Category: Economics & Investing

Two Letters Re: Projecting Some Possible Outcomes for The Panic of 2007

Jim, Very, very well done post, “Possible Outcomes for the Panic of 2007”. I would say you nailed it as good as can be done. However you will not be invited to be a guest on CNBC. – DAV Jim: Don’t ignore the compounding effects of a) an energy shock from peak oil, a major gulf hurricane, or geopolitical conflicts, b) natural disasters, particularly major 8.0+ earthquakes on the West Coast or the New Madrid fault, or c) wars and terror attacks driven by causes other than angry debt collectors (e.g. Al Qaeda, false flag attacks). All of these could …


Projecting Some Possible Outcomes for The Panic of 2007-2008

I’m sure that you’ve been reading about the current liquidity crisis. But I’m not sure that the average citizen realizes the full implications. Twenty years ago, borrowed money was a lubricant for the American economy. Now it is the economy. Without credit at all levels–consumer, corporate, and government–America as we know it would cease to exist. We live in what economist Bill Bonner calls The Empire of Debt. Because of the lending crisis, the U.S., economy is teetering on precipice. Writing in his Reality Check e-newsletter this week, Dr. Gary North pointed out: “On August 15, the 90-day T-bill rate …


Letter Re: Honey Prices Escalating, Just as Predicted

Jim: Several months ago, I e-mailed you and the others on the blog about bulk honey prices going up. They stabilized at $7.99 for a 96 liquid ounce jug of Silverbow brand honey at Costco for many months. Two weeks ago, a jug of honey was $7.99. As of today, the same jug is $8.79, a 90 cent price increase. I put out some questions as to why the price increase and all I am hearing is minor costs due to dwindling honey supplies (as was discussed in SurvivalBlog) but [also] a greater [wholesale] cost due to transportation costs as …


Letter Re: Advice on Construction a Hiding Place for Precious Metals in a Home

Jim, After being scared Schumerless by the potential US economy meltdown and reading various related posts on SurvivalBlog, I finally took the plunge and purchased some junk silver coins. Since I plan to store these at home rather than a bank safe deposit box (because of potential accessibility problems), would you please recommend a strategy for storage. I’m assuming a small, somewhat hidden, safe bolted to the floor/wall would be reasonable. Any recommendations? Thanks, – Russ S. JWR Replies: Unless you already own a large home vault–such as a gun vault–I recommend that you construct one or more secret caches …


A Full Scale U.S. Dollar Panic Before November?

The news wires were abuzz last week about the global credit squeeze. Bankers are unwilling to make loans when they can’t calculate risk. What risk? Here is a big one: Many of their clients have derivatives exposure, which means that lenders can no longer calculate their credit worthiness. In the banking world, the standard “safe” answer to any loan question in the absence of data is almost universally no. I surmise that if this situation gets any worse, governments may step in and make loan guarantees. (Meaning that the taxpayers would shoulder the risk instead of the bankers.) That may …


Two Letters Re: Advice on Small, Incremental Silver Investing Purchases

Hi Mr. Rawles, In response to the letter regarding buying silver in small increments each month, I know that Franklin Sanders has a monthly acquisition program (“M.A.P.”). I have made bullion coin purchases with him twice now, converting some bonds to gold and silver coin and had good experiences both times. Look for the M.A.P. link to find details about his offerings. Something to consider when buying locally versus through the mail is the difference between sales tax and shipping. If you buy from an out-of-state vendor, there should not be any sales tax. Mr. Sanders only sells and ships …


Letter From Lawyer Describing Real Estate During the Great Depression

The following (courtesy of Tom at CometGold.com) is an excerpt from letter written from a lawyer from Mason City, Iowa in the Corn Belt, recounting the impact of the Great Depression of the 1930s on his town. Foreclosures galore. Tom’s Comment: “Anything sound familiar?” Just substitute residential real estate for farm land, when reading the following: “The boom period of the last years of the World War and the extremely inflationary period of 1919 and 1920 were like the Mississippi Bubble and the Tulip Craze in Holland in their effect upon the general public. Farm prices shot sky high almost …


Letter Re: Advice on Small, Incremental Silver Investing Purchases

Mr. Rawles As a proud 10 Cent Challenge subscriber and daily reader of your blog I must thank you for the mountains of information and content that you make available to us every day. Worth many times the price! Today I would like to know if you could recommend a reputable seller of tangibles i.e. gold / silver. I have been in contact with your banner advertiser Swiss America. They are a good group of people but I don’t quite have the funds to invest that I think they normally deal with. I think I would be a small time …


Letter Re: Ammunition Prices in the Future?

