Posts Tagged ‘debt ceiling’



Have you stopped to ask yourself why you own PM (precious metals)? When asked twice last week my motivation behind founding TPS (The Prospector Site) and personally owning gold, I found the timing odd.  The first came from an interview request outside the U.S. where the host asked if I was a “prepper” or “survivalist”.  I understand the question, and it’s fair, but find it interesting with all the questions reasonable to ask the first one is about surviving. My goal is to not only survive but thrive. For the record, here is my view of prepping straight out of my recently released book introduction.

The information you are about to receive does not come from a fringe “doomsday” point of view. I own gold and silver because I understand them as the most reliable transport of wealth in an age of printed money. I’m not thumping away on some keyboard in a cave with a long extension cord. I don’t live off the grid (but understand why some folks now do). From “Why Silver & Gold Will Go Higher”.

Our society is so far removed from a realistic perspective it’s almost scary. They still view silver and gold as risky but accept raising our debt ceiling as responsible to pay past obligations. The masses view those “preparing” as alarmist while justifying $2 to $3 billion lost by one of the largest banks on the planet.

Is it easier to discredit individuals seeking an independent lifestyle than admit four decades of fiat spending is proving unsustainable? Maybe this is why my second “fear” encounter of last week accused me of capitalizing from fear. This leads me to set the record straight, for all of us. I don’t own silver and gold because I’m afraid, I own PM because I’m preparing for a future full of unknowns caused by decades of greed and monetary mismanagement.

I realize many of my readers are what the mainstream classifies as “preppers” and often victims of ridicule without reason. But how is preparing for a time of uncertainty ridiculous? Is food storage, alternative power sources, a proactive plan of defense, home first-aid, and self-reliance anything but prudent regardless of good times or bad?

Physical silver and gold serve two purposes. One, preserves wealth in times of economic calamity while offering wealth building opportunity. Two, provides another layer of independence (along with the list above) in a time of overreaching government, fiat correction, class warfare and Wall Street manipulation. Fear might kick-start this motor but long-term motivation comes from a realistic revelation of what’s true compared to what is unsustainable.

Folks, gold will go “mainstream” but probably not for the same reasons you own it. The same ones casting ridicule today will pay multiple times the price of your silver/gold.

News Worthy:

GOLD NEWS:  World Gold Council: Q1 2012 Demand Up 16% year-on-year.

The World Gold Council are out with their first quarter 2012 report. They report that whilst the tonnage amount of gold sold dipped 5% from Q1 2011 the US$ value of the gold sold was up some 16% from a year before.

The report highlights how investment demand is becoming more important than jewellery demand. Jewellery demand was down 6% from Q1 2011 at 519.8 tonnes. However investment demand was up 13% to 389.3 tonnes over the same time period. This is definitely worth the short read.

News Worthy:

US GLOBAL INVESTORS – GOLD: The World’s Friend for 5000 Years

Gold—A Reality Check
Investors have “defriended” gold recently in favor of the dollar, as Greek and French voters rejected austerity measures. Greeks have been responding to their escalating debt issues for a while by steadily pulling money from overnight deposits. I often say, money goes where it is best treated, and these deposits will need to find a safe haven.

In the end, I believe governments in Europe lack the courage to be fiscally disciplined. Earlier this week, I told Aaron Task and Henry Blodget on The Daily Ticker that when push comes to shove, Europe will likely continue to print money. This should be positive for gold. Read the rest right here.

News Worthy

CNN- Grow Up, Congress: Make a Deal on Debt

Confronted with record-low approval ratings, Congress seems determined to drive them down even further by planning another game of chicken with the debt ceiling this fall.

The last time they tried this game, the United States lost its Triple-A credit rating as Standard & Poor’s opined that “the political brinksmanship of recent months highlights what we see as America’s governance and policy making becoming less stable, less effective and less predictable.”

Talk about a zero percent learning curve. As you know, the definition of insanity is doing the same thing over and over again and expecting a different result. Well, this asylum is being run by the inmates.

House Speaker John Boehner told CNN’s Erin Burnett at the Peterson Foundation Fiscal Summit that “allowing the debt ceiling to go up without addressing our fiscal challenge would be the most irresponsible thing I could do.” In other words, there’s a showdown waiting on the other side of this election.

