WHICH Precious Metal?
August 12, 2013
Most Conservatives know that continuous printing of money can only mean one thing for the dollar – and it is not good. So I see more and more people turning to sound money – precious metals.
Today I received an email from a lady who saw me teach about Christian Financial Concepts on GodTV. She forwarded me an email pitch she had received for palladium, and asked for my thoughts. This is an extended version of my reply to her. (Often when I answer questions from readers, the research I do to answer their questions inspires an article.)
All precious metals are in short supply, including gold, silver, platinum, palladium, rhodium and others.
There are three major markets for precious metals:
2) Decorative (mainly jewelry)
86% of all manufactured products include one or more precious metals in their makeup. Precious metals are heavily used in electronics, and more and more medical uses for these expensive metals are being discovered every month.
So ALL precious metals (including palladium) have industrial uses.
THREE of them (gold, silver and platinum) are used for jewelry.
But only TWO - gold and silver - have been used as money.
Obviously, a metal that is needed for all three of these markets is the best - demand is greater, supply is decreased by usage, and therefore prices tend to go up. The more markets that exist for any commodity, the better. This means that gold and silver, which have three uses, are the best overall. Platinum comes in number three because it has two uses. All the others (including palladium) only have the one use - industrial.
With that said, ANY of the precious metals can be a good buy at different times in history. The rub is that very few people are able to successfully "trade" precious metals. This is also true of all other commodities. If you know a particular commodity well, or have a great computer algorithm, you may be able to make money trading in commodities, such as grains, oil and pork bellies. But most people lose money when they try. Look at the required warnings that commodities dealers have on their sites. Something like, "If you trade commodities, you will probably lose your first-born child, and all your hair will fall out."
The main principle that you should understand is that gold is NOT a commodity (although many people try to classify it as such). It is the only metal that has been used as money in almost every nation and society in recorded time. Silver has also been used as money, although not as widely as gold. So you might describe them as monetary commodities.
Gold and silver are the only Biblical money. There is actually no word for money in the Bible for money. But silver (in Hebrew, “gerah”) is described as being used for everyday business transactions, and gold (referred to as the shekel) is used as a storehouse of wealth in the Word.
In addition, gold and silver are the only Constitutional money. Do a word search on the Constitution, as I have done. (You can find a digitally searchable copy at www.ConservativeTruth.org and many other sites.) Search for any word related to money that you can think of: Currency, Payment, Exchange, Coin, Note, Gold, Silver, and the word Money itself. You will discover that gold and silver are the only Constitutional and legal money in our nation.
Then why do we have un-Constitutional money in our pockets – the infamous Federal Reserve Notes, which are not money, but are actually IOU’s? (That’s what the word “note” means.) We’ll get to that in a moment.
First, what does the Constitution have to say about money? Article I, Section 10: “No state shall…make anything but gold and silver coin a tender in payment of debts.”
Article I, Section 10 (selected portions): “The Congress shall have power to…coin money (and) regulate the value thereof” and shall “Provide for the punishment of counterfeiting the securities and current coin of the United States.”
You will note that there is no mention of paper money of any kind anywhere in the Constitution. This is not because paper money was unknown. In fact, prior to the writing of the Constitution in 1787 (the US was governed by the Articles of Confederation for our first decade), the official US money was the Continental Dollar. This, our first currency, was eventually devalued due to hyper-inflation, and was replaced by the US Dollar at a ratio of 100 Continentals to one US Dollar.
Have you ever heard of the expression, “Not worth a Continental? That expression comes from America’s first experience with hyper-inflation and devaluation of its currency. So much for the claim of many today that the US would never devalue its currency (we already have); or that our money could never suffer hyper-inflation (it already has, and has come very close to it again several times since).
This year is the 100th anniversary of one of the most terrible events in our nation’s history – the establishment of the so-called Federal Reserve System. (See my article, “The Non-Federal Fed.”) This was when the United States started counterfeiting money – a crime that would land any citizen in jail.
It is also the 80th anniversary of another terrible event – the theft by our government of 539 tons of gold from its citizens, and at the same time, the removal of the Gold Standard. Some say that the Gold Standard ended in 1971 when Nixon stopped allowing other nations to redeem dollars in gold. But in truth the Gold Standard ended in 1933 when FDR issued Executive Order 6102, which prohibited US citizens redeeming dollars in gold and confiscated their private gold.
Just as gold and silver are the only Biblical money, and the only Constitutional money, there is another important parallel between The Word of God and the Constitution. Both view tampering with money as extremely serious crimes.
Section 19 of the Coinage Act of 1792 established a penalty of death for debasing the gold or silver coins authorized by the Act, or embezzlement of the metals for those coins, by officers or employees of the mint.
Most of the provisions of this Act have been abolished or revised over the years. But this provision stands as written. This is something that the people who are debasing the money of the United States today might want to ponder.
Likewise, the Bible has a lot to say on this subject. And it prescribes serious punishment for those who alter money.
Proverbs 16:11 states, “Honest scales and balances belong to the Lord.” In Deuteronomy 15 He warns anyone who would use dishonest scales (weights or measures) that He considers this “an abomination.” That’s pretty serious Bible language that means “worthy of death.” Murder and other particularly vile acts are also called “abominations.”
In Leviticus 27:25 God says, “Every value is to be set according to the sanctuary shekel, twenty gerahs to the shekel.” The gerah was silver, and the shekel was gold. This was the original “Gold Standard,” long before Congress set a standard ratio of silver to gold.
God makes it clear that He hates inflation, because it victimizes the poor. In Amos the 8th chapter, the Bible says, “Hear this You who trample the needy, who make the bushel smaller…and increase the shekel, and cheat with dishonest scales. The Lord has sworn…I will never forget what they have done.”
The modern equivalent of “increasing the shekel” would be the sin the Federal Reserve commits when it increase the money supply with paper that is backed by nothing. “Making the bushel smaller” is like today’s inflation. Have you noticed that you consistently pay more for products while the manufacturers decrease the size or weight of those products? A good example is a 10 cent Hershey’s bar that cost $1 today, and is 2/3 smaller.
OK. That’s enough background on precious metals. How can we use them today to protect what God has given us?
It is clear all that precious metals are very valuable, and will continue to be so due to their scarcity. But I choose not to gamble by trading in most precious metals, because they are just commodities. I protect what the Lord has given me by investing in real money – particularly in the form of gold.
One caution – all gold is not the same. Bullion gold is not suitable for investment. Even though it has gone up hundreds of percent in the last decade, it has only done so because the US dollar and other world currencies have gone down. Therefore, it takes more dollars to buy the same amount of gold. In fact, an ounce of gold has bought roughly the same amount of “stuff” for thousands of years.
By contrast, Investment Grade Gold (IGG) increases in value (real purchasing power), not just in price. So, while bullion is a good protection against inflation, IGG provides both protection and growth. It is a real (and viable) investment.
I don’t have the space to get into the subject in detail here, but I taught a Webinar on it called, “Why Investment Grade Gold is Better than Bullion.” You can request the video at Webinars@Bellsouth.net.
I believe we are all responsible to be good stewards of those resources with which we have been blessed. Do your research and pray about how you should allocate your resources.
The Coinage Act of 1792
“The Non-Federal Fed”
Christian Financial Concepts
Investment Grade Gold