Yes, we have gone through multiple crisis…in fact as the pendulum swings back and forth from fear to greed and back again the only place there probably isn’t much crisis is through the middle. I think you make a good case for why a total meltdown or failure of our fiat currency hasn’t happened as of today is for reasons like you stated…our economies are so entangled. We have very sophisticated financial mechanisms of manipulation that have been able to kick the can down the road and I would argue that that’s all it is…kicking the problem down the road. Also, at times we get some better leadership in different offices and things do get better.

My premise is that debt matters and the levels we are at and headed to are unsustainable. I don’t know at what point that is but we are probably going to find out. It is taking a large amount of our GDP right now just to pay the interest on our national debt. Yes, the strength and clout of the US has gotten us a long way(thankfully) but it is not guarantee. You have to get a much longer perspective than 80 years or you are likely doomed to fulfill the saying, “What we learn from history is that we don’t learn from history”. I’ve seen an exhaustive list of fiat currencies and there is not one that hasn’t failed for one reason or another. We are actually only at the average lifespan of a fiat currency.

We very much differ on governments maintaining the financial stability of it country and its relationships with other nations. There are way too many foolish people doing foolish things with the power they wield in Washington today(for example, we’re going to spend more money for more healthcare services and the price is going to go down!…that’s like saying 2+2=3). I would submit that it is the few rather than the many who look out for the long term health of our country. Far too many get elected or appointed and self-interest overtakes wisdom. I very much disagree that the Fed(but then you could say they are not the government and you would be right) is looking out for the best interest of the country. This secretive, extremely powerful, unaccountable, unelected group of men have a great degree of responsibility for the predicaments that our economy is in today. I would argue that they have helped create the bubbles rather than smooth out the road.
The type of thinking that says we are too important or too big for our ship to sink reminds me of a certain Cunard ship. So, yes, there have been a few warning for what seems like a long time that all is not well and are scoffed at by naysayers. I wish the naysayers were right and we are just too important to fail but there are many leaders in this world who don’t care what we bring to the table they just want to be the big cheese and they’ll cut off their nose to spite their face.

I think we could go on and on but the point I’ve been trying to make is what Greenspan himself said before he became Fed Chairman and I’ll repeat. “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. … This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”

Hold everything in $ currency if you want to but if you do you must accept that you are doing so at great risk. Inflation is not something to dismiss even though you can’t feel it on a moment by moment basis. It must be taken very seriously and one way to hedge against it is through owning physical gold. YOUnique can help you do that. If you don’t want to buy from us that’s OK but I would get some somewhere soon because our little green pieces of paper are taking a beating and it’s going to take more and more of them to buy some. Just think, in 1920 one dollar would buy 1/20th of an ounce of gold today it will buy all of 1/1068th of an ounce. Wow, it’s really held its value well!

I’ll pass on this article by Alex Stanczyk and 14 reason to own gold
Gold Passes $1058 on Asian Market
October 8th, 2009
At approx 2am GMT-5 gold passed $1058 per troy ounce, another all time high in nominal terms.
Silver was a touch shy of $17.90 per troy ounce this morning.
Fundamentals have still not changed. We could see pullbacks as a normal part of an upward trend, but unless underlying fundamentals change, my long term outlook is of course the same.
Those fundamentals are:
1. Downward pressure on the USD from Quantitative Easing
2. Downward pressure on the USD from the carry trade (The USD is the new favorite target)
3. Downward pressure on the USD for additional bailouts as firms are salvaged from losses in ALT-A and ARM resets
4. Downward pressure on the USD as foreign countries diversify out of dollars into other currencies
5. Upward buying pressure on gold from Central Banks
6. Upward buying pressure on gold from the Chinese Government
7. Upward buying pressure on gold from Chinese Citizens
8. Upward buying pressure on gold from retail investors globally
9. A continually declining production capacity in gold mines – no new mines being brought online due to low prices of gold making exploration investment less common
10. Gold ETF’s and Institutions buying tremendous amounts of gold, with no sign of letting up
11. Largest gold mining companies in the world are closing out their hedge books (buying pressure)
12. Continued concern over inflation causing positive sentiment towards gold
13. Competitive Devaluation will ensure the cycle from fiat to tangible assets continues
14. Common sentiment – Contrarian Investing basics – The common man still has no idea gold and silver are a good investment – when you see Bill Murphy from GATA as a regular guest on CNBC, you know the fundamentals are shifting.

