“The rule of law has basically been thrown out the window. Moneyprinting is the order of the day. And when politicians take control of central banks, which they have done in the United States and they are also doing in Europe, that basically destroys the currency. It puts the currency on the road to what I call the Fiat Currency Graveyard, so I expect there are going to be massive currency problems as we go forward. The financial crisis that we have been dealing with for the last several years has not been solved.”
So cautions James Turk, widely-respected precious metals expert and founder/chairman of GoldMoney. In this detailed interview (recorded in June), Chris and James explore the probable outcome of the current US debt-ceiling operatics, the likelihood of future Fed money printing, and strategies for preserving wealth. In short, James believes we are witnessing the decline of the world’s major fiat currencies and expects gold to be remonetized in the aftermath.
James explains why he expects:
The US Government to raise the debt ceiling in August, which will require the Federal Reserve to print more money in order to soak up the new debt, sending gold and silver prices much higher this summer.
Holders of fiat currencies to experience increasing losses in the purchasing power of their wealth, contrary to those who hold precious metals, who will see the reverse.
This pattern of currency devaluation to be similar to the many other examples seen throughout monetary history. In short, the “unthinkable” event of a dollar collapse is a much more probable event than most consider.
Precious metals to be an excellent vehicle for preserving purchasing power through this next transition, and whatever future currency emerges, their historic role as money to be restored.
The end of the bull market in precious metals is years away. We’ll know its ending when holders of PMs begin trading them for other assets (e.g., property, securities) that have become overly undervalued.
Note: listeners interested in the conclusions expressed within this interview will also want to read Chris' recent report on The Screaming Fundamentals For Owning Gold And Silver, which takes a deep dive into the data behind the supply and demand imbalances in the bullion markets.
James Turk is founder and chairman of GoldMoney which offers investors an easy and inexpensive online solution for buying precious metals with international storage options.
James is one of the foremost authorities on precious metals and has long offered market forecast commentary including co-authoring The Coming Collapse Of the Dollar and How to Profit From It with John Rubino of DollarCollapse.com. He has built his career on decades of experience in international banking and finance spending many of those years living outside of the US.
I’ve heard and read about the various aspects of of owning gold and silver, however, I have not seen much on if the appreciation will be, or be able to be, taxed. I currently have the majority of my gold/silver in miner stocks and coins in my Roth. The cost of buying gold American Eagles is more, however not paying taxes on the appreciation seems to me to be the better way to go. I am able to take possession of them any time I choose, though they would then become outside of my Roth. Are there any thoughts regarding this strategy or any others?
In regards to electronic gold transfer as a way to conduct transactions; something tells me this could be electronically manipulated rather easily. Wouldn’t this put us back into the same position we are in now if enforcement was lacking in proof of physical ownership?
“And when politicians take control of central banks, which they have done in the United States and they are also doing in Europe”
I completely disagree; the situation is in fact the reverse: Wall Street and the big banks control both the central banks and the politicians.
In the interview James Turk talks about the price to buy physical bullion being in the 7-8% range unless you are buying 400 oz bars where they charge 2.5%. You can get a lot lower than that buying 25oz at a time from Tulving. You can buy a kilo bar (32+oz) at $2 over spot. That 0.12%. You can get eagles at under 4% over, and 1oz bars at 1.3% over spot. You just have to shop around - but paying 8% unless your buying a single coin would seem to be really high. Of course then you have costs associated with storage…
[quote=ao]Just curious. How do you plan to ship that kilo bar when the time comes to sell?
[/quote]
I actually wouldn’t buy kilo bars unless I had a whole lot of money to put towards PMs. I was just pointing out that the prices James Turk was quoting seemed a bit high. Even the smaller 1oz coins/bars are a lot cheaper than he quoted, and I think a better deal in a blackmarket/flee the country situation. Although a couple kilo bars might be appropriate to buy a house or farm. I think I’ve already shown where most of my funds went, solar! Which is paying off quite nicely already. My gardening attempts have so far been less than successful. I’ve heard you can’t kill mint, but that’s wrong…
Considering that only 2% of the population has some gold or money to spare to buy gold this system is just for a limited number of people.
What about the masses?? and how do you want to pay your taxes??
There are also many other ways of exchanging goods and services like local currencies.
I see gold still as my back-up plan or better as an insurance policy.
“Completely secure” - that would explain what occurred at MtGox. Granted this was an exchange being hacked but it shows things can happen. Also, anything that requires a robust interconnected network is at risk.
Anyway, here are a couple of interesting articles:
Of course there are quite a few "bitcoiners" who think Doug Casey doesn't get it, is just pushing gold, and is old.
For me, I look at Bitcoin as an interesting alternative currency, which I think there should be many to compete against the fiat currencies we have now (of course Bitcoin is fiat). I don’t see that it offers any advantage over metals, and there is significant risk with anything software/network based. While I might consider using Bitcoins for small day-to-day holdings and transactions, I would not risk any significant amount of wealth using it as a wealth storage mechanism.
