Excerpt from Parsson, Jens O., Dying of Money: Lessons of the Great German & American Inflations, Wellspring Press, 1974, p.71.
"Everyone loves an early inflation. The effects at the beginning of inflation are all good. There is steepened money expansion, rising government spending, increased government budget deficits, booming stock markets, and spectacular general prosperity, all in the midst of temporarily stable prices. Everyone benefits, and no one pays. That is the early part of the cycle. In the later inflation, on the other hand, the effects are all bad. The government may steadily increase the money inflation in order to stave off the latter effects, but the latter effects patiently wait. In the terminal inflation, there is faltering prosperity, tightness of money, falling stock markets, rising taxes, still larger government deficits, and still roaring money expansion, now accompanied by soaring prices and ineffectiveness of all traditional remedies. Everyone pays and no one benefits. That is the full cycle of every inflation"
There is much discussion around investment circles whether we are headed for inflation or deflation. Make no mistake we are headed for inflation, in fact hyperinflation. As Jenso Parsson highlights above we are currently in the terminal phase with faltering prosperity, stock markets and tightening of money. The almost unimaginable money printing by the Federal Reserve (note charts below on the Feds balance sheet) flows on to all other countries. With the US dollar as the worlds reserve currency money supply increases must be matched by all governments to ensure stability in currency markets. Whilst the short term deflation scare appears real, inflation is the 1000 pound gorilla in the room that no one has noticed. As the hyperinflation and global currency crisis story becomes known gold and silver prices will head to the moon.
I have been highligting the short term downside price risk to gold and silver for some time now. This weeks sell off to below $850 provides a good entry point. Prices could still move lower in coming weeks but the risk reward is now as favourable as it has been since 2005. I added some silver this weeks when the price dipped below $11.00 and expect to buy gold next week should the price drop below $800. Silver prices in particular offer great value relative to gold with a ratio of about 73 to 1. As I have discussed many times before the long term ratio is about 15 to 1. The recent trading range (2006-2008) has been 50-55, implying a silver price even based on recent ranges, significantly under priced relative to gold.
I have also started accumulating high quality gold and silver stocks this week, however given the precarious nature of stock markets this is a high risk strategy.
Gold and silver purchased in 2008 will protect your wealth and family, it may even make you very rich in the longer term. However life is to be lived and enjoyed. Bullionmark subscribes to a philosophy or strategy called "ounces to acres". When the ounces have done their job its time to convert the profit into acres. Buy a farm and enjoy life driving a tractor. Your dream may be different but the point is that gold and silver are not something to hold for ever. At some price, economic, social, political condition or personal lifestage it will be time to harvest and enjoy the benefits.
Bullionmark takes every precuation to advise you of the safest, most economical and effective way to take delivery of your precious metals. Millions of dollars of gold and silver are shipped via Australia Post and Armoured vehicles every day. It is your responsibility to reduce the risks during and after delivery. We do not recommend sharing your purchase or delivery details with friends and relatives, we do not advise allowing others to collect your postal parcels (in fact we specify the purchaser must sign to receive). Common sense should apply. We can assist your learning but we cannot control your actions. Your decision to invest in precious metals is wise, please don't add unnecessary risks by being careless about delivery or possession of bullion.
For large, high value orders or at client request we can organise armoured security guard transport for your precious metal delivery. Bullionmark uses Brinks and Armorguard. Transport will be fully insured and quoted to you at the time of purchase. For obvious reasons armoured transport deliveries must be made to a business address, vault or bank. If you would like to learn more about armoured transport please call Mark on 02 4464 2525.
All Bullionmark orders will be fully insured during shipment. You will be quoted a shipping and insurance charge at the time of the order.
Orders under the value of $20,000 AUD will where appropriate be shipped by Austalia Posts registered and fully insured postal service. Australia Post has been integral to the precious metal market for many years and is safe, reliable, economic and practical. Shipping costs will vary by order and delivery destination. Bullionmark may also split your delivery into several packages. You will be provided a fixed quote including delivery at the time of your order. For customers selling bullion to us we also strongly recommend the fully insured registered post service from Austalia Post.
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