The Dollar is Done - Deal with It

By: Jason Hommel, Silver Stock Report
 
-- Posted 7 November, 2011 | Share this article| Discuss This Article - Comments: 0
(5 Stages of Grief over the Loss of the Dollar!)
Silver Stock Report
Psychologists tell us that there are five stages of grief over loss of whatever kind, usually death, or breaking up with a loved one, which are:  denial, anger, bargaining, depression, acceptance.  I've applied these to the loss of the dollar, as I see most people today are still stuck in denial, and here's how to deal with that.

Denial.  Most people in America are in total denial.  But the dollar is done.  Most probably don't think it's done, because we all still use dollars to buy things.  But do you notice prices going up?  That's the key sign that the dollar is done.  The dollar is abandoning you, the dollar does not care about you, and you have to deal with it.  People in denial will repeat the many lies taught to us all by the media and schools.  The most popular of these delusions are, in order, "gold is too high now," "how would I sell it," "gold bugs are crazy," "I'm not sophisticated enough to invest in gold," and the classic denial line, "I don't want to hear anymore about gold." 

I've actually researched over 100 gold bashing nay sayers, and gathered together all the most popular statements of denial, which you can see, here:  http://silverstockreport.com/2009/bashers-say.html

Back in Dec. 2009, the most popular statement of denial was "gold is too high now", and that was when gold was $1200/oz.  Today, almost two years later, gold is $1785, and climbing.  Clearly, everyone who thought gold had topped out were simply in denial.

To get past denial you must accept the truth of sayings such as, "democracy is two wolves and a sheep voting on who to eat for dinner", and realize that our founding fathers never gave us a democracy, but rather, a republic, because they hated democracy, which is nothing more than mob rule.  Democracies are inherently unstable, because when the people understand that they can vote for themselves benefits out of the public treasury, then it's over.  Why is it over at that point?  Because with socialism, eventually you run out of other people's money to redistribute.  And then, to pay for things, the only way to do that is to print money, which will destroy the dollar.  America hit all those points back in 1933.  That was a long time ago, and that's when we abandoned the gold standard.  You should also realize that Obama is not as scary as the electorate who voted for him in the first place.  Obama may come and go, but the stupidity of our fellow Americans is probably still with us, don't deny it.  Acknowledge reality, accept it, and deal with it.  Best way to cope?  Start buying silver, or work past the next stages of grief.  First step, visit your local bullion dealership, or place an order with www.jhmint.com or call (530) 273 8175.

Anger.  Very few of my readers have hit the anger stage.  Not even many prospective silver or gold buyers have hit this stage.  Some anger is out there, as it's manifesting itself in the Tea Party movement, and now in the Occupy Wall Street movement, but those are still very small movements.  They will get bigger.  To get past the anger stage, move towards feelings of pity.  Pity those who are not smart enough to buy silver, because they are the ones who will be wiped out.  Pity even the bankers with their billions and billions of dollars, because the silver market is still too small for them to buy into it, and as deceivers, they are self-deceived, too.  Pity them.  But you won't be wiped out, because you have silver, right?  Right??  Well, not many in the Tea Party or Occupy Wall street movements have silver, but that's because they are still stuck in the anger stage.  Get past it.  Buy silver. 

Bargaining.  This is not about using silver to bargain for things.  It's about thinking you can fix things.  At this stage, you may think that you can get involved in politics to try to fix the dollar.  Nope.  It's way beyond that.  Donations to Ron Paul's campaign will not save the dollar.  In fact, Ron Paul might help to destroy the dollar even faster, even if he is capable of reducing government spending.  But even if Ron Paul were to become president, there is still congress, who would keep spending, and who is a reflection of the will, the selfishness, and the delusions of the American people.  Or, perhaps you may think that you can find numerous investments that will outpace the decline of the dollar, so that you can buy more gold and silver.  Well, I certainly thought this way for a while.  Occasionally, I still do.  But overall, the dollar has to decline against something, and that something is really just gold and silver.  To get past the bargaining stage, invest over half of your assets or net worth into silver and gold. 

Depression.  This is not about economic depression, it's about your feeling depressed and sad over the death of the dollar.  Many people erroneously believe that if the dollar dies, there will be economic calamity (because that's the lie that supports the dollar), but recent history shows that's not true.  After gold went up in 1980, it was economic boom times, as so much fraud was wrung out of the system.  Also, when the dollar really dies, many people who were on the dole will become despondent.  Many people who receive government entitlements do not feel they are on the dole, they really feel entitled to the money; they are still in denial, and still voting to make sure they get the handouts like social security, etc.  Hey seniors, social security is bankrupt, congress raided the funds years ago, and there is zero money backing it up these days; they are printing new money to pay you, and this won't last forever.  When that flow of funds is cut off, people are going to be depressed, and until they get jobs, so will the economy.  To help deal with that stage, buy silver.  If you are on any sort of fixed income, or government assistance, you need to buy silver more than anyone else, because silver will keep you fed when the flow of funds is cut off.

