If I didn’t own physical silver and gold the term “investing” could be worrisome. Only a weekend has passed since confetti laden hopefuls celebrated “better than expected” unemployment numbers but few, maybe none, mentioned the amount of “investing” required to achieve improvement.  I have mentioned several times how silver and gold are now lockstep with rising debt (debt ceiling graph proves this as fact) offering only the 1% invested in PM (precious metals) protection from out of control spending, sorry investing.  If you’re one of the many new readers visiting our site please don’t underestimate the protective measures of PM. Profiting is only a byproduct of gold or silver following a distant second to preservation, preservation while the rest of the world invests its way into our generation’s depression.

The term “investing” actually refers to supporting an economy, lifestyle, and society unsupportable, please don’t confuse it with a traditional sense.  The goal is to propel those in power to a higher level or new term of empowerment while the rest pay for it with higher taxes or inflation.  My goal for The Prospector Site is to accurately describe the forces most likely to send your precious metal values skyward, investing is at the list top.  Any business leader realizes investing alone is not evil; in fact, it’s a necessary part of growth and development within all businesses.  But what America has resorted to is not investing; it’s nothing close to the traditional term.  Private enterprises invest by implementing well thought plans capitalizing on innovation and timing.  This type of organized planning reduces risk and exposure all while providing the best odds for future prosperity.  This is completely opposite of today’s governmental “investing” term, do you agree?

It shocks me how easily the American people are now distracted while those in power toss what history will describe as an investing Hail Mary, but with less odds.  This only proves that the line between optimism and denial is nearly washed away leaving only those skeptical to question investing trillions into programs and too big to fails, like this is our best odds for prosperity.  Investing is beginning to look like the rich getting richer while the masses struggle to stay employed, regardless of new numbers. Make no mistake; this is only good news to those invested in gold, silver, and few other assets.

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We can look no further than Freddie and Fannie as investing in leaking ships all while not one person in power draws a limitation line in the sand.  Once private companies, now avenues necessary to invest in America by backstopping a housing industry still in decline and desperately searching for bottom (far more wealth is lost in real estate than will ever be profited in PM).  There is absolutely zero chance of supporting housing values built prematurely from years of easy credit and greed.  Why dump, sorry invest, billions, soon to be trillions, into a housing industry so worthy of correction.  We must realize that the ill effects of trying to fix housing are far more dangerous than letting housing correct freely without manipulation, sorry investing.

Housing is far from the only example of investing in industries desperately necessary to correct, or purge, themselves into free market worth. Wall Street now relies as much on government stimulus as innovation. Again, the ill effects of supporting something so large are far more damaging than allowing dying industries to, well, die.  Real innovation will grow from the ashes but have little opportunity as long as we continue to throw good currency after bad industries.  Again, no one in power is willing to draw a monetary line in the sand regarding too big to fails! This is the point where most readers should ask why we allow leaders to continue this reckless direction. Remember, investing more debt infested capital doesn’t have to work; it only has to convince the majority as successful.  Most Americans honestly feel investing policies are resurrecting our economy.  Why? Because many still believe leadership has their best interest at heart. A tree is known by its fruit, a good man by his deeds. Gold and silver holders know this as anything but real recovery each year metal values increase.

Below is an article describing how Stockton, California has now slipped into a depressed level of economic stability. It can be read here and compliments of the LA Times. No amount of investing will sustain cities like Stockton. Stockton is a perfect example of a community soon to swallow mistakes and then patiently wait for correction to breed new free market innovation. Below are a few highlights from “Stockton Residents Watch Their Port City Slip Away”.

Within the next three months, Stockton could become the nation’s largest city to file for protection from creditors under U.S. bankruptcy code. Using a new California law, the City Council is trying to slow or stop the bust by entering mediation with creditors, including public employee unions. In the meantime, the Central Valley port city of 300,000 has suspended several bond payments and will not cash out vacation or sick time for employees who leave.

PROSPECTOR: Why or how did Stockton reach such a point of economic devastation? Please read below.

The city had a vision. Like San Antonio or Baltimore, it would transform its rough waterfront into the city’s shining jewel. The real estate market was hot and credit was easy. Up went a theater complex, a high-rise hotel, a sports arena/convention center financed by city bonds, a marina and a walkway.

PROSPECTOR: Stockton “invested” by borrowing money to develop a waterfront area financed by city bonds. Now their only hope is federal “investment” money to afford a style that shouldn’t have existed in the first place. No amount of “investing” can support something built on an era of limited wealth or from easy credit or from tax revenue derived from easy credit expansion.

“Everyone had taken money out against their houses,” Koster said. “Everyone had dough and they were spending it.”

As taxes from sales, property, business licenses and utilities dropped, so did money for day-to-day operations such as police, fire, parks and libraries.

PROSPECTOR: I can not find an accurate measure of economic depression but I’m guessing we can agree a situation without police, fire, parks and libraries is on the directional path of depression. Please notice the quote above, “Everyone had dough and they were spending it”.

The landlord already cut the monthly rent from $4,750 to $2,750. Koster said he has thought about asking for another break, but he doesn’t see how the owner would make his mortgage. The owner bought the building for $600,000; it’s now valued at less than $200,000.

PROSPECTOR: This is the most sobering part of this LA Times article, no winners that I can see.  The landlord has cut rent by 50% and at risk of owning a vacant building now worth 1/3 compared to when he bought it, amazing.  This means his investment is worth 1/3, half the cashflow, and in jeopardy of owning a vacant building still in decline.  We must understand the ill effects of fixing, or investing, in cities like Stockton only postpones default and continues to grow deficits on a national level. Can you imagine the level of national debt necessary to bail out cities across this country? Each new day offers yet another city struggling to balance budget shortfall with yet another decline in tax revenue.




COMMENT:  Your post Building Silver Wealthis spot on. Just speaking from someone relatively new to silver (bought 500 oz but soon to buy more) it seems to me silver is more popular than gold.  It stands to reason silver will outperform gold if for no other reason than its popularity.  Love the site and look forward to each new post.

PROSPECTOR REPLY: Thanks, you are correct since 9 of 10 emails mention silver over gold.  Does this mean silver will out perform gold? No, not necessarily. Silver is hot today, especially in the US, because silver allows newbies to gently test the PM waters.  You said it yourself when you mentioned the word “popular” but this alone does not guarantee an asset as worthy over long term.  Sure silver has great monetary and industrial values but gold is now a worldwide currency.  I will caution to not overlook gold’s worldwide influence and stability, I personally own more gold than silver.  Having said that, welcome to our site and congrats on your first silver purchase, well done. Now, don’t forget about gold too.

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