That’s not just the debt ceiling he’s talking about. That’s the full faith and credit of our country. That’s our economy. That’s your bottom line. If you can stand it, read more here.


COMMENT: I was happy to read your Ebook for you.  I found it easy to understand.  Your presentation of the PM market was very clear for someone who has no previous experience in this area.  I still learn something new about PM every day.

You might also point out any balanced portfolio should have PM in it.  PM people normally refer to this as ‘insurance’.  The recommended percentage is usually around 5% of the total portfolio amount.

Also, most people have no idea (I didn’t until recently) that one can own physical PM.  As you mentioned in your comments, the topic can be easily overwhelming, so I think your book gives a good jumping off point for the novice without being too detailed or boring.

As I watch the news from Greece, one can see how a ‘run on the bank’ works.  With PM, there is no need to panic as you have your wealth where you can physically put your hands on it.  No Federal Reserve Notes to worry about.  I guess this is one reason why bankers poo poo the idea of you having physical PM!
If the Central Bankers in China, India, Russia and Japan buy Gold for their reserves, I think it is a very good idea for me to follow along……

PROSPECTOR REPLY: Thanks for reading/commenting. It’s funny you mention not knowing a person can own physical gold since this is more true than folks can imagine. Paper ownership is looking less wise with each passing day since I’m convinced paper manipulation is hampering physical values. Yes, Central Bankers are buying record amounts of physical and this should be a sign for all of us. Thanks again.

QUESTION: Love TPS and read each new post, which brings me to ask my question. If PM prices are currently unstable then when why buy physical silver now? Would I be better off waiting for prices to decline more?

PROSPECTOR REPLY: Thanks for reading, and the great question (s). Yes, you can wait if this is what you’re comfortable doing. But I remind you and others too, that timing a bottom is nearly impossible but at the same time buying a good dip allows us to own the most metal for our cash. My advice is to keep your $ liquid and ready to strike at a moment’s notice. I will pass along good offers as bullion dealers pass them to me.

For what it’s worth, some folks find it easiest to buy, store, and then move along with life without constantly watching day-to-day metal fluctuations. Again, it’s your choice, your money too, so watch the silver market closely and then pull the trigger at will. Thanks for the question.


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GOLD & SILVER, GOLD AND MONEY   No comments yet

Here at The Prospector Site we take a non-typical approach to PM (precious metals). Our approach goes beyond asking if silver or gold will rise, our approach promotes an understanding of what influences PM to rise. Today’s news offers a perfect example of such an influence and I want to share it with our readers. I’ll try to keep it short, and simple, since we have lengthy comments and questions.

In typical fashion, I want to pull a news headline as one of many examples why PM will increase. If you’re one of the millions watching PM from the bleachers please pay close attention.

CNBC: Student Loans: The Next Bailout? ($1 trillion & rising)

Here’s what we do know about student loan debt: it’s roughly $1 trillion in size, greater than either auto or credit-card debt and second only to mortgage debt in the U.S.

Borrowers in their 30s today owe $28,500, on average. The debt burden has soared just as — and partly because — the recession hit, so younger graduates carrying the highest balances are hit with the double whammy of a weak job market (that still isn’t showing any sign of rapid improvement).

Not surprisingly, young, heavily indebted grads are calling for forgiveness in full or in part of their student loan burdens. Petitions on advocacy website Change.org include calls for federal student loan interest rates to be capped at 3 percent or eliminated altogether. (Indeed, President Obama is currently among those urging Congress not to allow the interest rate on federally subsidized Stafford loans, which are aimed at low — and middle-class borrowers, to double to 6.8 percent on July 1, matching the rate for unsubsidized loans.)

Levying an “education tax,” making college free and assigning students to institutions based on a lottery system? Abolishing “college” altogether for more specialized trade institutions instead, while at the same time requiring a “gap year” of liberal arts prior to entry? Offering high-school grads the choice between student loans or business loans to fund new ventures? These all seem ridiculous, but then so too is our current state of affairs. Read more here.