[quote=thc0655]You killed mint? That is probably a marketable skill itself! I know we would’ve paid $20 to have you kill ours in the garden we had 30 years ago…
[/quote]
Yes, the funny thing, the stuff growing wild outside - doing okay, the stuff I planted in a pot indoors - dead. So clearly it is my care that took it out. I’ve also done well at killing thyme, oregano, and rosemary! I’m the Grim Reaper for plants.
[quote=DonnyCMU]Assume the meltdown, and people resort to gold as a better store of wealth and medium of trade…
… How are you gonna buy lunch with a bar of gold?
There’s this decentralize digital currency called Bitcoin. It’s an open-source project.
Owned by no organization (open source, transparent)
give 100% control of ownership
completely secure and anonymous
can not be shut down (it’s decentralized peer-to-peer network)
It’s the hot new thing right now. Google it.
[/quote]
DonnyCMU,
Welcome to the site. Bitcoin has been discussed in “The Screaming Fundamentals for Owning Silver and Gold” and other threads on the site. You probably were not aware of that, but as a new member that’s understandable. Many new members can’t wait to share their favorite “hot new thing” on this site and at some point someone might actually do it, but usually if you search for your topic, there is already plenty of discussion about it on past threads. I’m not trying to pick on you but actually just giving a heads-up to you and new members in general.
..... How are you gonna buy lunch with a bar of gold?
How are you going to buy lunch with bitcoin? If you transfer it to the restaurant's bitcoin account, assuming they have one then fine. But, you could transfer your gold to their Goldmoney (or equivalent) account (within 4 cent increments) assuming they have one also. I have nothing against people using bitcoin or any form of money that they prefer, but don't assume that to use gold you always have to use bars.
SS
[quote=DonnyCMU]… How are you gonna buy lunch with a bar of gold?
[/quote]
I won’t. I’ll buy it with a small piece of silver.
Everything you stated about Bitcoin is the reason I will pass on it, especially it being “the hot new thing”. Buying into “the hot new thing” is almost never a good idea. No thanks.
Great article, and very well written! I just started a new blog that brings controversial topics for discussion. My goal is to bring these topics to the forefront so the public is aware of what is going on in the world…especially since the mainstream media is bought and paid for by the elite. Please visit my site if you have a chance and get involved! www.questionabletopics.com
To read article requires FT subscription. I suspect a reversal of a 10 yr trend of CBs depositing gold at the BIS is meaningful, but I’m not sure exactly what it means, aside from increased insecurity everywhere.
[quote=rhare]In the interview James Turk talks about the price to buy physical bullion being in the 7-8% range unless you are buying 400 oz bars where they charge 2.5%. You can get a lot lower than that buying 25oz at a time from Tulving. You can buy a kilo bar (32+oz) at $2 over spot. That 0.12%. You can get eagles at under 4% over, and 1oz bars at 1.3% over spot. You just have to shop around - but paying 8% unless your buying a single coin would seem to be really high. Of course then you have costs associated with storage…
[/quote]
I agree. I’ve looked at all of the preferred web sites CM recommended in his gold buying primer and have solicited the names of other dealers (thank you fellow members), but have yet to find a better price on any denomination of gold or silver coin at or above the minimum 20 coin purchase level. Overnight shipping is included and a $15.00 wire credit is applied. There is a 2-5 day delay before overnight shipping, lesser with gold. I’ve made mock purchases at several different times over the month and still find the commission to be always below that of the competition (APMEX + at least 8 other sites), albeit sometimes by only a few dollars. Has that been the experience of others? I realize there are many high quality dealers with excellent customer service that people are comfortable with, but if the sole goal is to accumulate ounces at the lowest possible price from a reputable company with insured door to door delivery, wouldn’t Tulving be the clear favorite for larger (20 coins or greater) orders?
Also, looked for answers to the following questions on the site but have not been successful. Hope someone can field them here. I understand the real and potential headaches associated with buying large denomination silver or gold bars, etc. as ao and others have mentioned. For those considering 1 oz coin purchases for an IRA, why pay more for gold and silver eagles when maples are cheaper and can be carted across the northern border tax free if necessary? Softer metal seems irrelevant if these are going to sit in a vault. And…if the dates are mixed and the coins are not in mint-sealed 2011 boxes, should I care? Why would it be about anything other than weight with non-numismatic coins? The differences in cost are not insignficant.
I’m sure I’m missing something since people seem more than willing to pay a premium for shiny new harder coins.
“The rule of law has basically been thrown out the window. Moneyprinting is the order of the day. And when politicians take control of central banks, which they have done in the United States and they are also doing in Europe, that basically destroys the currency. It puts the currency on the road to what I call the Fiat Currency Graveyard, so I expect there are going to be massive currency problems as we go forward. The financial crisis that we have been dealing with for the last several years has not been solved.”
James Turk is founder and chairman of GoldMoney which offers investors an easy and inexpensive online solution for buying precious metals with international storage options.