Foster Publishing, Coin & Stamp

The first thing people usually consider when buying gold is its price, but unfortunately, they are grabbing the wrong end of the stick. Price is of secondary importance. To explain why, one has to examine the reasons for buying and holding gold.

The motivation to buy gold is usually driven by the pursuit of some defensive financial strategy. For example, gold is a proven and time-tested inflation hedge, so people acquire gold if they believe inflation is likely to worsen. This defensive strategy aims to protect your purchasing power because with gold you hold sound money instead of some inflating national currency.

Another defensive motivation to acquire gold is its unique attribute of being money with no counterparty risk. This significance of this risk was highlighted by the bank-run at Northern Rock in the UK last year and more recently, Bear Stearns in the US. People withdrew their money from those banks because they recognized that their ‘money’ was only as good as the financial capability of those banks to make good on their promise. In contrast, gold is not dependent upon a promise because it is the only money that is a tangible asset, and not an I.O.U. of some financial institution.

Another reason people focus on the price of gold is because they consider it to be an investment, but it’s not. Investments generate rates of return because you put money at risk, for example, by lending it or buying equity in a company. If the investment is successful, you will generate a return, increasing your wealth. But gold doesn’t do this. Gold preserves wealth; it doesn’t increase it.

For example, one ounce of gold purchases approximately the same amount of crude oil today as it has at anytime over the past 60 years. Who would want an investment like that? Gold hasn’t generated any rate of return. It hasn’t given its holders the opportunity to buy more crude oil. But because you can still buy essentially the same amount of crude oil, an ounce of gold has done exceptionally well at protecting wealth by preserving purchasing power, which is what money is supposed to do.

Money is a temporary store of value where we place a portion of our wealth while we decide whether to spend, invest or save (hoard) it. So when we hoard gold, we are in fact saving money until that moment in time when we decide to spend or invest it, which brings me back to my basic point.....

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Congressman Ron Paul shares his thoughts on the recent housing bill that passed yesterday. He calls it the Mother of All Bailouts. Government is selling out tax payers by absorbing the bogus housing mortgage securities created intentionally by banks. The dollar will struggle from taking on these unwanted assets. Borrowing from the words of Congressman Paul, Tighten your belt and live within your means.

Darryl Robert Schoon gives Fiat Paper Money high acclaim in his recent writings on Kitco. Schoon is a forward thinking economist and author of the book Time of the Vulture: An Analysis of the Economic Crisis Facing the US and the World. Here is what Scoon had to say about my book:

Regarding fiat money, I cannot more highly recommend Ralph T. Foster’s Fiat Paper Money—The History And Evolution of our Currency, a well researched and fascinating account of fiat currencies throughout history. Once read, you will never again believe that governments and bankers can resist the temptation to gain by the debasement of currencies. Our present circumstances are a case in point.

Money is a most important matter and we should seek to understand its history for our future depends upon it.

Schoon's articles mentioning Fiat Paper Money:

Bankers Bullsh*it & Bullion
The Shell Game

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Learn the lessons history teaches us about hyperinflation and why fiat currency ultimately leads us down this path. Fiat Paper Money is essential to understanding the cause of today's economic problems.

Buy Now

$29 USD (price includes shipping to US only)
260+ pages, full glossary, bibliography, and index.

My book Fiat Paper Money: The History And Evolution of Our Currency was mentioned in the April 8th issue of John Williams' Shadow Government Statistics report. Williams comments on my preface and recommends the book on his further reading list.

Hyperinflation Special Report

What lies ahead will be extremely difficult and unhappy times for many. Ralph T Foster, in his "Fiat Paper Money" (see recommended further reading at the end of this issue), closes his book's preface with a particularly poignant quote from a 1933 interview of Friedrich Kessler, a law professor at Harvard and University of California Berkeley, who experienced the Weimar Republic hyperinflation:

"It was horrible. Horrible! Like lightening it struck. No one was prepared. You cannon imagine the rapidity with wich the whole thing happened. The shelves in the grocery stores were empty. You could buy nothing with your paper money."

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Learn the lessons history teaches us about hyperinflation and why fiat currency ultimately leads us down this path. Fiat Paper Money is essential to understanding the cause of today's economic problems.

Buy Now

$29 USD (price includes shipping to US only)
260+ pages, full glossary, bibliography, and index.

Talk starts at 4:45

Elizabeth Warren, Leo Gottlieb Professor of Law at Harvard University, was chosen to be the 2007 speaker for the Thomas Jefferson Memorial Lecture series at UC Berkeley. She fears America is moving from a three class society to a two class society. She points out:

• Men today make $800 less average income than their fathers made in the 1970's.
• Savings as a percentage of personal disposable income has gone from 11% to negative in the same time period.
• Food, Clothing and Car prices all went down.
• Yet the median family spends 76% more on a mortgage compared to 30 years ago.
• A family who has employer sponsored health insurance pays 74% more than a generation ago.
• Since the late 1990's, more children live in homes that file for bankruptcy than live in homes that file for divorce.
  

All numbers have been adjusted for inflation. Take your time with this video. It's good.