Acceptance.  Eventually, you will realize that we will all be better off without the dollar.  Debts will be wiped out.  Banks and usury slavery will collapse.   Government size, largesse, corruption and theft will dramatically decrease.  Businesses will flourish.  It's not like after war, when entire cities, buildings, and people will be destroyed; but rather, ownership of assets will simply change hands, and life will go on.  A lot of people "on disability" have tried to get a job working for me.  Most people can work, they just don't want to, especially if they don't have to.  Older people actually live longer if they keep working.  Retirement is a cruel joke.  I could have retired 7 years ago, but why?  It's more important to keep helping people.  Ministry, service, & working keeps you young, keeps you going, gives life meaning and purpose.  The dying dollar can't be saved.  But individual people, who have stacks of dollars, still can be saved; just get them into silver!  So, I hope you can see why I've opened up a bullion dealership.  Next best thing to doing that, is to share this article with one of the deniers!

8-)  God bless!

 

Nov. 11, 2011


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Wells Fargo Says 80 May Be the New 65 for Retirement Age
By Elizabeth Ody - Nov 15, 2011 9:01 PM PT .

Workers in the senior section package cosmetics at the Bonne Bell cosmetics factory in Lakewood, Ohio. About three quarters of Americans expect to work in retirement, according to the Wells Fargo survey.

About 76 percent of respondents said it’s more important to reach a specific dollar amount before retiring, compared with 20 percent who said it’s more important to retire at a given age, regardless of savings, according to the survey of adults with household incomes or assets from about $25,000 to $100,000.

“Eighty is the new 65,” Joseph Ready, executive vice president of Wells Fargo Institutional Retirement & Trust, said in an interview at Bloomberg headquarters in New York before the survey was released today. “It’s a real sea change.”

About 74 percent expect to work in retirement, according to the survey, with about 39 percent working because they’ll need to and 35 percent because they want to. And 25 percent of those surveyed said they expect they’ll need to work until at least age 80 because they don’t have sufficient savings.

“People are starting to move toward understanding the different levers of what they’re going to have to do to make it in retirement,” Ready said.

About 68 percent of those surveyed said they’re not confident the stock market is a good place to invest their retirement savings. About 45 percent of respondents said if they were given $5,000 they would buy a certificate of deposit, and 50 percent said they’d invest it in stocks or mutual funds.

No Good Alternative
“Even though there’s a lack of confidence, I don’t know that they see there’s a good alternative,” to investing in stocks, said Laurie Nordquist, executive vice president of Wells Fargo Institutional Retirement & Trust.

The Standard & Poor’s 500 Index returned 1.32 percent this year through Nov. 14. One-year CDs yielded 0.35 percent and five-year CDs paid 1.19 percent on average as of Nov. 3, according to Bankrate.com, an online provider of consumer-rate information and a unit of Bankrate Inc.

Survey respondents had saved a median of $25,000 towards retirement and estimated they’d need a median of $350,000 to support themselves in retirement. About 42 percent expect to receive a pension or already receive one.

“The numbers don’t add up,” Nordquist said. “The gap is probably larger than what they self identified.”

Those surveyed expect to withdraw about 18 percent on average from their savings each year in retirement.

“We would recommend typically 4 percent or less, in terms of withdrawals,” Nordquist said.

About 57 percent of respondents said they’re confident they’ll have saved enough for retirement.

“You used to just save blindly, but I think the blinders are coming off,” Ready said.

Geographic Attitudes
Wells Fargo hired Harris Interactive Inc. (HPOL) to survey 1,500 Americans aged 25 to 75 by phone in August and September. San Francisco-based Wells Fargo is the fifth-largest administrator of 401(k) retirement assets, overseeing about $117 billion as of 2010, according to Cerulli Associates, a research firm based in Boston. Fidelity Investments is the largest administrator with about $824 billion in assets.

Residents of the San Francisco and Sacramento, California, metropolitan areas are generally the most ready for retirement, and residents of Indianapolis and New York are generally the least ready, according to a ranking of 30 major metropolitan areas by Ameriprise Financial Inc. (AMP) The ranking, released yesterday, evaluated the survey responses of almost 12,000 adults about their preparations and attitudes towards retirement.

Nov. 18, 2011


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Nov. 21, 2011, 11:36 a.m. EST

MF funds shortfall could top $1.2 bln: trustee

By Dan Strumpf
NEW YORK (MarketWatch) -- The trustee overseeing the wind-down of MF Global Holdings Ltd.'s brokerage said more than $1.2 billion in customer funds could be missing from the failed firm, more than double the original estimate of missing cash.