PROSPECTOR: I am willing to bet a bullion ounce of gold that student loans join the bailout list! My interest is to not argue bailouts or “education tax”, my opinion only relates to how this affects your hard-earned stash of silver and gold.

Let’s answer why this is so very significant now. This bailout is eminent, and planned for. The US government took over student loans early 2011 knowing this insurmountable debt wave is crashing.  The question if it’s politically motivated is one I’ll pass to you. Again, my motivation goes no further than a PM observation.

Let’s look at how such a bailout affects silver and gold since I see two major influences. We know for sure that a rising national debt also raises gold prices (both are now in lockstep, see chart below). A trillion plus of student loan debt will push our current debt ceiling beyond congressional approval. This means more room necessary for student loan debt.

Secondly, the trial balloons are afloat for all to see. College education is the next health care type government absorption, I see no way politicians will let education sink. This means more taxation for those willing to get out of bed and work, how can it not? The question is how will more taxation affect PM?

Political forces realize taxation increases must accompany creating more national debt (deficit borrowing). But economists know too much taxation stimulates an internal urge to protect individual wealth. This is why good folks in Europe are using silver and gold as savings type accounts. This trickle up taxation (inflation) will ultimately apply pressure to a very limited supply of physical silver and gold.

Not one realistic mind expects government to spend within budget, they never have. A “coming soon” taxpayer-funded fuel for education will certainly be no different. Please add student loan bailouts and eventual government sponsored education to the growing list pushing silver & gold higher.

If you have an interest in WHY SILVER & GOLD WILL GO HIGHER please read closely. I’M LOOKING FOR A FEW READERS WILLING TO READ THE BOOK AND THEN COMMENT/REVIEW (your identity protected, of course). Contact me here if interested or if you have questions, thanks for those who have responded.


COMMENT: I just happened to stumble across your site today and, since I recently decided to take the plunge into buying physical PMs, I’m finding your site very informative and helpful.

I must say, that the global economy has recently become a very scary place for me.  Until the past few weeks, I hadn’t even been aware that the situation was so dire.

However, I happened to stumble across an article about how crazy insane our country’s debt was and it propelled me to start investigating how such a thing was possible.

In short, I’ve been educating myself over the past few weeks about fiat currency, inflation and monetizing our debt.  The information I’ve gathered has ranged from wildly optimistic that our economy is in recovery to doom and gloom.

I’m trying not to let emotion and hysteria overwhelm me.  Fortunately, I had enough put by to pay off all my debt, including my house and vehicle and still have money to invest in.  At this point, I’m highly uncertain about getting into the market but have started to purchase physical gold and silver.

I haven’t purchased very much yet but this site makes me feel a little better that I have taken a good step in the right direction in protecting myself in, what seems to me, a very unstable and scary world.

I appreciate you for taking the time to give sound advice to novices, such as myself, and will make sure to visit your site everyday and keep on educating myself.

Thanks so much for what you do.

PROSPECTOR: Thank you for the nice email and taking the time to comment.  In my opinion, you are the new precious metal face. You’re no longer accepting more borrowing fixes a debt problem, no longer willing to believe the nonsensical. Congrats to you. I love your point to “keep on educating myself” since this is the key to understanding and then entrusting PM.

Each reader holds the one piece to the puzzle layered in emotion. Although I’m confident PM will rise, the one missing link is the emotional trigger each of you holds. You, by your comment, have reached the triggering point and now ready to investigate a nontraditional monetary approach. Timing this revelation is impossible.

You have come a long way in just a few weeks so keep up the good work.


I want to hold the other comments and questions until Monday to make room for this interesting gold related article, sorry. It is definitely worth reading especially for those interested in rising metal prices.

Harvey Organ: Get Physical Gold & Silver!

CHRIS MARTENSON.COM: Harvey Organ has been analyzing the bullion markets closely for decades. The quality and accuracy of his work is respected enough to have earned him an invitation to testify before the CFTC on position limits for precious metals back in 2010

These guys would go around to the mining companies and say, “Listen, I’m going to pay you for your gold in the ground and I will sell it. You just pay me as you bring it out.” So that was cheap financing to the miners. Barrick, the biggest mining company of them all, went in on this and it financed a lot of Nevada projects.

