A Voice of Sanity – RobertRinger.com

By Robert Ringer

(Today’s article concludes my series on gold versus paper money, the content of which has been taken from my 1982 book “Civilization.”)

Finally, there is the argument that gold does not pay dividends or interest. But such an argument could only be made by an individual who does not understand the financial realities of today’s world.

As I pointed out earlier in this series, virtually none of the (so-called) traditional investments — i.e., Capital Black Holes and Capital Crapshoots — is income producing. They all lose to price inflation and taxes.

It’s true that if you are able to pick the right Capital Question Mark at the right time, and watch over it carefully, you have a chance to break even or, conceivably, even make a profit. But what makes gold unique is that the breakeven is virtually assured.

As to how to buy gold and what types to buy, reams of reading material are readily available to help you in these areas. Not only are there many good books on the subject, but any gold dealer will be more than happy to send you detailed literature.

The South African Krugerrand gets the lion’s share of gold’s publicity, and, all things considered, it is probably the best vehicle for owning gold. It’s a matter of market domination.

Just as more people would rather buy IBM or Xerox equipment because it is much better known in the marketplace, and hence more likely to retain a higher resale value, so it is with the well known Krugerrand.

South Africa, with its enormous resources of gold (relative to other countries), has effectively dominated the gold coin market through its Krugerrand. It now also makes 1/10 Krugerrands, 1/4 Krugerrands, and 1/2 Krugerrands, which are convenient for smaller transactions.

While speaking of lower value coins, I would like to make a specific point about silver. Because silver’s value per unit is much less than that of gold, you will, in the coming years, need a sufficient supply of silver coins for use in day to day transactions. The corner grocer may not be able to make change for an ounce of gold.

Even in a deflation, silver coins are never worth less than their face value. Therefore, depending upon your means, you should convert enough paper currency to “junk silver” to meet your small purchase needs in the future. So called junk silver includes pre 1965 silver dimes, quarters, and half dollars, and is normally sold in $1,000 face value bags consisting of 720 ounces of silver.

In addition to the Krugerrand, other readily recognizable gold coins include the Mexican 10, 20, and 50 Pesos, the Austrian 100 Corona, the Canadian Maple Leaf, the Hungarian 100 Korona, and the U.S. $20 Double Eagle. Large gold bullion bars (100 ounces) are impractical for most people, one of the chief reasons being that too much value is condensed into a single unit.

Buying gold is one area where you cannot afford inaction, because, as Gary North has correctly noted, betting against gold is the same as betting on governments. And, says North, “He who bets on governments and government money bets against 6,000 years of recorded human history.” Those certainly are not the kind of odds you want to apply to your long term planning.

Owning gold is the only known way to virtually guarantee the protection of your capital from the destruction of paper currencies. By investing in real money, you eliminate virtually all risk and get right to the crux of the issue. In the end, you can absolutely count on gold — not paper money — being king.

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Today’s Reflections:

Not much I can add to what I said on this subject back in 1982, though I do find it interesting that 27 years ago I was telling my readers that “banks are completely controlled by the government.” But, in all honesty, even I had no idea how much more extreme that control would become.