Category: Economics & Investing

The Precious Metals Bull Charges Onward

Instability in Pakistan, $100 per barrel crude oil, declining US manufacturing, and shaky Asian markets have all worked together to push the US dollar down, and precious metals upward. You may have noticed that the intra-day spot price of gold set an all time high on Wednesday, spiking briefly to $861 per ounce. Meanwhile, spot silver spiked to $15.27 per ounce. Although there may be some profit-taking in the next few weeks, I stand by my assertion that the precious metals are in a primary bull market that will carry on for several more years. Amid all this good news …


Letter Re: Peter Schiff’s Commentary–“Not Your Father’s Deflation”

Greetings! Here’s some more ‘great’ news [from Peter Schiff, by way of Kitco.com] for the coming economic crash. Thanks to ‘fiat currency,’ this [nascent] economic disaster won’t be nearly as “mild” as the Great Depression, because consumer prices will rise, and, our worthless money will de value at the same time! At least in the 30’s, the gold standard that backed the US dollar, made it hold value – even if there were fewer in circulation. Ditto silver & gold coins, that were still worth something (I found your blog late, and got started late, but I’m buying junk silver …


Letter Re: Cashing in on Scrap Copper, Brass, and Aluminum

Dear Jim, I am a daily reader of your blog. With all the discussion about gold and silver value I thought it might be prudent to bring up the value of other metals. I am a Master Plumber and I make a small fortune by recycling old copper pipe, brass fittings, valves, and faucets. Number 1 copper is up to $2.75 a pound. Four years ago it was $1.50. Yellow brass is $1.60 a pound. It was only 60 cents four years ago. An old water heater can get you $5.00. I know people that save aluminum cans and take …


Two Letters Re: Wider Implications of the Credit Crunch

Sir, I read your piece on the credit crunch, and believe it or not, it gets worse. Morgan Stanley not only took a $9.4 billion dollar hit, they shored up their books by getting a $5 billion dollar infusion of capital from the Chinese! They received a 9.9% share of the company in return. The same Chinese fund has also propped up the Blackstone Group, a private equities firm. – Tim R. Mr. Rawles: I don’t understand what all this credit and financial news means to us poor folks who don’t have any investments to lose. I have a tiny …


Wider Implications of the Credit Crunch

The news on the financial front has gone from bad to worse. Eric S. sent us this: ECB lends $500 Billion to lower rates, and Stephen in Iraq found this article: Fed Loans Banks [Another] $20 Billion. And if that weren’t enough, K.L. in Alaska sent us this: ACA Capital Holdings Inc. was just de-listed by the New York Stock Exchange. K.L.”s comment was blunt: “[ACA Capital Holdings] is essentially bankrupt. It is one of the insurers of the financial instruments such as municipal bonds, hedge funds and CDOs that have been infected by toxic mortgages. These funds are becoming …


Four Letters Re: Coping With Inflation–Some Strategies for Investing, Bartering, Dickering, and Survival

Jim: Great article. You say you have a stock of spices you bought in the 1980s, and this saves you money. As someone who gets a lot of pleasure from good food, I would caution that most spices lose much of their flavor in a short time, certainly within a few years, especially for typical herbs and powdered spices stored in jars as bought in supermarkets. Yours may be specially packed or stored, or selected long-life types. But for most people, as advised in the “Rawles Gets You Ready” preparedness course, buying in moderate bulk makes more sense. A mail-order …


Letter Re: Credit Crisis Attracts Carpetbaggers from Europe

Jim, In your novel “Patriots” the UN and Europe’s storm troopers waited until [after] the collapse [to move in] but in reality they are not [waiting]. With foreign banks buying (or should I say trying to buy) US banks and larger euro banks trying to buy the sub prime loans from several sources and now they are trying to make us a new sweat shop because of our falling dollar. They are gobbling up all of the defaulting residential and commercial property that they can, to a the average person that looks at it they are helping, but no there …


Coping With Inflation–Some Strategies for Investing, Bartering, Dickering, and Survival