So right now, people are going to say: how high can it go? And I’m going to tell you: you are going to go to sleep on Thursday night and gold may be $1,670. And then you wake up the next day and it’s going to be a banking holiday. And gold will be $3,000 bid, no offer. No offer — and it will be a banking holiday. Because there will be a failure to deliver.

You’ve got to have physical coins or bars. If all you have is a piece of paper — that’s all it is!  It will just blow up in smoke. Read more here.

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The news wire is cherry red with media chatter of default and credit downgrade.  I understand the thought of yet another crisis captivating America but for those willing to look deeper this is a long shot at best.  This is less about default and more about entitlement, reelection, and fiscal mismanagement.  There is one thing separating us from other debt ridden countries and today we look at what it is and how it affects your stash of gold and silver.

Washington is beginning to look like a Chris Angel trick show gone bad. We don’t call it printing money because technically it is not printed.  But something happened recently, without much fanfare I might add, with America taking over as the number one holder of our own debt.  Most folks believe this honor goes to China but in fact we now own more of our own debt than anyone else.  How long do you think a natural economy can sustain itself working both sides of free economics?

Soon the debt ceiling will be old news and new money will flow created from nothing and backed by less. As we pointed out yesterday most don’t understand the ill effects of debased dollars and more don’t care as long as their world moves along.  But the media needs a crisis and many float around these days but I can’t help but wonder when gold bubble talk will heighten?  The media are predictable but not even waves of gold bubble talk can squelch the future of your gold or silver.  It’s worth repeating that gold will continue its course as long as fiscal mismanagement continues its destructive course.

At post time one ounce physical gold will cost a buyer over $1700 but with so much debt ceiling talk few pay attention.  The real story is what $1700 gold is trying to tell us. Expect more of the same regardless of debt ceiling compromise.  Thanks for reading The Prospector Site.


SACRAMENTO CITY NEWS: Improving Mexican economy draws undocumented immigrants home from California

“It’s now easier to buy homes on credit, find a job and access higher education in Mexico,” Sacramento’s Mexican consul general, Carlos González Gutiérrez, said Wednesday. “We have become a middle-class country.”

“They’re going back home because they can’t get medical help or government assistance anymore,” Frausto said, “And when it’s getting so difficult for them to find a job without proper documentation, it’s pushing them away.”  Read it here.


THE STREET:  Gold Prices Surge on Sour GDP Data

Jeff Clark, Casey’s senior precious metals analyst, said that gold could see a 5% correction if a debt plan is reached in Washington, which would bring prices down to $1,525 an ounce.

“The gold price could easily correct once a debt deal is reached,” said Clark. “Many analysts are attributing the current run-up [in the gold price] to the debt ceiling talk impasse,” so if a deal is reached, then a lot of the impetus for higher prices will disappear.  Read it here.

PROSPECTOR:  Mr. Clark, along with other precious metal experts, feel any pull back will be temporary and the long term diagnosis for gold is bullish.


Philly Burbs:  Gold coins, worth $25,000, stolen from car

A New Britain Township resident reported that someone broke into his secured car between July 17 and 19 and stole about 14 gold U.S. coins valued between $25,000 and $30,000, said police. Police said the coins were $20 and $30 denominations. Authorities believe the person responsible for the theft knew the coins were in the car.

PROSPECTOR:  Not sure how safe a car is for storing coins but as values rise so will the temptation to steal.

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A confusing part of owning gold, or silver, is the premium physical holders pay over spot.  Before we answer let me say the cost to own physical metal is well worth it.  I expect the spread between spot and physical metal will grow as demand increases and supplies decrease.  Today we answer why physical gold carries a premium over spot prices.

As gold prices soar new gold investors are tempted to buy paper gold ( at spot ) over physical metal. The premium for physical gold bullion is around 5% today and my guess is the near future will demand larger premiums with more folks willing to pay whatever sellers demand.  One thing to realize is most experts believe there’s not enough physical gold to cover paper gold, not even close.  The thought of 74 other people owning the same paper gold certificate does not appeal to me.   Maybe paying over spot doesn’t sound so bad?

