The Golden Truth: The Purchasing Power Preservation Of Precious Metals

Thursday, June 3, 2010

The Purchasing Power Preservation Of Precious Metals

My business partner, Dean, came up with this example of how silver has maintained its purchasing power over time. This is a picture of pre-1965 silver quarter, which was made from 90% silver and 10% copper:

In 1964, this coin was worth 25 cents. Back then you could use this coin to buy a gallon of gasoline. Today, if you take this same coin to a gas station, you can buy about 1/10th of a gallon of gas. HOWEVER, if you stop by your local coin dealer, he will pay you roughly the silver-melt value of this coin, which is $3.24 with spot silver a $17.95. You can then take the proceeds to the gas station and buy a little more than a gallon of gasoline.

As you can see, the face value of a quarter has declined since 1964 by 90%. But the silver-melt value of that same quarter has maintained its purchasing power over those 46 years.

With an ounce of gold, this example is even more dramatic. Back in 1964, the price of an ounce of gold was fixed at $35. Today, that same ounce of gold is worth $1210. If you do the math, you will find that the value of the U.S. dollar in relation to gold has declined by nearly 98% since 1964. Got gold? Got silver?

8 comments:

AnonymousFriday, 04 June, 2010
I am a confessed DOLLAR Lover and prefer my purchasing power be eroded daily by aliens and child molesters!
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HopiumFriday, 04 June, 2010
Another fine post Dave, $3 for one of these Silver quarters huh? Nice, as I have 20 rolls of them that I have held on too for the longest time.

No not for sale..../snark/
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HopiumFriday, 04 June, 2010
Interesting link as well.

http://www.realclearpolitics.com/video/2010/06/03/census_worker_claims_job_numbers_are_being_inflated.html
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AnonymousFriday, 04 June, 2010
Just another day watching the fiat bankster 'notes' die a little bit at a time.
It's a good thing that my garden is doing well. Otherwise, I might have to go to the grocery store, notice the rising prices, and then I might not believe our gubbermint numbers any more.
Redneckistanian
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Dave in DenverFriday, 04 June, 2010
Hopium thanks for the census video. may incorporate it into today's post if i get motivated to do a post LOL
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AnonymousFriday, 04 June, 2010
Dollar Dave,

Where's my USD comment gone?

http://www.youtube.com/watch?v=5j2F4VcBmeo
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Dave in DenverFriday, 04 June, 2010
Hey man, I post everything except the cash 4 gold spam and the occassional jerk-off who tries to post my personal information. I dunno what happened to it but I published it.

Love that movie. Like I said earlier, my wrong call on the dollar - so far - is analogous to being a foot or two off the mark in horseshoes and handgrenades.

But I could care less. You see gold today? That's the effect of the euro collapsing and every European who can fog a mirror trying to buy some gold. If the dollar spikes up because the euro is being used to fuel furnaces in northern Germany, that's not good even for dollar holders.

This is me shooting down paper gold frauds:

http://www.youtube.com/watch?v=S06nIz4scvI&feature=PlayList&p=A1E64F5465F7BF53&playnext_from=PL&playnext=1&index=4

Ain't war hell?
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Dave NarbyFriday, 04 June, 2010
It's fun to price things in metals.

E.g. in pre '64 silver, a Pizza Hut Super Supreme pizza costs a whopping $0.80!
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Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.