Imagine a day when you go to buy a quart of milk, ask the price, and the cashier says, “that’ll be a tenth ounce silver.” As the US dollar’s decline accelerates, several efforts around the country are trying to make this vision a reality.

Historically, paying for items in silver or gold was actually quite common. We happen to live in an unusual time and place where generations have grown up trading exclusively in paper. While my parents still used dimes made of silver, we have now gone several decades with no precious metals in any of our official coinage. But this system of money by government fiat is unsustainable.

While the practice of bartering precious metals directly for goods and services has continued on a small-scale over the last few decades, the 2000s saw the beginning of organized efforts to revive gold and silver as money.

THE LIBERTY DOLLAR

One such effort was spearheaded by an eccentric mintmaster from Hawaii named Bernard Von Nothaus. He called his project the Liberty Dollar, and it centered on privately minted gold and silver rounds as well as deposit certificates for precious metals held in his firm’s vaults.

I had many reservations about how the project was implemented – coins were minted with a fixed US dollar amount at which they were supposed to circulate, the dollar amount was well above the spot price of the metal, and authorized “distributors” were allowed to pocket the difference (which often resulted in buyers paying far higher prices for their gold than what they would have paid had they simply bought, say, Canadian Maple Leafs instead) – but I believe Nothaus’ idea was a good one, even if the product was over-priced. Tellingly, despite the obvious flaws, public participation grew steadily from 1998 until 2007, when federal agents raided the Liberty Dollar’s offices on trumped-up charges of counterfeiting.

Really, they were charging him with competing with the US dollar’s monopoly privileges by offering a better product. It’s important to note that the case against Nothaus was built around his coins looking similar to official US coinage (though no one actually mistook Liberty Dollars for US currency), and not around encouraging people to use precious metals as circulating money.

DIGITAL GOLD

Next came a crop of internet-based currencies backed by gold and silver. Most prominent among them are eGold and GoldMoney. Both were designed to allow customers to open online accounts that were valued in, and backed by, gold and silver bullion.

eGold was perhaps the better known of the two until it, too, was shut down by the US government on charges of money laundering. eGold was positioned more as an online payment system than a means of holding bullion. Due to the anonymous nature of the transactions – it was akin to spending cash – the authorities alleged that it was being used by criminal enterprises to funnel illegal funds. But mostly it was being used by regular people to begin saving and trading in money that holds its value. eGold had a transparent system of annual audits and live transaction screening by any user to keep the system honest. It, too, was growing robustly, and was putting up strong competition against PayPal until the authorities intervened.

GoldMoney, founded by my friend James Turk, has remained in operation by keeping its principal operations overseas and by cooperating fully with onerous US financial regulations. It offers similar services to eGold, but with an emphasis on long-term storage. GoldMoney improves upon traditional storage by locating offshore, offering real-time online account access, and providing extra liquidity. These services do come at a cost, however. Still, over the course of the last decade, GoldMoney has swelled to over $2 billion in assets. Clearly, many people want to trade gold and silver over US dollars.

Digital gold is a niche service, but I think the public’s rapid embrace of these projects – none older than ten years – shows that investors are viewing gold and silver as more than mere commodities, but once again seeing them as money. This could signal a paradigm shift back to tradition, which is good news for any precious metals holder.

STRAIGHT UP BARTER

While digital currencies are neat, in practical terms, nothing beats the resilience of traditional barter of bullion for goods and services. If you actually own the physical gold and silver that you intend to save or trade, then you can be sure it will be there until you’re ready to sell. You don’t have to trust anyone except yourself.

In that vein, several efforts have popped up around the country to simply get people trading gold and silver rather than dollars. Since the transactions involved are usually small, such as buying lunch at a local diner, silver is typically the metal of choice.

There are several hotspots for this sort of activity.

Philadelphia has one group, DelValley Silver, that has fostered a local barter market there by encouraging merchants to accept silver coins in addition to dollars. DelValley is also a silver dealer, but they sell privately minted rounds, which can be harder to liquidate than well-known coins like the American Gold Eagle and Canadian Maple Leaf.

Meanwhile, in New Hampshire, many merchants associated with the Free State Project have begun accepting gold and silver at their businesses. Innovation abounds here and the practice of encasing small amounts of silver in laminated cards seems to be the most successful.

