I like this report. It is a clear assessment of why you MUST invest. And if you think this doesn't affect you....wake up this affects everyone regardless of where you are from.
As dollar forms the base of all trades and is pegged to virtually every currency, this translates to what affects your purchasing power.
A simplified example
in 2007 - Gold cost roughly US$650 while dollar/sing was roughly S$1.60 so it costs S$1040 to buy gold
fast forward to 2010 - Gold cost US$1400, dollar/sing S$1.30, cost of gold S$1820
Although Sing has strengthened against Dollar, after stimulus packages and quantitative easing (Basically central banks are just printing more money. So it isn't really the case of Sing appreciating against Dollar more so Dollar eroding in value.), it actually cost S$780 more to buy the same quantity of gold. Same goes for other materials. If you think that's bad, just imagine how much worse it is for another from a country who's currency value is depreciating or in tandem with Dollar value.
And if you are apathetic politically or financially "Oh I don't care, know, bother./ It's someone else's problem./ It's too confusing./ The government will take care of things." (As many people from where I am from are), thinking that it's a problem for someone else to solve....simply to put it, if your company (US) halved your pay (purchasing power) while gives you back 10% and gradually increase your wages by 4-7% annually, which inflation strips by 4-7% annually, and your supervisor (Your country) can do nothing about it, would you be very happy?
Yet this is exactly what is happening currently, right under your nose, with stimulus packages and quantitative easing, your money value is being robbed blind, even worse than what inflation strips off and what are you currently doing about that?
By the way, that WAS/IS the solution. Yes someone else solved the problem, which end of the stick are YOU at? Is being apathetic to your advantage or disadvantage? So while you haggle about the small prices you can see, and be ignorant about the BIG prices you can't see, are you being proverbially Penny wise and Pound foolish?
Previously in May'10 I posted that we are going to see serious demand/supply issues and great inflation problems, I am sorry to say, this is only the beginning, things are only going to get more expensive. God bless our next generations.
This is one of the reasons why property value will go up and why I advocate investing in property. (The right ones ;D)
Enjoy the report!
Until next time.
Your Fellow Investor,
Until next time.
Your Fellow Investor,
Previous Updates
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It’s a lot of bull!!! by Ann SiegHow To Buy $56,000-An-Ounce Gold For $1,400 Prices. $1,414.50. That’s what the spot price of gold closed at yesterday. A historic all time high after news hit the stands that the Chinese government imported nearly 210 metric tons of the precious metal this year in response to the Federal Reserve’s latest rounds of quantitative easing (up 500% from what they imported in 2009). Yet at $1,400 an ounce, it’s still an unbelievable steal in many people’s opinion. The subject line for this email has two meanings. 1) The fact that many people believe we’re about to witness the greatest bull (up) market in the history of the world when it comes to certain investments, followed inevitably by what will be the greatest bear (down) market. But more importantly, that it’s possible to make money during both. 2) The idea that making as much money as Mike Dillard is talking about in our presentation in such a short period of time is a lot of bull! ;-) Now, I will agree with you, the thought of $56,000/oz gold does sound just plain stupid. However, once you do the homework and understand all the economic principles and factors at work, you come to the startling realization that it’s not only possible... But historically, extremely realistic. You See, Despite What You Might Think, This Is Not About Hording Shekels Of Gold And Silver... What it’s really about is understanding how markets work and taking an entrepreneurial (visionary) approach to everything you do in life. It’s about understanding that nature (your business, Google, Facebook, your cost per lead, your traffic sources, governments, society, history, civilization, the seasons, our bodies, etc) all operate in cycles. Nothing goes up forever and nothing goes down forever. That’s not natural. This particular economic cycle we’re in just so happens to be the biggest cycle the world has seen in 6,000 years. And my goal is for you to be profitable and in good shape 10 years from now, not just today or this year. This idea of cycles affects EVERYTHING you do – from your business plan to your investments – and once you understand the economic laws behind them, it becomes very clear and easy to see how it’s possible for an “asset class” (could be gold, could be anything) to go up 10, 20, 30 even 40 times in value in a very short period of time. How The Story Of A Little-Known Ship Called The “Flying Cloud” Could Save Your Business And Your Retirement Some would say that things like quantitative easing, inflation, deflation and economic cycles cannot be explained without a lot of calculus. I think it can be done a lot easier than that using history. A story can be worth a thousand words (or charts). This story takes a few minutes to tell but once told it will be cemented in your mind and much easier to use than hundreds of pages of diagrams and formulas... It begins on June 2, 1851, when the sailing ship Flying Cloud left New York bound for San Francisco. Making the maximum possible speed for three solid months, the ship’s journey was one of the most exciting and dangerous