Trustee James W. Giddens also said in a statement Monday that he does not have access to funds beyond $1.6 billion already on hand and is "very close to exhausting the funds under his control." Giddens said restoring customer accounts to 60% of their value--a previously announced goal--would require as much as $1.6 billion.

That next step still requires approval of the bankruptcy court and should occur in early December, Giddens said.

Regulators had previously said that approximately $600 million of funds in segregated accounts owned by former MF Global customers was unaccounted for at the time of the firm's bankruptcy filing on Oct. 31.

Giddens also said efforts to collect other funds from U.S. depositories is continuing "around the clock," but the recovery is complicated by assets located in foreign depositories. Recovery of such assets could take more time, Giddens said.

Giddens has estimated that he is overseeing about 38,000 customer accounts, but that number--and how much money those accounts contain--has been fluid as the trustee has scrambled to sort through the brokerage's records.

How to beat money-market returns as a silver investor
November 21, 2011, 7:06 AM.Share: 

We think that silver is a very good investment, and it was proven to be one of the best for the last ten years. Since its low at $4.01 per ounce in November 2001 to the last high of $49.87 reached in April 2011, we were tested with wild corrections in 2008 and 2011, each time of around 50% from the previous high.

Besides physical silver, the best vehicle to use for silver investment is the SLV which is an ETF (exchange trading fund) for 1 ounce of silver. Friday 11/18/11’s close was $31.40. This year’s low was $27.41 (09/26/11) and the high was $48.35 (04/28/11).

In this financial world of debt crisis which saw the U.S. Federal Reserve come to help with two Quantitative Easing interventions  (QE1 in 2009 and QE2 in 2010), we think that the next QE3 will happen when the stock market will again fall down dramatically. The shock of Europe’s waves are starting to hit U.S. shores. When QE3 will be implemented, the stock market should stabilize and silver should shoot up. (After QE2, silver went up from $18 to almost $50 in the space of eight months.)

This is what we propose to do for those investors who accept to allocate 5% of their portfolio to a potential silver purchase: We will use the strategy of selling put options on silver. For example, when we sell an SLV put option at a strike price of $25, we are committed to buying silver below $25. If silver stays above the strike price of $25, at option expiration we will keep only the option premium which was given to us when we sold the put. It is very important that we accept to allocate the total value of our commitment to buy silver at $25 in this strategy.

The above strategy in action:

On Friday 11/18/11, SLV closed at $31.40.

All examples don’t include commissions.

Two-Year Put Options

SLV $25 Put January 2014 (Expiration 01/18/14) closed Friday 11/18/11 at $4.50 (Bid). If at expiration, silver is below $25, we get delivered silver at $25 (20% lower than Friday 11/18/11’s close), and we have to pay $2,500 for the one Put we sold (1 option = 100 x $25). In the case silver is above $25, we keep the premium of $450 per option ($4.50 x 100). What was our return in this case? $450/$2,500 = 18% over two years (9% per year when the money market is giving us very low interest rates).

SLV $20 Put January 2014 (Expiration 01/18/14) closed Friday 11/18/11 at $2.60 (Bid). If at expiration, silver is below $20, we get delivered silver at $20 (30% lower than Friday 11/18/11’s close), and we have to pay $2,000 for the one Put we sold (1 option = 100 x $20). In the case silver is above $20, we keep the premium of $260 per option ($2.60 x 100). What was our return in this case? $260/$2,000 = 13% over two years (6.5% per year when the money market is giving us very low interest rates).

One-Year Put Options

SLV $25 Put January 2013 (Expiration 01/19/13) closed Friday 11/18/11 at $3.15 (Bid). Similarly to the previous examples, if at expiration silver closes above $25, the return will be 12.6% for 1 year.

SLV $20 Put January 2013 (Expiration 01/19/13) closed Friday 11/18/11 at $1.58 (Bid). Similarly to the previous examples, if at expiration silver closes above $20, the return will be 7.9% for 1 year.

If a more aggressive strategy is followed:

SLV $31 Put January 2013 (Expiration 01/19/13) closed Friday 11/18/11 at $5.80 (Bid). Similarly to the previous examples, if at expiration silver closes above $31, the return will be 18.7% for 1 year.

Short-Term Put Options

SLV $25 Put December 2011 (Expiration 12/17/11) closed Friday 11/18/11 at $0.21 (Bid). Similarly to the previous examples, if at expiration silver closes above $25, the return will be 0.8% for one month (an annualized return of 10%).

SLV $25 Put January 2012 (Expiration 01/21/12) closed Friday 11/18/11 at $0.54 (Bid). Similarly to the previous examples, if at expiration silver closes above $25, the return will be 2.16% for two months (an annualized return of 13%).

