Purchasing power and preservation of wealth
Ok. So in my recent post, I mentioned how to look at silver and gold, not as something you are BUYING....... but rather as a currency that you are EXCHANGING for. The same as if you went on a trip to Europe and at the airport, you EXCHANGED some dollars for Euros. You didn't SPEND any money of euros. You simply EXCHANGED on form of currency for another. And that is exactly what silver and gold are.... MONEY. They are CURRENCY. So, you aren't SPENDING your money BUYING silver and gold. You're simply EXCHANGING one form of money/currency for another.
Now, with that behind us, WHY would we want to do this "EXCHANGING"? As I've mentioned many times before, it's to preserve your wealth. So, in this post, I want to provide some examples and give you a perspective that can make it easier for you. A perspective more as a "Way of thinking".
If today, you had accumulated say 1000 ounces of silver, and with dollar cost averaging and an average manipulated price, lets say you've spent $20 per ounce average. That means, you have exchanged basically $20,000 in dollars for 1000 ounces of silver. What could you buy TODAY with $20,000 in dollars? I think it's safe to say, if your grandparents had put aside $20,000 in dollars away in the year 1930, in an envelope; they wouldn't be able to buy nearly as much good or services today if they opened that envelope and decided to spend it. No where near the amount of goods or services they could have bought with $20,000 in 1930. Back then, you could have bought a really really nice house for that kind of money. Obviously, this is an extreme. But the point is, the DOLLARS, held for future spending, (Savings), will not be worth in the future, what it was when you put it away in the past. Saving dollars is fine, for more IMMEDIATE spending/purchasing needs.
Well some, will say that is why you INVEST. IRA, 401K, bonds, t-bills,, CD's, etc. Well that's fine, but there is a lot of risk involved, and you have to hope that WHEN you need to CONVERT/EXCHANGE/SELL those investments, the value isn't in a down cycle. The thing is, silver and gold aren't investments. What they do, is MAINTAIN PURCHASING POWER. They remain basically with inflation and the economy. But to be more PRACTICAL in my presentation, lets use probable examples.
Back to the $20,000 you exchanged on average today, for 1000 ounces of silver. If you were to use the $20,000 today, what could you buy with it. Lets use simple numbers. Going to the grocery store, obviously you can buy food cheaper than going to a restaurant. So lets say that you can feed your family for $10 PER DAY. That means, the $20,000 in dollars TODAY, would feed your family for approximately 7 months. (200 days). That means today, that 1000 ounces of silver exchanged, either direction, would also be able to feed your family for that same 7 months.
Now, fast forward 10-20 years. We're using normal inflation. Nothing erratic or out of the ordinary. No different than if you compared today with say the year 1995-2000. This is a term you might have heard before called the CPI (Consumer Price Index). This is how they compare based on the price of goods and services, vs average income, at different points of time. So, if you look at the average price index of the year 2000, it was 172.2 and in 2015, it was 237.02. This means, on average, what would cost you $1.72 in the year 2000, would cost you on average, $2.37 in the year 2015. That is roughly a 27% increase in the cost of living in the last 15 years. So, using that average, we could roughly say that the $20,000 you could spend today, if left under your mattress, or in your savings account, etc. would only be worth about $14,600 in 15 years. In other words, you'd only be able to buy in today's money, $14,600 worth of goods or service. Using the above example of feeding your family, that means about 5 months of feeding them instead of 7 months when you first put the $20,000 away.
As I've shown many times in the past, silver and gold keep up with inflation. What you could buy with an ounce of silver or gold 100 years ago, you can still buy with it today. If you take out the obvious manipulation, due to the PAPER SILVER and GOLD in ETF, Stocks, etc. So, what does that mean for the 1000 ounces of silver you "Exchanged" for, INSTEAD of having the $20,000 in cash? Simple. The average price of silver in 15 years, would only have to rise to $25.40 an ounce instead of today's $20 an ounce. Do you think that's probable? Hell yes, Considering the massive debt we have today, the government trying to force the dollar to be strong with that debt, which means manipulating silver and gold down, a price of $25.40 an ounce is too easy to do. We've seen it hit almost $50 an ounce just a couple years ago. Averaging $25.40 is a breeze.
That's how come we know that silver and gold will PRESERVE your wealth and preserve your purchasing power. So, what happens if the price of silver rises rapidly. Similar to in 2011 when it reached almost $50 an ounce? What happens if in the next 10-15 years it spikes at $50, $75, or even $100 an ounce. That's when you use that "Exchange" for some of the other reasons I recommend buying silver and gold. You use it to pay down debt or purchase items at a discount. See, it doesn't matter what happens to the cost of living, your DEBT is generally fixed. Example: If you have a $200,000 mortgage, it doesn't matter if inflation goes up 50%, they don't then say you owe $300,000. You still owe the original debt. So, if silver spikes to $50, $75, or $100 an ounce, you can convert that back and use it say to pay off that mortgage, pay off other debt, use it to buy a car, or any other goods or service at a lot less than you bought the silver for.