in history. It was a full speed dash around Cape Horn in the middle of the Antarctic winter. Thanks in no small part to the skills of the ship’s navigator (who was the Captain’s wife) the Flying Cloud reached San Francisco in 89 days. A record that would not be broken until 138 years later. Why was the crew of the Flying Cloud in such a rush to reach San Francisco? The answer is one of the most important lessons you may ever learn. It will help you achieve success and prosperity every day for the rest of your life. It Starts With The Fact That In Bad Times As Well As Good, Someone Is Always Earning Lots Of Money More Fortune 500 companies were started during recessions than at any other time and more people got rich during the great depression than at any other period in history. How? It begins with the construction of the Flying Cloud. The Flying Cloud belonged to a special class of vessels called “clipper ships.” Clippers were long, slender transport ships with a sharp, long prow. They were copied from the design of French warships and were built for one thing: Speed. They had three masts slanting slightly backwards and rigged with every inch of sail the designers could cram into them. For a cargo ship, clippers didn’t hold much. And being made of oak and other hardwoods, they were expensive to build. In spite of this, clippers were one of the most profitable types of ships in operation and were constructed in large numbers. From 1848 to 1852, 160 were built in the United States alone. Why? What would cause ship owners and builders to go on a crash program to make ships that had such a high construction cost and yet limited cargo capacity? Furthermore, why would they do so during the 1840s when the country was in a depression? The answer is that... Prices And Profits Were High On The West Coast And Low On The East Coast Money could be earned by quickly transporting cargo from east to west. Ask any of the ship owners and builders if they understood all the economics behind this and they probably didn’t have a clue. But they didn’t need to. All they needed was to see the difference in prices and respond to this difference. They were following the signals of the market. For us, this story does become extremely useful if we look into the economics behind the clipper ship industry, which starts with the California gold rush. In 1848 gold was discovered in California and tens of thousands of people migrated west (kind of like former employees migrating online). When They Arrived In The Goldfields They Found Plenty Of Gold, But Little Else. There Was An Extreme Shortage Of Almost Every Necessity Known To Man In other words, in California huge amounts of money were chasing small amounts of goods. At the going rate of $16 an ounce for gold, a pair of boots cost $30 – almost two ounces of gold. In today’s terms this was more than $700. An onion cost a dollar, which is equal to about $22 today. A pound of potatoes cost $1.50 or $33 today. A month’s rent for a small hotel room was equal to the price of a new house on the east coast. In a restaurant in the gold rush town of Mokelumne Hill, a single slice of bread with butter cost two dollars, or $44 today. Yes, you read that right. In fact, most goods were so scarce and difficult to haul into the goldfields that the nature of the goods themselves had almost nothing to do with the price. In Sonora, everything sold at a uniform $3 per pound, regardless of what it was. Of course, tools were in enormous demand. Shovels and picks arriving in San Francisco were marked up 1,500%. (Figure it out. Using today’s dollars, if a shovel cost $12.00 on the “deflated” east coast, and you bought a thousand of them, shipped them to the “inflated” west coast and sold them to people who were willing to pay 1,500% more for them than the east coast price, what would your profit be? I’ll give you the answer at the end of this newsletter) And the miners had the money to pay these prices. It was common in some areas for a miner to dig out six ounces of gold a day. That would be an income of more than $8,400 a day using current spot prices. In other words, California was a huge pile of money in need of goods to buy, at a time when the east coast was a huge manufacturing center going through a depression, in need of buyers. The two coasts of the United States were somewhat like two sealed tanks, one of them highly pressurized and the other one a vacuum. Shipping Crews Realized That If The Two Could Be Linked, The Flow Of Money Through The Pipeline Would Be Enormous Some also realized that the difference in pressure between the two “tanks” would not last forever. Once the connection was made, they would begin to equalize. Whatever was done to tap into the flow of money needed to be done quickly. So the race was on to build the fastest ships possible. No one paid much attention to cargo capacity since the mark-up in California was so great only a small amount of cargo was needed to reap huge profits. The most important thing was speed. A merchant had to get his goods into the goldfields before the gold was depleted. The first real clipper ship was built in 1833. The discovery of gold in California put so much attention on speed that ship builders came out with the so-called “extreme clipper.” They were the fastest wind-driven cargo ship ever built. And the Flying Cloud was the most extreme of them all. Which is why it was able to make the trip from New York to San Francisco in a record 89 days. It’s hard to believe, but true, that clipper ships did not reduce speed at night or in bad weather. For them, a storm was good news because the winds made them even faster. Many times these ships would come into port with their sails and rigging in tatters from