SLV $25 Put February 2012 (Expiration 02/17/11) closed Friday 11/18/11 at $0.84 (Bid). Similarly to the previous examples, if at expiration silver closes above $25, the return will be 3.3% for one month (an annualized return of 13.4%).

Conclusions:

In all these examples, we will not own silver at all if the market never goes below our put’s strike price at expiration. However, the amount allocated for the silver in the case of expiration below the strike price should still bring us a better return than if it were sitting in the money market.

The January 31, 1980 silver price (adjusted for inflation by the CPI) was $139.98. In the present economic environment, allocating 5% of your portfolio to silver (Friday’s SLV close was $31.40) and 5% to the above strategy should at maximum keep you invested at 10% in silver which has been one of the best investments during the last 10 years. Only the very unlikely but catastrophic scenario of a depression hitting us all could derail this investment’s profitability.

Everyone should remember that silver was money until 1961!…

Esther de S.G. Elkaïm

More Upside for Gold as Government Spending Continues Unabated
By Bill Bonner

12/16/11 Baltimore, Maryland – Have yourself a merry little depression.

Dow up 45 points. Gold down $9.

We’re still waiting for a major correction in the gold market. Each time one begins, it seems to run out of steam before doing any real damage. At yesterday’s closing price, $1,577, gold is still solidly ahead for the year.

So, where’s the soft spot? Where’s the test? Where will it come from? When?

Don’t worry, dear reader, Mr. Market will test us. He’ll throw his curve ball. We have to be ready.

What if…

…instead of testing us on the downside, he tests us on the upside? This is not a prediction. Just a thought. What if gold suddenly shot up…and looked like it was going to the moon. What would we do?

Citigroup’s metals expert puts a $3,400 price on gold “in the next year or two.”

Jim Rogers makes a similar forecast.

What if they’re right? We only mention it because The Trickster has more than one trick up his sleeve. And he’s perfectly capable of running the price up to $3,500 BEFORE testing us.

We could get giddy, watching the price of gold hit record after record. And then, just when we think it is ready to scale its final peak, gold could turn tail and run for the valley. We wouldn’t believe it. We would hold on. We would wait for it to go back up.

And then…wouldn’t we feel stupid, if we’d taken that ride all the way to over $3,000…and then rode it all the way back to today’s level? Wouldn’t we be put out with ourselves, if we sold out then…thinking gold had put in its final top and we missed it?

According to the 50% principle…it could hit $3,000…collapse to barely $1,500…and then soar again…possibly going to $5,000…or even $10,000. That’s what we’ll get in the final ‘crack up’ boom that is coming.

Who knows?

But what we see is more upside than downside for gold. Because the motor pulling gold up still has a lot of gas in the tank.

In the US the feds spend $1.60 for every dollar they raise in taxes. In Europe, the euro-feds prepare to bail out their banks and sovereign debtors.

And guess how much the feds have already spent? They were so desperate to avoid a debt crisis…or a depression…that they threw the throttle wide open on the biggest rescue effort the world has ever seen. Bloomberg calculated that $7.7 trillion were put to work. Our estimate was higher — about $10 trillion, we guessed.

Well…we were both way off. Here’s the news report:

As part of the Ford Foundation project “A Research and Policy Dialogue Project on Improving Governance of the Government Safety Net in Financial Crisis,” Nicola Matthews and James Felkerson have undertaken an examination of the data on the Fed’s bailout of the financial system — the most comprehensive investigation of the raw data to date.

The extraordinary scope and magnitude of the recent financial crisis of 2007-09 required an extraordinary response by the Fed in the fulfillment of its lender-of-last-resort function.

The bottom line: a Federal Reserve bailout commitment in excess of $29 trillion.

Whoa! The feds put at risk an amount equal to 200% of US GDP. And for what? So that a depression wouldn’t knock 5% off GDP? Even the Great Depression of the ’30s only set the US back by 30% of GDP. A similar setback today would cost the economy less than $5 trillion.

Do you see what we see? Even if it worked — which it didn’t — the feds’ efforts would have been a disaster. Who would spend $29 trillion to save $5 trillion?

But wait. There’s more. This assumes that a depression is unnecessary…or that it doesn’t do any good. We know that’s not true. A depression does a lot of good. It wipes out bad investments and eliminates bad speculators. It forces capital into more productive, more profitable uses. It kills off zombie industries. It retires worn-out industries…and reduces costs so that new industries can arise. It’s the ‘destruction’ that Schumpeter’s ‘creative destruction’ needs.

The more we think about it, the more we’re beginning to like depressions. After scammy bailouts and bogus recoveries, a depression would be something to look forward to.

Bill Bonner
for The Daily Reckoning