Author Archives: USAGOLD

USAGOLD one of the oldest and most respected names in the gold business

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Short and Sweet

Is the dollar the Humpty Dumpty of the global monetary system?

Graphic image of Humpty Dumpty perched happily on a wall, antique

The dollar at the moment is something of a Humpty Dumpty in the global monetary system – sitting on his wall oblivious and seemingly immune to all that goes on around him.  Whether or not there will someday be a Great Fall remains to be seen, but increasingly forces are lining up against it. Over the past few years, we have seen protracted movement among various central banks out of the dollar and into gold and other currencies. Though the dollar remains something of a Humpty Dumpty oblivious to all that goes on around him, a good many analysts believe it is poised for a major decline.

It is with that in mind that we took an interest in a Bloomberg report posted recently that “[g]old stored at the Bank of England has been selling for unusually high premiums recently, signaling that central banks may be back in the market buying.” The report goes on to say that the reason for the burgeoning gold demand from central banks is “to diversify their portfolios away from the U.S. dollar to safeguard their finances amid concerns over the Fed’s ultra-loose monetary policy, massive U.S. government spending and inflationary pressures.”

We see that as a rational response to current economic circumstances and a way of taking advantage of the dollar’s current strength to load up on gold. For example, Brazil, the world’s ninth-largest economy, recently reported a hefty 42-tonne purchase of gold to shore up its central bank reserves. Poland has announced its intent to add another 100-tonnes to its coffers in the months ahead. And those are only two in an expanding list of central banks in the market to buy gold. We hasten to add that it is not just the United States that is in the business of debasing its currency, but most, if not all, of the states issuing internationally traded currencies.

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Image of the word 'Gold' with elaborate gold crownThe Investment of Kings and the King of Investments

From the small investor just starting out to the high-net-worth individual hedging a multi-million dollar portfolio, we have helped many thousands add precious metals to their holdings in our nearly 50 years in the gold business – safely, economically and with the investor’s goals in mind.

No matter the size of your investment kingdom, we can help!

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Short and Sweet

Of 17th-century tulips, 21st-century stocks and ageless gold

antique painting of a fool trading his gold for tulip bulbs

During the Dutch Tulipmania, the price of one special, rare type of tulip bulb called Semper Augustus sold for 1000 guilders in 1623, 1200 guilders in 1624, 2000 guilders in 1625, and 5500 guilders in 1637. Shortly thereafter, the bottom fell out of the market and prices plummeted to 1/200 of their peak price – a mere 27 guilders. In the artwork above an individual, portrayed in fool’s garment, is shown trading a hefty pouch of gold for a handful of tulip bulbs. It is no mystery who got the better part of that bargain. History teaches us that no era is immune to financial mania including our own. As a matter of fact, a good many believe that we are fully immersed in a stock market mania (wherein many include bitcoin) right now.

Since the earliest days of the USAGOLD website (the mid-1990s), we have enshrined a quote from Thomas Bailey Aldrich at our home page: “The possession of gold has ruined fewer men than the lack of it.” Aldrich’s axiom has held true down through the ages. It applied in ancient Greece and Rome, in 11th century China, in the time of the Medicis, the Dutch Tulipmania, the South Seas Bubble and French fiat money mania, during the long string of panics in the late nineteenth and early 20th centuries (Aldrich’s time), the spate of post World War I and II hyperinflations (Austria, Germany, Greece, Hungary, et al)  and it still applies today.


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Market Overview

Landscape mode is recommended for mobile phone viewing.

Market Data by TradingView
Delayed data except FOREX

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Graphic to link the calendar of reports and events for the week ahead

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Short and Sweet

Gold in the age of inflation
The star investment of the fifty-year era and the most reliable store of value

There has been considerable, and some would say tedious, discussion on the subject of inflation over the past several weeks. The Fed wants it. The markets await it. Investors and consumers worry about it. If it does come, the Fed thinks it will be transitory. Others believe it will persist. That said, the current discussion ignores an established historical reality: We already live and have lived with it for a very long time. The Age of Inflation began in August of 1971 when the United States disengaged the dollar from gold and ushered in the fiat money era. Thereafter, the inflationary process has progressively eaten away at our wealth and the purchasing power of our money. Now, some of the best minds in the investment business tell us that it is about to accelerate and that if we ignore it, we do so at our own peril.