Now here is a real proposition. How about you save every month 1/10 shekel and I will put the same amount in a CMT. Then after a time frame that you decide, hopefully within my life span, we convert it all to a currency that you decide. The person with the least has to give up its own holding to the other person and match the holding that the other person achieved. E.g. at the end of the period I have $10,000 and you have $15,000. I will give you my $10,000 and match your $15,000 on top of it. I.e. you walk away with $40,000 and vice versa. I will even pay for the legal costs. How about that!

I had a read of your link. I read the same thing 20 years ago! It is very interesting reading, I do agree! However, why doesn’t it happen? Adrian Douglas wrote in 2005 “ABANDON SHIP” (I read that 20 years ago as well) , i.e. the fiat money system will fail but it still doesn’t happen. The reason why?….. no market economy can afford it to happen! We have gone through multiple crisis for the last 80 years or so and nothing sinks the boat, the thing is that all economies are so entangled with each other that nobody can afford it to break down, regardless of how flawed the system is or isn’t. The discussion becomes more philosophical than anything else. It is a little bit like when I was involved with “lunatic” offshore people. They were trying to beat the legal systems in one way or another, and I must say it really is entertaining reading. Then, the miracle happened, a magistrates court in Adelaide, I believe it was, was shown to not have been setup in accordance with the law and constitution effectively giving the last 4 years of sentencing a path for appeal and invalidation of all convictions. They had a feast and finally they could overturn the legal system and it was nothing the Australian government could do about it. Well, what happens, the parliament the very next day introduces new legislation that in retrospect validates the court and therefore all of its cases. Done! I guess we do agree that governments can do anything at any time, however my point is that they will also do so to maintain the financial stability of its country and with its relationships with other nations and economies. The great collapse or crisis is possibly a reality in an economy in disarray and with little or no international trading, such as Zimbabwe, but this collapse has little or no effect on anybody else, just a tragedy for the population.

Cheers – Daniel

PS. I have never claimed JWS to be a ponzi, only a pyramid.

Secondly, the “multiples of 3” scenario is only one way to pay for your gold/silver acquisition. The other part of the equation is your retail sales(totally ignored in your example), which is the lion’s share of my commissions right now. Without healthy retail sales any MLM is going to fail and I’m not interested. Also, think about what we’re talking about. We’re talking about gold and silver…not shampoo, not a vitamin, not soap…not something that is consumed but something that is accumulated and we’re talking about selling it in a profitable manner.

The point of the example of the house wasn’t when it was bought and the use of it it was the purchasing power of the dollar over time. As you know there are cycles in everything including economics and there are times to be accumulating precious metals and there are times to be liquidating them. I happen to believe we are in a time when it is extremely prudent to be out of debt and in tangible assets in general and be accumulating precious metals in particular(not exclusively but it should be a part of your holdings).

I’m not saying that gold should be purchased at the exclusion of other investments but I do subscribe to the perspective that the stock market is more like a Vegas crap shoot for most people. To be sure many have made a lot of money trading stocks but it must be left to professionals. {Besides, what makes Google worth $500+??}

In my opinion the reason that gold and silver are important to have is that we are at a time in history where currencies (the dollar in particular) are being inflated to such a degree that it is unsustainable…plain and simple. It’s really not more complicated than that. Not long ago we were the world largest creditor nation and now we are the world largest debtor nation and the hole is only being dug deeper with ‘quantitative easing’ and trying to pay back debt with cheaper dollars. As a nation we are able to keep afloat because of a certain amount of clout and our ability to borrow but in my opinion ever increasing debt of the magnitude which we now see is unsustainable. Debt matters and has consequences just like we found out last year.

I think the above answers the question reasonable well why I am a proponent of buying gold. It is many things but one role it plays well is currency crisis protection and/or as an inflation hedge. Nobody know exactly how things will play out but I think it’s easier to look down the road and see that the dollars days are number as the world reserve currency than it is to look down the road and see a hip replacement happening.

The problem as I see with your term deposits and your PS example is the value of the dollar. You may have nearly a million of them but they don’t have the same buying power that they did in 1933. That is the hidden insidiousness of inflation and most people don’t even know its happening or that it’s being done on purpose. Gold can still buy the same thing. Granted this is contrarian thinking but I believe it be correct and why you need to own some of it. So I don’t agree that you’d be better off with the 4% p.a. as you’d need twice that just to break even when taking inflation into account.

The other facet of the “price” of gold is that (and this is controversial to some) I don’t believe we have a market free of manipulation where gold is concerned. There is much that can be read on this subject but I’ll just summarize my view by saying that the price of gold would be much higher today if central banks w/complicit investment banks were not doing everything they can do to suppress the price by selling/lending {or whatever they want to call it} their gold onto the market. The problem is they are running out of golden bullets and have become net buyers now. So, as you can guess, in my view the price of gold will be going much higher.