the pounding they took going full speed through high seas. An Important Point In All Of This Is That The Clippers Only Ran Their Mad Races To The West Coast And Back For Three Years By 1851 the easily accessible gold was gone and the “pressure” between the two tanks had begun to equalize. It looked the era of the clipper ship was about to end, but here is where we come to the most instructive part of the story. A California gold miner by the name of E. Hargraves had decided to go in search of a new gold field. He went to Australia and in February 1851, discovered gold. The Australian gold rush was on and the clippers diverted from their San Francisco runs to the new gold mines in the Southern Hemisphere. The story of the clippers dramatically illustrates the principles of business and investing success in their most simple form: 1. Find out where there is a pile of money. 2. Tap into that pile. 3. Don’t expect the pile to last forever. 4. Always be searching for new piles. Today, these piles of money can be found in lots of places, but the biggest ones are the artificial piles of paper money created by governments and central banks. In the example of the clipper ships, it’s very easy to see how there can be such enormous differences in price ranges (and therefore profits) when you’re dealing with such extremes in supply and demand and you’re using a visual, geographical example like the east coast and the west coast. These same imbalances, or “pressurized tanks” can be found all over today as well, where some “asset classes” are massively overvalued and others are massively undervalued. The key point is that nature (the free markets) always equals out these imbalances and whoever can form a link between the two can tap into immense sources of profits. Here’s the catch with the economy today. Many people are afraid to get into business or investing because of the risk involved. However, participation in this wealth cycle is not optional. Everyone’s chips are on the table whether they realize it or not. Most people don’t look at cash or currency as an investment vehicle the same way they do other assets. When in fact... Currencies Are Historically The Riskiest Form Of Investment There Is! If the Federal Reserve can print and print and print without sending the US dollar into hyperinflation they’ll have done what no government or bank has been able to do since the invention of currency. While they have become exceptionally skilled at manipulating the economy, they can’t beat gravity forever. If you go back to the email I sent last week (you can find it posted on my facebook profile) comparing the prices of things from 1913 to today, you’ll see that a dollar today is worth about what $.04 was 95 years ago. That’s a pretty poor ROI by anyone’s standards. It’s very easy to see how one can actually go broke simply by doing nothing and keeping all your money in a savings account! If you look at major corporations and wealthy individuals or families, they never hold the majority of their wealth in cash. Of course, you need a reserve, an operating cashflow. But they always dump as much as they can as fast as they can into assets that have REAL intrinsic value (not paper money that’s only worth what a bank says it’s worth). In our current global economy, where the most common unit of exchange used to purchase things (the US dollar) is so massively overvalued, inflated and unstable, this creates wild fluctuations and imbalances in the prices of everything. This is why the value of houses can now fluctuate like stocks. We’re in a unique situation because this particular asset class (the dollar) sad to say, really forms the basis of society. These imbalances, or pressurized tanks, will equal themselves out. But the longer governments and central banks try to patch over these imbalances and prevent the free markets from correcting themselves (like repeated surgeries) the worse it gets and the more imbalanced it becomes. Which means more profits for savvy investors and business owners in the know. Remember the question I asked you earlier about the profits on a shipment of picks and shovels to the west coast during the gold rush? If you did the math, a $12 shovel marked up 1,500% brings the price to $192. The profit was $180. For A Thousand Shovels At A Cost Of $12,000, The Gross Profit Was $180,000! Now you can see why $56,000 an ounce gold is not only possible, but in some people’s opinion, conservative. Again, it sounds absurd. But it’s not when you realize that this exact pattern has repeated itself hundreds of times without exception all throughout history. One of the best examples being the 1970s where you could have invested $20,633 into silver in 1971 and just 9 years later it would have been worth $770,796 (a 3,735% ROI). And the only thing going on then to cause this was inflation – extremely MILD inflation at that compared to today. Add on to that the other factors in the economy that Mike talks about in our “Great Wealth Transfer” presentation and you can get a pretty good picture of what’s going on (with more information coming soon). It may sound hard to believe for someone coming across this information for the first time, but... Right Now The US Dollar Is One Of The Most OVERVALUED Assets In The World And Precious Metals Are One Of The Most UNDERVALUED Much like the two pressurized tanks of the east coast and west coast during the gold rush. It’s not a question of IF they will equal out, it’s just a question of WHEN. This is why I personally have been investing every spare dollar of mine and 80/20’s into precious metals for years. This is serious stuff and I wouldn’t be telling you this if I didn’t strongly believe in it and practice it myself. Sincerely,  |