To mark the occasion of the fiat money system’s golden anniversary, we offer two instructive charts. One is something of a myth-buster in that gold has decisively outperformed stocks during the fiat money era. Many will be surprised to learn that gold is up 4,500% since 1971, while stocks have played second fiddle at 3,375%. The other reveals at a glance the pernicious, ongoing debasement of the dollar and gold’s role as a hedge against it. The dollar lost 85% of its purchasing power since 1971, while gold, as just mentioned, gained nearly 4500%. If that does not serve as vindication of gold’s portfolio role in the era of fiat money, I don’t know what will. At the same time, consensus has it that cyclically, stocks are closer to a top than a bottom, and gold is closer to a bottom than a top.

Gold and stocks price performance
(In percent, 1971-2021)

area charat showing gold and stocks 1971 to June1 2021 in percent

Chart courtesy of TradingView.com • • • Click to enlarge

Gold and the purchasing power of the dollar
(1971 to present)

overlay area chart showing the value of the dollar and gold since 1971

Sources: St. Louis Federal Reserve [FRED], Bureau of Labor Statistics, ICE Benchmark Administration • • • Click to enlarge

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Celebrate the fifty-year anniversary of the fiat money system with a gold purchase
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Reliably serving physical gold and silver investors since 1973

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Favorite web pages

What you need to know before you invest in gold
Initial guidelines for first-time investors from one of America’s top gold experts

image showing stack of gold coins and chart indicating analytical approach to the investment
New to the idea of including gold in your investment portfolio?
If so, this is the page for you.

If you are new to the idea of gold ownership, you might be looking for a little guidance. We, at USAGOLD, have been in the gold business for a good many years, and the one thing that stands out to us in working with so many over the years is how often investors, for one reason or another, get off to a bad start.

That is why we developed a question and answer page many years ago that delves into the subject of GETTING OFF TO THE RIGHT START. We update it regularly as things can change rapidly in the gold and silver markets. The page is linked above, and we recommend that newcomers spend the few minutes it takes to get through it.…

This page receives considerably high-ranking from Google on a number of important searches, and we like to think it’s because of the cause it serves – providing some positive direction to investors trying to get off to a solid start in their pursuit of gold ownership.


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row of books on library shelfA Gold Classics Library Selection

Pompous Prognosticators
Optimism abounds as stock market crashes – 1928 to 1932

by Colin J. Seymour
May 2001 (Rev. August 29, 2001)

Chart of 1929 stock market crash with numbers corresponding to famous quotes

This classic study posted on the USAGOLD website in 2001 has received thousands of visits over the years. Seymour captures the essence of a period in stock market history not unlike our own through quotes from major market players, economists, and analysts from John Maynard Keynes to Bernard Baruch, Irving Fisher, and many other notables.

[LINK]

[Gold Classics Library Index]


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Thinking about buying gold and silver?


Gold in six easy lessons

1. Don’t buy it because you need to make money; buy it to protect the money you already have.

2. Don’t look at price as a barrier; look at it as an incentive.

3. Don’t buy the paper pretenders; buy the real thing in the form of coins and bullion.

4. Don’t fall prey to glitzy TV ads; do your due diligence instead.

5. Don’t allow naysayers to divert your interest; allow yourself the right to protect your interests as you see fit.

6. Don’t forget the golden rule: Those who own the gold make the rules!


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Short and Sweet

Howe says this Fourth Turning will go to 2030

graphic image of walk in a deep, fearful wood

“To be clear, the road ahead for America will be rough,” writes Neil Howe, author of the modern classic, The Fourth Turning (1997), in a recent analysis posted at Hedgeye. “But I take comfort in the idea that history cycles back and that the past offers us a guide to what we can expect in the future. Like Nature’s four seasons, the cycles of history follow a natural rhythm or pattern. Make no mistake. Winter is coming. How mild or harsh it will be is anyone’s guess, but the basic progression is as natural as counting down the days, weeks, and months until Spring.”

For those who, like me, buy into Howe’s notion of a Fourth Turning, the problem is to get to the other side of the woods with our assets reasonably intact. “Currently, this period began in 2008,” he points out, “with the Global Financial Crisis and the deepening of the War on Terror, and will extend to around 2030. If the past is any prelude to what is to come, as we contend, consider the prior Fourth Turning which was kicked off by the stock market crash of 1929 and climaxed with World War II.” Eventually, he says, we will find our way to a first turning – a time of renewal – but we will be sorely tested before we get there. The precious metals have offered solid protection through the first half of the Fourth Turning. Gold is up 145% since the collapse of Lehman Brothers in September 2008 – the event most analysts associate with the start of the crisis. Silver is up 165%. In both instances, the greatest price acceleration occurred in the early years of the crisis.