Statistics released by the Federal government claim that the current inflation rate is 4.3 percent. That is utter hogwash. Their statistics cunningly omit “volatile” food and energy prices. The statisticians admit that energy costs rose by more than 21% since last December. They also admit that Finished Goods rose 7.2%, and “Materials for Manufacturing” rose a whopping 42% , with a 8.7% jump in just the month of November. When commodities rise this quickly, it is apparent that something is seriously out of whack. Meanwhile, the buying power of the US Dollar is falling versus most other currencies. Not surprisingly, …


Two Letters Re: Storing Nails–Crucial for Preparedness

Jim: [You had mentioned in yesterday’s post: “…one of my unfulfilled quests in life has been to find a small hardware store that is going out of business and getting to ask the owner: “How much for all of your fasteners?” (Hopefully, at or below their scrap metal value.) That would be quite a coup.”] FYI, never be shy! Several years ago the local Scotty’s [hardware chain store] was going out of business; after many weeks of slowly reducing the prices.On the final weekend I approached the “soon to be unemployed” manager and offered to buy all the remaining large …


Letter Re: Investigating Your Bank’s Level of Derivatives Exposure

Dear James With all of the talk about derivatives blow-ups, I decided to do some research on my bank, as I am concerned about the cash that I have in my personal account, as well as the cash that I use for my business. I first found this Treasury Department PDF and down around page 22, it lists the top 25 banks in the U.S., their assets and their derivatives exposure. I found that my bank is on the top 25 and has a fairly high exposure to derivatives, but nothing like the top 5. At that point, I decided …


Letter Re: Advice in Investing in a Belt-Fed Semi-Auto 7.62mm NATO

Mr. Rawles: I am interested in diversifying out of the dollar and was thinking of buying a belt-fed semi auto [as a “tangible” investment.] (I already have the rest of my gear, guns, and food storage well squared away.) Since 7.62 [mm NATO military surplus ammunition] is less expensive than [commercially loaded] .308 [Winchester], can you recommend a belt fed 7.62 semiautomatic? Any that you would avoid? Thanks! – S. JWR Replies: I would recommend buying a semiauto-only Browning Model 1919A4, since they have legendary “bomb proof” robustness, great versatility in mounting, and broad chambering convertability. I recommend that you …


Preparedness While on Business Travel–What to Pack, by LP

If you’re like me, there are times when you have to leave almost all your preparedness stuff behind as you journey by air to strange, far-off places on behalf of your employer. No access to your well-stocked SUV. You are alone, and home is hundreds if not thousands of miles away. But disaster will not be consulting your personal travel itinerary before it strikes. How best should you prepare? Let’s first discuss the objective, as it determines the approach. For most of us, we leave family, friends, and a (more-or-less) well-stocked homestead behind. This means Your primary objective is to …


Letter Re: Electronic “Cash” in the Event of a Banking Emergency?

Jim, What if the banks were closed for a Bank Holiday by the President, for let’s say one week. Question: Could one still use their credit card? Or is the system intertwined? Keep up the great work you do and service you provide the world. – David V JWR Replies: In the event of a national banking crisis and bank “holiday”, I predict that all bank doors will be closed and that every form of electronic money will be inoperative (ATMs, debit cards, credit cards, et cetera.) You might be able to write checks at some local businesses, but don’t …


Off the Record Comments from a Saudi Prince: Possible Collapse of the US Dollar

A big red flag went up on Saturday, when a “must read” article was published on the web site of The Business (a British international business news magazine): Saudi minister warns of dollar collapse. I loved the bit about the inadvertently open microphone. There is something about “off the record” comments about a potential US Dollar collapse that is strangely reminiscent. (I just can’t quite place it…) Meanwhile, our friend Stephen in Iraq pointed out this article signaling trouble ahead: US inflation reaches 14-month high. The economic pendulum is definitely starting to swing more violently. I predict that things will …


Mass Inflation Ahead–Save Your Nickels!

I’ve often mused about how fun it would be to have a time machine. I would travel back to the early 1960s, and go on a pre-inflation shopping spree. In that era, most used cars were less than $800, and a new-in-the box Colt .45 Automatic sold for $60. In particular, it would be great to go back and get a huge pile of rolls of then-circulating US silver dimes, quarters, and half dollars at face value. (With silver presently around $15.50 per ounce, the US 90% silver (1964 and earlier) coinage is selling wholesale at 11 times face value–that …