Sir: I have pondered your recent posts about stocking up on ammo. I’ve decided to spend $6,000–the same that I spent last year on storage food, a wheat grinder, and heirloom gardening seeds–to buy some ammunition to squirrel away. That will pretty well tap out all of my available cash. I’ll mainly be buying mil surplus rifle ammo (.223, 7.62×39 and .308) plus some civilian pistol ammo–mostly .45 auto, for my two Glock 21s and my Glock 30. But I’m also taking your advice from a post earlier this year and buying 300 rounds of .40 S&W, even though I …


Letter Re: Ammunition Prices in the Future?

Jim: [Regarding your reply to the recent letter about military surplus ammunition prices,] cheap ammunition is indeed a thing of the past. The reasons for this are several; 1) Under new UN small arms treaties, many states are now committed to destroy small arms ammunition rather than allow it to fall into the hands of “Unapproved Users” (which does not include psycho dictators, just civilians). 2) US small arms ammunition is now going “Green” with lead replaced with Tungsten-Tin, Tungsten-Polymer and other non-toxic materials, which means they cannot be sold to civilians as they fall under “Armor piercing handgun ammunition” …


Letter Re: U.S. Comptroller General Warns of Impending Economic Disaster

Dear JWR: I have read your novel “Patriots” twice now, and have begun preparations to build a retreat. I am in agreement with the initial premise of “Patriots”, that financial collapse is likely going to trigger massive problems in this country. I have enclosed a link to an 11 minute speech [a video in Windows Media Viewer (.wmv) format] by David Walker, the US Comptroller General – the top accountant of the Federal government. He warns of the kind of national bankruptcy you did in “Patriots”. Though he cannot directly point the finger at his Congressional masters, he makes it …


The Coming Hard Times–Wake Up Call!, by Dr. T.

I am writing this essay with a bit of trepidation. I do not want to make you think I am an expert on anything, but I do think a lot and have spent a lot of time studying the economy. Mr. Rawles can verify that my education and training are as follows — I am in the medical profession and also an attorney. I am also in the Air National Guard, after spending many years in the Army Reserve. I was deployed in 2003-04, primarily to Kuwait, but also made trips to Iraq, Qatar, and Djibouti. I also spent most …


Letter Re: Ammunition Prices in the Future?

Jim, I followed the link today about ammo production declines. Do you have any idea how this may effect pricing to the public? I hear from some folks that they expect ammo prices to drop as more of the stockpile hits the market after the (hopeful) end of hostilities in Iraq, et cetera. I wondered if you had an opinion of how things may evolve. Thanks, – Jason in Idaho JWR Replies: I expect ammo prices to remain high, and in fact continue to climb as long as global commodities prices–especially copper and lead–remain high. The world’s credit markets are …


Letter Re: The Pension Gamble: Cash In or Stand Pat?

Sir: [My advice to David J. is:] Keep your retirement! I think you should keep your retirement account and find another job. By cashing out now you only receive your contributions plus interest and not one cent of your employers contributions if your state is anything like California. You are only getting about two years of a pension that you could possibly end up collecting for 30 years or more. Not counting any cost of living increases you would receive $756,000 over a 30 year period of retirement, the $50,000 looks kind of weak. Get a jump on things and …


A Second Income–A Key Goal for Family Preparedness

I often encourage folks that are preparedness-minded to develop a second income stream. Why is this important? “Living off the land” style self sufficiently is an admirable and commendable goal. But even if you are living truly “debt free”, you will still have property taxes to pay. That means that you will need at least a modest recession/depression proof revenue stream in the event that you lose your primary job. Let me underscore this point with a bit of Rawles family history: My family came out west by covered wagon in the 1850s. They soon after set up a sheep …