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Reliably serving physical gold and silver investors since 1973

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Gold is the investment for All Seasons

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Short and Sweet

Inflation a process not an event
But history shows runaway inflation can come suddenly and without warning

graphic image showing decline of the denarius over 200 y ears

Image courtesy of Visual Capitalist • • • Click to enlarge

We sometimes forget that inflation is a process rather than an event. One of the better-known examples of that axiom is the nearly two centuries-long debasement of Rome’s silver denarius. The Roman citizen who had the wisdom to hedge that process by going to gold at nearly any point along the way ended up preserving some portion, if not all, of his or her wealth. Those who did not suffered its debilitating effects. In the inflationary process, the line between cause and effect is not always a straight one, and its timing difficult to discern. History teaches us, though, that when runaway inflation does arrive, it comes suddenly, without notice, and with a vengeance. That is why it pays to view gold as a permanent and constantly maintained aspect of the investment portfolio. “A change of fortune,” Ben Franklin tells us, “hurts a wise Man no more than a change of the Moon.”
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(Related please see:  News & Views Special Report / March 2020 / Hedging the decline and fall of a currency – The baseline case for gold hasn’t changed much in 1700 years)

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The USAGOLD Website
A guiding light for current and would-be clientele since 1997

graphic image of light house beaming
Welcome newcomers!

When the USAGOLD website was established in 1997, there was no Google, no Facebook, no I-Tunes, no Amazon. Instead there was just a handful of scattered websites trying to figure what this new technology was all about and how it could be used to some advantage.  We were among that group.  Our idea of innovation in those early days was two spinning globes on either side of the USAGOLD logo.  We marveled at it; considered it state of the art.

But being among the first on the internet to have spinning globes was not our only achievement. We were also among the first to sponsor a Daily Market Report (1996), a Discussion Group (1997), Live Prices and Charts (2007) and a Mobile Website (2011) – to mention just a few of our ground-breaking internet ventures.  We await the next wave of innovation so that we can offer even more value to our regular visitors.

Through our 23-year presence on the world wide web, the philosophy underlying our website has always been a simple one – to act as a guiding light for our current and prospective clientele by providing a state of the art information portal coupled with a reliable and competitive brokerage service.  We had and still have no aspirations beyond that, and that pinpoint focus has paid dividends beyond anything we would have imagined in 1996.

From a humble beginning, we have grown to almost 800,000 visitors per month currently and there have been times when that count has been significantly higher. USAGOLD today remains one of the most highly referenced and visited web portals in the gold business. We once had a client tell us of visiting the Gold Souk in Dubai and being surprised that so many merchant stalls had USAGOLD on their computer screens. 

If you would like to gain a better understanding of what USAGOLD has to offer to you as a current or prospective client, the menu at the top of the page is a good place to start. 


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Short and Sweet

Of wheelbarrows and runaway inflation

graphic image of a gold money machine

As Crescat Capital’s Kevin Smith and Tavi Costa point out in a recent client alert, the U.S. government issued $4.4 trillion of debt in 2020, and $2.4 trillion, or 54%, was purchased by the Federal Reserve. They believe that $300 billion per month in quantitative easing will be needed to cover the upcoming tab as opposed to the current $120 billion per month. “Global central bank money printing is one of the primary drivers of the gold price,” they say. “Our current valuation target for gold based on the level of central bank assets and the inelastic supply of above-ground gold is $3,200/oz. Note, this is a rising target.”

“Really smart investors,” says Morning Porridge’s Bill Blain, the London-based commentator, “are increasingly hedging their wealth created from financial assets (stocks and shares) by putting much of their allocations into Alternatives: outright real assets or cash flow driven assets, assets that are likely to retain value while still paying attractive returns. (The cost is lower liquidity). The idea is that if crisis ever comes, then owning the wheelbarrow might be better than owning the mountains of worthless cash it’s carrying (to cite the classic example of inflationary danger from Weimar Germany…)” If runaway inflation truly does materialize, a wheelbarrow full of gold and silver might be an even better option ……


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Reliably serving physical gold and silver investors since 1973

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Notable Quotable

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“[T]he object of speculation may vary widely from one mania or bubble to the next. It may involve primary products, especially those imported from afar (where the exact conditions of supply and demand are not known in detail), or goods manufactured for export to distant markets, domestic and foreign securities of various kinds, contracts to buy or sell goods or securities, land in the country or city, houses, office buildings, shopping centers, condominiums, foreign exchange. At a late stage, speculation tends to detach itself from really valuable objects and turn to delusive ones. A larger and larger group of people seeks to become rich without a real understanding of the processes involved. Not surprisingly, swindlers and catchpenny schemes flourish.”