Again, you can have your other investments but you’d better have some gold and silver too b/c the others can become vaporous very quickly. In my opinion, most people are truly not in a position to buy precious metals in big chunks but they can buy in smaller quantities. So, I recommend to folks in this position start the discipline of buying a little each month. YOUnique offers a way to do that. There are others ways… just like there are choices between insurance policies.

To address your pyramid scenario I would just point out that unlike Madoff’s scheme it doesn’t take adding more and more people to the business to make things work thus it is not a pyramid. You may choose to only grow so much and be satisfied but that makes no sense when there is more potential. But let’s say that suddenly there was a massive run on physical gold and supply suddenly dried up and YOUnique stopped. Would anyone be left hanging? Let’s see…what are we left holding? Oh shucks…I’m left holding gold and silver {which I might add in this scenario would be skyrocketing in price}. To me that’s the beauty of a savings based business where you are acquiring more of something each month versus a consumption based business (vitamins, soap, drinks).

You ask an interesting question I hadn’t thought of as far as how many originator lines there are. I’ll ask that question.

Firstly, the business proposition. I assumed you had this one worked out and that’s why I left it alone. Since you brought it up here you go:

Get 3 people, get them to get 3 each (12 people) and you have your gold free…. nice! I do agree, it isn’t that a bad proposition. But I do assume from your numbers that this needs to happen before my gold is free.

The sell to the next 3 is the same thing, they get 3 and get each of them to get 3 and their gold is free of charge. Simplified I see that this is the business sell story.
From the above it is only the 1st person who makes it for free. How big is the market? Well, world population is about 7billion(?). Usually, any business proposition says that “by joining us you can join us into a $xxxmillion market and we already have yy% of it. In the JWS case we need to look at people. Who in the whole world can buy 1/10 a month. I am assuming but let’s make this number 1 billion people. So assuming that you are the originator then how many levels can you have underneath you in best case? The answer is 19.

Now I am sure that JWS has more than 1 originator. I’m going to pick 50. Let’s assumes that JWS has appointed 50 originators directly underneath JWS and that they are responsible for providing the downline. So if all 50 are able to get 13 levels below then you have 80,000,000 people at that level and 119,000,000 in total. Which means that if what you are telling me is true then 106,000,000 are paying the price and 13,000,000 are getting their gold for free. How are the 106,000,000 people able to get their gold for free??? There is NO WAY!

Whichever way you turn it this is a pyramid.

If I am at the top of this I will make a squillion, but, at what level am I joining you and the whole JWS structure? And, how can I with a clear conscious promote it when I know people will miss out?

The business proposition is limited. The earlier you get in the more of a chance you have to make gold or money but you have no idea of where you are in the tree. Do you know where you are in the tree and how the tree looks like from JWS? I would assume this to be a standard document from them but apparently not.

As you can see from above, not all can make gold from this scheme as a business owner, there is NO WAY! Even if everybody tried their hardest the people in the world runs out and after 1 billion people introduced (15-16 perfect levels from 50 originators). I believe you could convert 10-20% at the best, this equates to 13-14 levels, but in reality you might get 2% (7-8 levels). Regardless, we need a population growth similar to hyper-inflation to make this a viable business for all participants.

Secondly, back to the product – 1/10 Oz shekels. Let’s assume for this that the world economy keeps on going pretty much as it has been. If I am sitting on 12 oz of shekels in 10 years and need to sell 8 oz to buy my daughter an electric wheelchair, which is the equivallent price as of today. You must agree that I would have been better of putting that money into a 4% p.a. account! Right?

I like your house example. The issue is that while I bought my house I have had use of it, my family had use of it etc… over all of these years, while if I bought gold I just had gold which I couldn’t use. In other words, ask anybody if they rather buy a house for 278 oz in 1933 or have the gold, knowing it would be worth the same today….. well, pretty simple answer, especially when they could enjoy it at the same time.

Now, I am starting to agree with Douglas. There has to happen something extraordinary to make this gold worth something of substance. What is it? Please tell me Lisa? Also, you bring up insurances again, well at least they tell me why I need it such as “if you need a hip replacement you will not be out of pocket”. Then I can make a decision if I need coverage for a hip replacement. Again, tell me the scenario(s) you see that require gold rather than other investments.

Cheers – Daniel

PS. If I put my money into the Dow Jones Index in 1933, i.e. $5,750 (index 60), it would be worth $929,583 (index 9700) today. 3 times both the house and the gold in your example.