As gold prices increase so will exposure. With this exposure, demand will find those holding precious metal glad they paid a small premium to do so.  The last time gold went hyper, back in late 1979 early 1980, lines grew long from fear of inflation and uncertainty.  Our current economic challenges are far and away more volatile than 1980.


I don’t have a problem with paying over spot for physical gold but I do have an issue with selling gold back for spot.  Even as demand increases most online gold brokers pay 1% over spot when buying back gold but giving up 4% hardly seems fair.  Up until now brokers and coin shops felt buying back gold for spot or just over allowed for market fluctuation but as demand grows this shouldn’t be an issue.  My bet is brokers, coins shops, and pawn shops will eventually up the ante but at this time don’t expect more than 1% over spot unless selling to another investor.

The bottom line is paying 5% +- over spot to physically own gold is worth every penny.


MARKET WATCH:  Gold tallies nine-session gain of nearly $108

The U.S. debt ceiling crisis discussions “have begun to crystallize the thinking about what people have been told with respect to precious metals as an asset class and money alternative,” said Gillette.  Read it here.


ATLANTIC WIRE:  Gold Creeps Up and Up As Debt Ceiling Mess Continues

Investors trust gold more than politicians, it seems, as negotiations falter between the White House and Republicans on raising the federal debt ceiling before August 2. Gold hit a 40-year-old record as it gained value for the tenth straight session Friday, Reuters’ Frank Tang reports. People are putting their money in safe havens like precious metals and crude oil, and “Analysts forecast gold would extend its rally further based on its technical outlook, and one said it could reach an outlandish $5,000 an ounce should equity markets plunge,” Tang reports.

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As of post time an ounce of physical gold will cost around $1654 American Dollars and it’s still worth every cent.  Never before, at least not in our lifetime, has economic uncertainty stood so close to the edge of financial crisis.  As political leaders wrangle over approving more debt, more government, more programs, and more investments, gold stands strong at an all time high.  Today we witness gold spike 2011.


Today people across the globe will run out and buy physical gold like it’s a new Baskin Robins ice cream flavor. I’m not sure why the same folks didn’t buy when it was $75 per ounce less but human nature is to follow and follow is exactly what most will do.  The coolest part is even at $1654 physical gold is a bargain at least if you don’t own any.  I’m convinced gold will find a place in the commodity market, rest a bit, and then reset higher repeating this fashion over and over again.  With each new high more folks will flood new money into physical metal only compounding demand and cost.

But few will actually listen to what gold is trying to tell us in that massive debt (deficits) are strangling the neck of nearly every economy world-wide.  Just this week President Obama said if the debt ceiling isn’t lifted soon adverse reactions will occur.  He said mortgage rates, auto loans, and credit card rates will increase if the debt ceiling is not erased allowing for more borrowing. Am I the only one finding it odd our president has accepted the fact our economy must be debt based to move forward in a healthy fashion?  Will the economic wheel stop spinning if people on this earth actually live off what’s produced, earned, and grown?

So many ask if this is as high as gold will go not understanding as long as fiscal nonsense like above continues so will the price of gold and silver.  Debt, fear, and fiscal insanity are the fertilizers providing healthy nutrients supporting gold’s growth.  To misunderstand is to blindly invest.  To misunderstand is to blindly believe nonsense of recovery, hope, and prosperity.  Please take a hard look at gold, even at these prices, soon.  As always, thanks for reading The Prospector Site.


CBS NEWS:  Obama says he cannot guarantee Social Security checks will go out on August 3

I cannot guarantee that those checks go out on August 3rd if we haven’t resolved this issue. Because there may simply not be the money in the coffers to do it,” Mr. Obama said in an interview with CBS Evening News anchor Scott Pelley, according to excerpts released by CBS News.  Read more here.


CNN MONEY:  Gold strikes new high after Fed comments

The late-afternoon surge came after the minutes from the Federal Reserve’s June meeting said “a few members” of the bank’s Federal Open Market Committee said the bank “might have to consider providing additional monetary policy stimulus, especially if economic growth remained too slow to meaningfully reduce the unemployment rate in the medium run.”

