When I put my own money on the line, my first question is, “Am I looking first at financial security or personal security?” The Swiss tend to think like this and lead the world as pacesetters on both fronts. No other country in the world comes near the Swiss when it comes to what I have come to refer to as “The Swiss Way.”
To emulate The Swiss Way on the financial security front, I rank my metals the following order: gold, silver and brass. On the personal security front, my ranking order is brass, silver and gold. Each of these metals is on my radar for purchase in 2012, and I hope to end the year with purchases in all sectors.
Return to the Gold Standard?
Gold is the big-volume financial asset building block — nothing else comes close. And no, I would not advise returning to the gold standard. As long as gold trades in a free market, gold is parallel money, as we can all exchange our fiat paper currency for gold whenever we want — I have made many such transfers in recent years and advise the same for you.
Now, I’m waiting for what feels like the next entry point. I never have sold any of my gold coins (I do not buy graded numismatic coins) or gold ETFs, and I have no plans to be a seller. I buy gold as the ultimate store of value and pray the price trends down. Why? Because everything else I own will most likely trend up. So, I do not buy gold to profit from a rise in its price or to sell to someone else. If gold should soar in price due to the destruction of the fiat dollar, which is likely, I will not only be glad I own the gold I have now, but I also will wish I had bought a whole lot more.
Click to Enlarge Silver has been regarded as a form of money for more than 4,000 years, and it will continue in that position through our lifetimes. The U.S. Treasury exchanged Silver Certificates for bullion until 1968. Each note represented one silver dollar payable to the bearer on demand. The 1968 breakdown was the first substantive indication that the fiat dollar’s days of sound money had passed for good. Politicians and the Fed howl to the contrary, but both are whistling Dixie and know it well.
The silver market is tiny compared to gold and often is far more volatile. The London gold bullion market turns over about 18 times faster than does the silver market. As recently as 2005, silver traded at $7 an ounce, jumping to $14 in 2006 and $20 in March 2008. Then, due to the credit crunch in October 2008, silver fell by nearly 60% in a single month.
How’s that for volatility?
In April 2011, a monster bounce-back propelled silver to nearly $50 per ounce. Today, silver futures have fallen to nearly $26 per ounce.
Brass Always a Must
Now I want to roll into the personal security component of my three metals’ financial/personal security package — looking specifically at brass. I buy brass (a lot of it) in the form of ammo, like the Federal low-recoil 00 buck shells for the semi-automatic Mossberg shotguns that my wife and I both own. Trust me here, unless you are a gun professional or a weekly regular at the shooting range, you will find blasting away with standard shotgun ammo a shoulder-rattling experience of the highest order. And if you have to discourage a home intruder, you will take out a lot fewer of Granny’s antiques with low-recoil 00 buck shells.
In times of emergency, you also will find brass ammo for shotguns, as well as for the popular police Glocks and .38s — a most welcome barter complement. The .38 still is the most popular revolver in the world, certainly for personal defense. My wife and I both own Smith & Wesson (NASDAQ:SWHC) .38 Bodyguards.