Shire Silver encloses silver and gold wire in their cards and measures them in terms of grams. It’s much easier to trade a flat, plastic card containing a gram of silver than to carry around a 1 oz coin. However, even their website will admit that the premium on such a small amount of silver makes it less than ideal for investment purposes. Of course, when you’re ready to barter, they’ll be happy to take your 1 oz rounds in return for some Shire Silver. And that Shire Silver is being accepted by more and more merchants across New Hampshire and beyond.

Another variation, from a group based in Phoenix, Arizona, encloses a pre-1965 US dime inside the laminated card. Before ’65, every dime contained 90% silver, making them worth about $2.50 each in today’s debased dollars. That’s why you won’t find any pre-’65 dimes in your change from the grocery store. However, one fellow had the clever idea of putting them in these cards so they could trade at their silver value without getting mixed in with the worthless dimes we carry around today. The same group even created a free iPhone app that translates US dollar prices into various amounts of silver.

While I’ll still be selling regular old bullion coins and bars at Euro Pacific Precious Metals, because these are the best way to invest in physical precious metals, I am energized by these efforts. The great thing about holding and bartering physical precious metals is that there is no central company running the operations, like with the digital gold currencies, and therefore there’s no single person the government can go after.

(My new offshore bank, Euro Pacific Bank, Ltd., will soon be offering Visa-branded debit cards backed by individual holdings of gold or silver. Euro Pacific Bank customers will be able to purchase gold from the bank, have it stored, and then access their holdings directly using their Visa cards to either make purchases though merchants or withdraw cash from banks and ATMs. Unfortunately, due to the reasons described above, I cannot offer this service to US customers. For more information about my offshore brokerage and banking companies, please visit: www.europacintl.com)

THE WRITING IS ON THE WALL

Besides these grassroots efforts at building barter communities, I’m seeing a cultural shift in favor of precious metals. Utah recently passed a law establishing gold and silver as legal tender and abolishing state capital gains taxes on their appreciation. I was interviewed for a new animated film called Silver Circle that features a rebel group in the near future which mints silver coins in defiance of an even more aggressive Federal Reserve. More and more people are starting to watch the gold price as often as they watch the Dow.

Overall, this bodes well for our investments and for our country. If gold and silver are successfully re-monetized, our children may know a rate of economic growth not seen since our great-grandparents were in their prime. And prices may never return to today’s levels again.

“Global /Train Wreck Coming”

The economy is facing ”a slow-motion train wreck” with Greece only the first nation to be hit, Reserve Bank director Warwick McKibbin has told a Melbourne conference. Referring to the most recent global economic crisis as a mere ”blip”, he said the coming crisis could undo the mining boom and bring on inflation of the kind not seen since the 1970s.

Professor McKibbin told the Melbourne Institute conference dozens of European countries now had gross government debts on track to exceed 60 per cent of GDP.” Japan is forecast to be 200 per cent of GDP, the US is forecast to be over 100 per cent of GDP,” he said.

”At zero interest rates that can be sustained, but at 5 per cent interest rates countries have to put aside 5 per cent of their GDP every year just to service the debt. That is not sustainable.

”Already consumers aren’t spending and investors aren’t spending because of the tax increases that are in prospect.

”Greece, Portugal and Ireland don’t just need to have their debts written off, they need to have a 30 per cent to 40 per cent depreciation of their real exchange rate,” he told the conference.

”There are two ways to do that, either pull out of the euro and depreciate by 40 per cent, or have deflation of 40 per cent over the next 12 months.

”I do not believe any society can survive having a 40 per cent deflation that’s been imposed by the International Monetary Fund and the European Central Bank.”

As the US created more dollars to inflate away its debt repayment obligations, countries that are linked to the dollar, including China, India and parts of Latin America, would suffer 1970s-style inflation.

”In India inflation is 9 per cent, in China it is 6 per cent. That inflation is pushing up resource prices for now, but it will have to be brought under control with much higher interest rates,” he said.

Joking that he could not talk about Australian interest rates, which were in any event ”always appropriate”, the Reserve Bank board member warned that the inflation would spread worldwide.

Australia needed a sovereign wealth fund to store mining income while it lasted, ideally stored in a separate account for each taxpayer so the government could not raid it.