“Even minor chatter about a third round of stimulus makes investors sell the dollar,” said Brian Dolan, chief currency strategist with Forex.com.  Read it here.

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GOLD & SILVER, GOLD AND MONEY   No comments yet

Wealth is a funny thing and the fact is most rich people are born that way.  Physical holders of gold are not born wealthy but if trends continue they certainly will be before it’s all over. Thanks for sticking with us for three parts ( this is unusual but we couldn’t fit it into one or two posts) and congrats for taking the time to fully understand importance of owning precious metal.  We have saved the best for last by proving how debt, even debt you aren’t personally liable, will spike metal to extraordinary highs.

Those who make a living selling gold only add confusion to those that don’t own gold. Majority of folks have no idea what a safe haven or intrinsic value mean or how gold can protect them.  Why should they?  For generations we’ve been told big government will take care of all our problems and the only thing asked in exchange is our support at the ballot box.  One needs to look no further on the debt debacle than power starved politicians and denial filled citizens.  There is no free lunch and never has been.  Life is about hard work and sacrifice and when someone fails they get up and try something else.

So many ask how high gold will go in dollars but the question to ask is how long will folks allow leaders to spend money we don’t have. Today debt makes up 40% of every dollar our government spends and most folks are so comfortable with this it never comes up in daily conversation.  Sure many act concerned about the ill effects of national debt but few take the time to look down the road seeing how this unsustainable lifestyle will affect them personally.  History paints us a picture of the end of our debt trail and for those unprotected it’s not pretty.

As you read this post politicians argue the debt ceiling, new taxes, and how much government spending should cut back.  Well let me help these guys out so they can enjoy the weekend with family.  A good start is to cut government spending 40% since this is how much of our budget is borrowed.  But politicians get (got) elected by promises and promises of cut backs and sacrifice are not popular.  If the majority don’t understand ill effects of debt why would they accept sacrifice?  Your nest egg of gold and silver will continue to grow until the majority of voters realize a life of debt is a life of uncertainty and reliance.  Only then will the value of your precious metal stabilize.


Majority of economists telling us what to expect in the future never saw the past coming. The ones that do understand how debased dollars spur inflation and rising gold value always forget one thing, emotion.  Economist, in theory, can predict mathematically what will happen “if” but they always leave out the fear factor.  Your gold and silver will react to inflation, really react to hyperinflation if this is the case, but another driving factor is old-fashioned fear driven demand.  When folks realize “fear” they historically have turned to precious metals.  Couple fear with natural inflation forces and the future could see days of 10% to 20%  spikes in gold and silver.

All above may sound crazy but let me say this before you formulate the opinion.  Never before has such a reserve currency, the U.S. Dollar, been as debased as right now.  Please take a hard look at hard money like gold and silver.  Thanks for reading The Prospector Site.


REAL CLEAR POLITICS:  Sen. Rubio: “We Don’t Need New Taxes, We Need New Taxpayers”

“And here’s the fact: the fact is it doesn’t solve the problem. First of all, if you taxed these people at 100 percent, basically next year you said, ‘Look, every penny you make next year the government’s going to take it from you,’ it still doesn’t solve the debt. Not only does that not solve the debt problem, but I looked at a host of other — a great publication that came out today from the Joint Economics Committee, our colleague Sen. DeMint chairs it. And it kind of outlines some of the tax increases being proposed by our colleagues in the Democratic Party and the president to solve the debt problem. And you add them all up, you add all of these things up — the jet airplanes, the oil companies, all of the other things they talk about — you put them all together in one big batch, and you know what it does? It basically deals with nine days and 23 hours worth of deficit spending.  Must read.


SMART MONEY:  Gold for Your IRA?

The Internal Revenue Code allows IRAs to own certain gold, silver and platinum coins, as well as gold, silver, platinum and palladium bullion that meet applicable fineness standards. For example, an IRA can own American Gold Eagle coins, Canadian Gold Maple Leaf coins, American Silver Eagle coins, American Platinum Eagle coins and gold and silver bars (bullion) that are 99.9% pure or better. Some well-known gold coins, including the South African Krugerrand, are off limits, as are bullion bars that are not sufficiently pure. The coins or bullion must be held by the IRA trustee rather than the IRA owner. In other words, you can’t have your IRA buy coins or bullion and stash them in your safe deposit box or bury them in your backyard. These tax rules apply equally to traditional IRAs, Roth IRAs, simplified employee pension (SEP) accounts and Simple-IRAs. No problems so far.  Read it here.