So, there is my explanation of why silver and gold can preserve your wealth. Why for savings, NOT INVESTING, you should have some silver and gold. It's to help you through high times of inflation, to supplement your income or retirement, etc. Hope this makes sense. You know how to contact me with questions if you have them. Take care.
CYA: SE:
Now, with that behind us, WHY would we want to do this "EXCHANGING"? As I've mentioned many times before, it's to preserve your wealth. So, in this post, I want to provide some examples and give you a perspective that can make it easier for you. A perspective more as a "Way of thinking".
If today, you had accumulated say 1000 ounces of silver, and with dollar cost averaging and an average manipulated price, lets say you've spent $20 per ounce average. That means, you have exchanged basically $20,000 in dollars for 1000 ounces of silver. What could you buy TODAY with $20,000 in dollars? I think it's safe to say, if your grandparents had put aside $20,000 in dollars away in the year 1930, in an envelope; they wouldn't be able to buy nearly as much good or services today if they opened that envelope and decided to spend it. No where near the amount of goods or services they could have bought with $20,000 in 1930. Back then, you could have bought a really really nice house for that kind of money. Obviously, this is an extreme. But the point is, the DOLLARS, held for future spending, (Savings), will not be worth in the future, what it was when you put it away in the past. Saving dollars is fine, for more IMMEDIATE spending/purchasing needs.
Well some, will say that is why you INVEST. IRA, 401K, bonds, t-bills,, CD's, etc. Well that's fine, but there is a lot of risk involved, and you have to hope that WHEN you need to CONVERT/EXCHANGE/SELL those investments, the value isn't in a down cycle. The thing is, silver and gold aren't investments. What they do, is MAINTAIN PURCHASING POWER. They remain basically with inflation and the economy. But to be more PRACTICAL in my presentation, lets use probable examples.
Back to the $20,000 you exchanged on average today, for 1000 ounces of silver. If you were to use the $20,000 today, what could you buy with it. Lets use simple numbers. Going to the grocery store, obviously you can buy food cheaper than going to a restaurant. So lets say that you can feed your family for $10 PER DAY. That means, the $20,000 in dollars TODAY, would feed your family for approximately 7 months. (200 days). That means today, that 1000 ounces of silver exchanged, either direction, would also be able to feed your family for that same 7 months.
Now, fast forward 10-20 years. We're using normal inflation. Nothing erratic or out of the ordinary. No different than if you compared today with say the year 1995-2000. This is a term you might have heard before called the CPI (Consumer Price Index). This is how they compare based on the price of goods and services, vs average income, at different points of time. So, if you look at the average price index of the year 2000, it was 172.2 and in 2015, it was 237.02. This means, on average, what would cost you $1.72 in the year 2000, would cost you on average, $2.37 in the year 2015. That is roughly a 27% increase in the cost of living in the last 15 years. So, using that average, we could roughly say that the $20,000 you could spend today, if left under your mattress, or in your savings account, etc. would only be worth about $14,600 in 15 years. In other words, you'd only be able to buy in today's money, $14,600 worth of goods or service. Using the above example of feeding your family, that means about 5 months of feeding them instead of 7 months when you first put the $20,000 away.
As I've shown many times in the past, silver and gold keep up with inflation. What you could buy with an ounce of silver or gold 100 years ago, you can still buy with it today. If you take out the obvious manipulation, due to the PAPER SILVER and GOLD in ETF, Stocks, etc. So, what does that mean for the 1000 ounces of silver you "Exchanged" for, INSTEAD of having the $20,000 in cash? Simple. The average price of silver in 15 years, would only have to rise to $25.40 an ounce instead of today's $20 an ounce. Do you think that's probable? Hell yes, Considering the massive debt we have today, the government trying to force the dollar to be strong with that debt, which means manipulating silver and gold down, a price of $25.40 an ounce is too easy to do. We've seen it hit almost $50 an ounce just a couple years ago. Averaging $25.40 is a breeze.
That's how come we know that silver and gold will PRESERVE your wealth and preserve your purchasing power. So, what happens if the price of silver rises rapidly. Similar to in 2011 when it reached almost $50 an ounce? What happens if in the next 10-15 years it spikes at $50, $75, or even $100 an ounce. That's when you use that "Exchange" for some of the other reasons I recommend buying silver and gold. You use it to pay down debt or purchase items at a discount. See, it doesn't matter what happens to the cost of living, your DEBT is generally fixed. Example: If you have a $200,000 mortgage, it doesn't matter if inflation goes up 50%, they don't then say you owe $300,000. You still owe the original debt. So, if silver spikes to $50, $75, or $100 an ounce, you can convert that back and use it say to pay off that mortgage, pay off other debt, use it to buy a car, or any other goods or service at a lot less than you bought the silver for.
So, there is my explanation of why silver and gold can preserve your wealth. Why for savings, NOT INVESTING, you should have some silver and gold. It's to help you through high times of inflation, to supplement your income or retirement, etc. Hope this makes sense. You know how to contact me with questions if you have them. Take care.
CYA: SE:
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