Your friends and mine are back with another fun and helpful post. Given the relative quiet of the day, I thought this excellent work would be a good distraction from the endless drumbeat of war headlines.
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STACKING STYLES OF THE RICH AND NOT SO FAMOUS
THE FUNDAMENTAL QUESTIONS
FROM RENOZEP AND AGXIIK
Why would anyone go the expense and trouble of buying and storing physical gold and/or silver? Once you’ve answered this question for yourself, as most of us here on TFMR already have, (and often had to endure the derisive snorts of friends and relatives) you set about building your stack. People who stack are in very good company. You may not know any billionaires (except Sprott) or the president of a Central Bank (get a dog in that case) but you're in the company of giants when buying gold. Just don't get trampled as the elephants run to the gold window buying color hand over trunk.
Governments large and small now count their gold purchases in multi-ton amounts. Central banks buy gold because it's a key asset for the bank. Gold certainly contributes to a country's well being. When Thailand, Uzbekistan and Brazil bought from 1-3 tons of gold recently you knew something was up. Uzbekistan just doubled down and bought 8.7 tons in August 2023, just behind Turkey at 14.7 tons. 77 tons of Midas's fave were snorkeled up in August 2023 with 277 tons going into the vaults for the last 3 months.
Yes, I'm painfully aware that gold's been monkey hammered down to $1,848 as of October 9, 2023 but that's a bargain basement prices for those who sport 10 figure check books. Or central banks who simply print a couple billion in inflation creating fiat to buy gold.
Banks stack gold because it's now a First Tier asset that makes their balance sheet stronger. High net worth people, hedge funds, family offices and private equity firms are buying as much gold as they can find because they know the financial firestorm that's coming is real and want real money, not paper promises. Average Joe and Jane know at an almost DNA level that it's a good idea to stack gold when they can afford it.
'With gold you have money; without gold you have a problem' according to Dave Kranzler, head of Investment Research Dynamics and publisher of The Mining Stock Journal and the Short Seller's Journal. Investmentresearchdynamics.com What's the harm in having a few American Gold Eagles or other gold coins. You might even want to put part of your retirement funds in a Precious Metals Self Directed IRA. I use SD Bullion sdbullion.com and the SD Depository for mine. store[at]sddepository[dot]com
The other 'precious' metal that's very stackable is silver. Yes, you need a bigger shovel to plant it in the ground but look at the bright side; you have your silver and some exercise to boot . The term 'precious' is used loosely because silver's a commodity; an industrial and commercial metal. It's closely tied to the price of oil as well. If you follow Steve St. Angelo of the srsroccoreport.com, you know he consistently ties precious metals and energy in a way showing the linkage in these two commodities.
That doesn't diminish the fact that silver's been used for 3 millennium as one of the most common forms of money. Until 1965 Americans used silver coins such as dimes, quarters, half dollars and silver dollars as money, spending silver on everything from a cuppa joe and a nosh, the morning newspaper or a tank of gas.
There's nothing said yet that convinces me owning gold and silver is anything less than a smart, prudent step to a well balanced portfolio. In a re-set selected components of your stack will often need to be converted into dollars to pay the bills, buy groceries or pay the rent. If possible, work out prior arrangements with those who also value real money as a form of payment should the system go FUBAR and we're back to barter. Until then it's one heck of a good insurance policy in spite of price fluctuation. If you disagree that it's good insurance check on inflation-adjusted price of your home and your auto policy premiums. Talk about sticker shock. And the worst part of that is you're forced to pay for the insurance companies mistakes, lack of investment return and all the bad drivers they insured.
Today the good news is silver is well priced, even low priced given the price air pockets of the last month or so. The silver miners are about at break even all in sustained costs when compared to $20-22 silver so you could say you're getting the most valuable industrial metal in the world at a wholesale price.
When compared to other commodities it's readily available with nominal premiums over spot price. You'll get a bigger bang for your buck when you buy silver and, if you're like many stackers, you know that supply shortages, high demand and the enormous utility of silver makes it a metal who's time has come. Trading your gold for silver given the gold to silver ratio is approaching 90 to 1 makes sense for some of us too.
The Crafting of a Stack is a Very Individual Thing
The decisions one makes when crafting a stack are not inconsequential because you are engaging in a 'buy and hold' strategy. If not wisely crafted and stored, in a SHTF scenario your stack could become an albatross and not your ace in the hole. Be sure you have enough cash to handle immediate overhead because it's painful to be forced to sell silver at low prices when you need cash.
Visit your local coin store. Get to know them as they can represent a conduit for buying or selling part of your stack should the need arise. Or, if available supply dries up and you want to buy, you may get preferential treatment as regular customer. The same can be said for a meet and greet with people at a farmers market or local meat vendor. Discretely ask if they would take junk bullion or generic silver rounds in trade. These people are close to the earth and thus have a better grasp of what's going on in the country today.
Think long term and plan wisely. Don't run out and buy that stack in one swelled foop. Be patient, wait for the “dips”. Buy incrementally, slowly and strategically with free cash flow. Don't use capital that's been assigned to more pressing obligations. Spending the kids college tuition or your rent payment on stacking might not be the best plan either, particularly if you want peace in the family.
It must be cash that can be used specifically for stacking without using debt to get the cash. Physical gold and silver , held in your direct possession, have zero counter party risk. That means there are neither prior claims to it nor any security interests in your stack. It's one of the few things you can buy that has no income, property, excise or possessory taxes on the physical metals. What's even more exciting is there are few, if any, records of your ownership. You're just Blackbeard the Pirate in civilian clothes, knowing your 'loot' is safely hidden from public view using OPSEC as the word of the day when buying.
TWO EXTREMES IN STACKING ARE NOTED
Some simply go for the most weight for the dollar. From 1000 oz bars to generic bars and coins of various weights, some go for the lowest premium possible. A few people we know took the Maharajah approach, such as buying your own weight in silver. If that's the case you might just be good to go. Being a Fat Basturd, it took me a bit to hit that mark but even elephants are afraid to tote my stack today.
In thinking you have to somewhat discount your future liquidity and potential confiscation risk remember this. Whether you own lots of properties, businesses or other tangible assets and possessions or lots precious metals, you are committed. This might be comforting to some, knowing their financial security is assured.
For those who might still be a bit unsure when accumulating precious metals, that level of comfort will come with time. I speak from 12 years in this market and know with a certainty that this will happen.
On the other side of the coin are the folks who value the rare and the beautiful. They pay large premiums to get “art” silver or gold pieces with Certificates of Authenticity, serial numbers and low mintages. Whether these people are stackers or collectors is a question. Perhaps both? Confiscation risk and future barter-ability are usually not a concern.
Another strategy: There are those who only want “Pre-1933” US gold coins. Those are the coins dated before Franklin D. Roosevelt, The Gilded Impaler, attempted to confiscate all gold from Americans. It is true that these coins are very liquid and may be less likely to be a target for confiscation since they are a bona fide “collectible.” This seems reasonable if someone was concerned about the security of their stack of 100 St Gaudens Double Eagles, Indian head gold coins and the like. But remember that history shows that all governments, having printed themselves into a hyperinflationary inferno, resort to FORCE in one form or another. Relying on historical precedence seems a flimsy shield.
Before the Battle of Termopylae in 480BC, when Xerces demanded the Spartans surrender their weapons, the famous defiant response was, ”MOLON LABE” meaning “Come and Take Them.”
This wouldn't be complete without a few links.