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History will someday tell a story of the greatest unarmed robbery of all time.  This same story will also tell a tale of 2% that had the foresight to look down the doomed path making financial adjustments before it was too late.  Today we start a three-part series on why debt will make gold holders rich.  My personal goal is not so much about wealth as it is independence.  Freedom to make decisions not based on desperation by what is right.  If you are new to precious metal investing let me say congrats and thanks for taking the time to read The Prospector Site.

As I write, as you read, politicians are embattled to see what it will take to raise our countries debt ceiling. The compromise will include new taxes, more government, and new “investments” by all of us. Do you know why it is imperative to raise the debt ceiling?  In one sentence I will answer what politicians will take months to argue.  The debt ceiling must raise to pay on interest only with more borrowed money. If you think this is sustainable please don’t buy any gold or silver.  In fact, your time will be better spent by navigating away from this website.

The ill effects of this debt will make physical gold holders wealthy but for all the wrong reasons.  I have been candid saying my dream is for gold to settle around $500 per ounce since this would show fiscal sanity returned to this great country and our dollar is once again valuable.  This is not happening anytime soon.

As we watch real estate tumble, jobs vanish, and our middle class slip into poverty many ask what will it take to get back to normal? What if I said normal was as abnormal as a Hollywood movie set made of store front facades with nothing behind the illusion but angled 2×4′s used to hold up something unreal.  Your neighbor making $50k per year shouldn’t have had a $400k mortgage, two car payments, boat payment, and $10k in credit card debt.  Yep this was great for the economy because new things were built, banks made loans, and car production was cranking but as we look closer it was all a facade.  Your neighbor should have actually lived in a 1200 square foot home, drove a moderate car, and saved the trips to the lake for shoreline picnics.  I hope you are not the neighbor I’m speaking of.

I want to tie this into what is happening with government spending (debt).  Most folks don’t realize significance of debt ceilings, bailouts, etc but what is happening is this.  Our government is stepping in, spending, on things you no longer can afford to.  They have replaced your side of consumer spending attempting to prop up the economic facade mentioned above.  Does this sound healthy to you?

So many ask what precious metal to buy and when not realizing these two things have little to do with the power of ownership.  As long as the debt train is rolling the only thing important is to own physical gold and silver to prosper.  Of course some metal types will prosper more and we have been open about what they are.  The doors of debt are blowing open and one by one folks will realize this life was not real, not normal, and not healthy.  Part of this revival will include the newly educated clinging to real assets like gold and silver.  This panic induced demand will propel a limited supply of precious metal to a point unthinkable.  Is it time you considered owning real money?


REAL CLEAR POLITICS:  Harry Reid Moves Forward With “Shared Sacrifice” Legislation

(b) Sense of the Senate – It is the sense of the Senate that any agreement to reduce the budget deficit should require that those earning $1,000,000 or more per year make a more meaningful contribution to the deficit reduction effort.  Watch it here.


SURVIVE THE CRISIS:  Debt Addiction Depression Destruction

“Modern economies were created by the collusion of bankers and government. The banks are now collapsing and only the governments are left. It’s like watching a two legged man trying to stand on his one remaining leg. How long will he remain upright and in what direction will he fall?”  Read it here.

PROSPECTOR:  The above article originally ran in 2009 but is as relevant today as then.


MARKET WATCH:  The next, worse financial crisis

Commentary: Ten reasons we are doomed to repeat 2008

The real economy remains in the tank. The second round of quantitative easing hasn’t done anything noticeable except lower the exchange rate. Unemployment is far, far higher than the official numbers will tell you (for example, even the Labor Department’s fine print admits that one middle-aged man in four lacks a full-time job — astonishing). Our current-account deficit is running at $120 billion a year (and hasn’t been in surplus since 1990). House prices are falling, not recovering. Real wages are stagnant. Yes, productivity is rising. But that, ironically, also helps keep down jobs.  Read it here.

