movie and scene also contains the classic line "Badges! Badges! We don't have no badgesz! We don't need no stinkin' badgezs!"

While the movie is GREAT! I also recommend reading the book. One thing the book covers that the movie doesn't is the relationship between oil and gold. (Otherwise, why was Bogie on that oil rig?)

The movie and book leads to my last thing you can't eat, and that is art. What is the purpose of art? According to Ayn Rand (Greenspan's mentor), it is to refresh the soul. Now I plan on making my own art, but to those who socked away enough gold, you may want to consider using your gold to buy art in the trying times to come. I promise you'll get it at bargain basement prices like you are getting your gold now.

Last, there is one other thing that you can't eat but I think is absolutely necessary.

"You can't eat freedom." One of the things that lead me to gold is a lot of Libertarian writers like Robert Ringer and Harry Browne in talking about the need for freedom, talk about gold and how the two are linked.

As you know, the country has stopped saving. The US savings' rate is zero. The banks in all honesty are not encouraging saving. I have always been a saver. But I can only save in small amounts. Usually my saving's account has been under a $100. Well, I am a small saver… but at least I am a saver. I noticed one day my (former) bank starting charging me all sorts of service fees where they did not before. Usually $3.00 fee or so. Now that may not be much to you, but having been broke too many times, it is a lot for me. I figured any bank that needs to take what little money I have is a bank in trouble! So I closed my little bank account and starting saving in gold.

A few months later I heard all sort of rumors on the Internet that this bank is having serious trouble with its derivatives. I am glad I got out of that bank. But what the gold does is give me freedom in this way.

I was working at a job I hate. So I quit! Decided to practice my trumpet. Now most musicians starve. But I wasn't starving because every month I could cash in some gold I saved to pay my bills. I wasn't happy that I sold my gold at the all a all-time low, but at least I wasn't being robbed by the bank, nor had I suffered as badly as those who brought at the top of the NASDAQ bubble. But having the freedom to pursue a dream was worth the price I paid in gold. I spent all the gold I had saved. It was worth it! The gold price may take-off without me, but the gold I had gave me the freedom to pursue a dream. That was worth its weight and more in gold. Freedom always is.

So to those who tell you, you can't eat gold, tell them the other things you can't eat.

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