Robert Z. Aliber and Charles P. Kindleberger
Manias, Panics and CrashesAnatomy of a Typical Financial Crisis (2001)

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The Precious Metals Safe Storage Advantage
The preferred alternative to gold and silver ETFs

graphic image of gold and silver stored in vault

It only takes a few minutes to complete a Precious Metals Safe Storage account opening form, but it could mean all the difference for the investor seeking a superior alternative to gold and silver ETFs. We use the word “superior” because depository storage accounts come with an option not readily available in most ETF accounts – You can take delivery of the metal in your account, or any portion of it, whenever you wish.  And you can include gold bullion coins, historic fractional gold coins, U.S. $20 gold pieces, silver bullion coins, bars – in other words, the range of gold and silver investment products available at USAGOLD.

At the same time, given the exclusive preferred referral storage rate you receive by opening your storage account through USAGOLD, the annual cost to maintain your holdings is comparable (and often lower) to what most ETF vendors charge in annual fees. All the while, your metal is stored safely and fully insured in an allocated account at one of America’s oldest, largest and highly respected independent depositories – a firm with which we personally have done business for decades.  To get started, we invite you to go to the link immediately below and fill out the application.

This approach is especially well suited for those who want to take a strong position in silver and avoid the logistics and storage problems that often accompany it.

Account Form – Precious Metals Storage Account


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Short and Sweet

1970s redux?
“Policymakers did not see it coming.’

overlay chart showing real return on the 10-year treasury and gold 2004 to present

Sources: St. Louis Federal Reserve, Federal Reserve Board of Governors, ICE Benchmark Administration

In the days ahead, the markets will be looking to the Fed to reassert itself as the bond buyer of last resort and keep a lid on the real rate of return, as shown in the chart above. If it fails in that respect, we might end up with a full extension of late February’s bond market panic. No one is more aware of what that could mean for the economy and financial markets than the Federal Reserve’s board of governors. As for gold, the chart clearly demonstrates that it has a propensity to rise when the real rate of return is in decline and decline when real rates are on the rise. Should inflation suddenly surge, or the Fed indeed become a more aggressive buyer of Treasuries (more QE), the current uptrend in the real rate could turn abruptly. As it is, the much-ballyhooed upward turn in real rates looks like a minor blip in a major overall downtrend.

At the moment, it does not appear that Fed liquidity operations are keeping up with an onslaught of bond selling that is pushing yields aggressively higher. That could change overnight. We should keep in mind that the Fed moved quickly and convincingly in money markets last March at the first signs of bond market weakness. Meanwhile, the central bank’s bond portfolio continues to expand at a record pace, and we haven’t even gotten around to fully distributing the $1.9 trillion stimulus package and the $2.4 trillion infrastructure project.

In the final analysis, it rising inflation that will be the most culpable in accelerating the negative real rate of return and sustaining physical demand in the gold and silver markets. “If you look at the inflation of the 1960s and 70s,” says Paul Singer in a recent interview with Grant Williams and Bill Fleckenstein, “inflation came in the mid to late 1960s, from basically very low levels, they didn’t see it coming. They, meaning the policymakers, the central bankers, and when it came, they thought it was temporary and one-off, and one thing leads to another. So we know about the oil embargo of 1973, which took oil prices up three or four times. So wages, prices, guns and butter, the Great Society, the Vietnam War, and increases in the money supply, all combined. But once inflation lifted off, it just kept on going.”


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Client Testimonial

Image of check for $1 million

“Thank you! It has been a pleasure doing business with your Company! You’ve treated the small investor (me) just like you would a millionaire. Best wishes, and I hope I can make some purchases in the future.” – L.W., Savannah, Georgia

We also treat millionaires . . . well. . . like millionaires – whether they admit to being millionaires or not [smile].

We receive unsolicited testimonials like L.W.’s routinely. Please see our Client Testimonials page for more feedback, and be sure to visit the Better Business Bureau for even more in the way of FIVE-STAR reviews.  Don’t do business with any gold company until you have checked it out.


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Favorite web pages

Charles DeGaulle’s ‘Criterion’ speech

photo classice profile of Charles de GaulleGiven the increasing frequency and severity of international currency imbroglios and one emerging nation-state after another falling into monetary disrepair, it is not difficult to visualize more and more of these states looking to hold gold in their reserves as a matter of national defense. One recalls Charles DeGaulle’s famous criterion speech on gold in this context. Though such a holding would not cure internal problems derived from excessive debt and the debasement of their own currencies, it would offer something of a shield for all nation-states against the devaluation/revaluation policies of other nation-states, just as it does for private investors who take the same course of action.

[LINK]


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