The $50 billion national broadband network epitomized the sort of waste Australia could not afford. ”I would say to any politician who thinks that spending is worthwhile, take your salary as shares in NBNCo. If you think it’s a good investment, you’ll be ahead,” he said.

Do not ask about the market, ask what you want to achieve through real estate investment.

Do you want to …?
… make the quick deal, quick profit?
…build a long term portfolio?
…create long-term passive income?
Most people never stop to think. Saying real estate investment is good, right?
It is the same as saying mutual funds are good, right? Well no…some are and
most aren’t!
Ask and force yourself for an answer.
What are you?
• A Shark?
• A Flipper?
• A Real Estate Investor?

The shark is a grave dancer. He benefits from the misery of others. The Shark will always be able to find customers whether it be good times or bad times. All the various categories for grave dancing apply. Illnesses, deaths, divorces, job transfers, business reversals, job losses, bankruptcies, people who got too greedy, too sleepy, or too stupid are all grist for Shark’s mill. Bad times simply make the soup a little thicker, but it is always there. Is that you? If you want to deal in foreclosures, auctions, tough deals…go learn something. Do not expect it to be easy. Sit in court, evaluate.

The Flipper has his advantage on the other side of the scale. For him the good times with a rising market and rapidly rising inflation give him the most opportunities. But even in a flat market with no inflation he can find deals, he just has to work a little harder and wait a little longer for them, but they’re there. What the Flipper has to watch out for is that ‘bigger fool theory’. .
There is a tendency in a rising, inflationary market to jump on the conveyor belt at any price because a bigger fool will come along and take you out at a profit. This is fine as long as you are not the last fool in line. Yes, you can be both a shark and a flipper.  The common characteristics to have are the ability to recognize the signs, interpret them correctly, and then to act quickly and without hesitation. Those three characteristics are the toughest things to learn about this business.

However, the Shark and the Flipper don’t deal in averages – they deal in the exceptions!

It sounds brutal to say that the Shark is out there looking to do some grave dancing to prosper from someone else’s misery. It also sounds cruel to describe the Flipper as an opportunist who will take advantage of someone else’s ignorance to deprive them of potential profit. You have to ask yourself where you draw the line between morals and business. Everyone has to decide that for him or herself.

The investor is primarily concerned in finding low down payment, cash flowing
property using personal rules. (I.e., the 1% rule…The monthly payments of 1% of the purchase price will service a 100% financed property and cash flow.)  He looks for safety and quality tenants to create a passive income stream for him sometime in the future, e.g., buy 5 condominiums anywhere in North America say at $80,000 each, with an $800 per month income. Buy them with nothing down, own them in 18 years and have an income of $4,000 forever ($4,000 will service a million dollars).

The shark and flipper buy anywhere…they are in and out of the deal within 3 – 6 months. The Investor MUST buy where the ratio of rental income is in line with the price you pay. Good working environment. Likely a suburb or a smaller town. The Real Estate Investor generally outperforms sharks and flippers over time.

Is it important to know if its a Good or Bear Market?

People always want to know whether it is a good market or a bad market.
Of thousands of questions I get every year…that is the most often asked.
For 35 years I have listened to ‘bubbles’, hot markets, seller’s markets, buyer’s markets…and you know what?
It did not matter. No matter what the market was, no matter whether there was Asian flu, Mexican crisis, bubbles or sharp increases…The average homeowner outperformed any other investment – BECAUSE OF LEVERAGE.

The best advice I received from my first branch manager in 1968: “For the individual, there is no such thing as a good market or a bad market…only whether or not he or she has a good or a bad deal.”

I have never heard one say: “Oh, I made a lousy deal…but I bought it in a good market! I mean…who cares?
Much more important is…who YOU are. Are you a flipper, a shark or an investor? The answer to that question determines your success.
The bad news? You have to do some work! No guru, no Realtor, no ‘market’ is going to find you that great deal…YOU must do it yourself.
The market is irrelevant. Your commitment to learning and growing is everything.

Ozzie Jurock creates the tools and environment to help people succeed in Real Estate investment, in sales, in personal growth, and new media marketing. Main Website HERE

Ozzie helps members build an action plan toward real estate success with his Real Estate Action Group, arming investors with the best information and insights possible with his Jurock Real Estate Insider.

Find out more about Ozzie Jurock HERE

“the beginning stages of another major rally in both stocks and commodities:

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