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This may seem contradictory to everything we say at The Prospector Site but it needs to be said.  Our dream is for gold to decline but it will not anytime soon.  The quality of life we all could experience is much better with $500 gold than say $2500 plus gold.  A surge in gold prices will represent a declining dollar which will represent a powerful blow to most in the middle class of America.  I guess if gold was a Vegas bet than gold holders are betting on declining dollars, more debt, more deficits and therefore betting on economic decline.  I hate to say it this way but these are the facts.  Another fact, the most significant fact, is our government has no choice but continue to borrow more money.  Today we look closely at why gold will only climb.

If you are on the fence wondering if gold will go up or down please read closely.  Gold is reactionary.  This means it has no heart, it has no soul, it simple reacts just like a dog runs into traffic after a ball.  Gold floats within inflation all while our dollars decline in purchasing power caused from more dollars injected daily into the system.  Although most Americans have scaled back on debt our government has only turned up the debt burners.  Why?  Because our economy is based on debt so government spending, by way of more debt, is replacing what you and I are no longer spending on.  Gold climbs by reacting to this increased debt, very simple.

Our news of the day is whether the debt ceiling will raise or not.  The debt ceiling is nothing more than an artificial line in the sand capping the amount of debt our country will allow.  It has raised over 70 times since we left the gold standard.  Yes it will raise, and yes gold will climb.  Governments will always borrow if borrowing is one of the options so raising the debt ceiling should be expected.

The truth is governments cannot continue spending, by way of borrowing, forever. Many societies have done this and the result is a failed currency and the people are the ones that pay the greatest price.  Since gold, or silver, cannot be printed, replicated, or reproduced they simply increase in price,  or react to inflation, until sanity prevails.  Gold will climb only because debt is the only support leg still holding up our economy of denial.  Sorry to be cynical but we deal only in facts here.

Below is a quote from the US President about the debt ceiling:

“…the United states could be forced to default on its obligations for the first time in its history.”

“This country now possesses the strongest credit in the world. The full consequence of a default–or even the serious prospect of default–by the United States are impossible to predict and awesome to contemplate….The risks, the costs, the disruptions, and the incalculable damage lead me to but one conclusion: the Senate must pass this legislation before the Congress adjourns.”

This may sound like something a current president would say given the times but the truth is President Reagan said it back in 1983.  One of the most conservative presidents in our history, preaching small government, advocated increasing the debt ceiling.  Nearly thirty years down the road we are still on the same path to worthlessness, that is unless you own gold!



How many times has the ceiling been raised? Since March 1962, the debt ceiling has been raised 74 times, according to the Congressional Research Service. Ten of those times have occurred since 2001.

Expect more of the same over the next decade. Barring major changes to spending and tax policies, “Congress would repeatedly face demands to raise the debt limit,” CRS wrote.

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BUYING GOLD/SILVER, GOLD & SILVER, GOLD AND MONEY, Uncategorized   No comments yet

Gold is a slippery little asset needing nothing more than a seem to shoot the debt gap heading straight into historic highs.  While most of us congratulated each other on cheap mortgage refi’s, gold and silver kept climbing the ladder of prosperity all while citizens, cities, states, and governments packed on extra pounds of debt.  What we have to show for this recent debt is declining real estate values, broke states, and bankrupt cites leaving even once solid job holders with future employment doubt.  Today we look at why gold is taking advantage of the cheap money addiction.

The news of recent tornadoes in the Midwest and East is nothing short of devastating and my heart goes out to families that have lost everything including loved ones.  Having personally witnessed the devastation of natural disasters, earthquakes, I can tell you it is sobering how quick nature can reshuffle life.  But one thing about a natural disaster is once the storm passes folks can pick themselves up and move forward rebuilding life.  Unfortunately with our debt disaster this is not as easy, at least not when the fiscally irresponsible continue to cure debt by borrowing.

I recently posted Cities on the Brink of how USA Today just rated San Luis Obispo, CA the most beautiful city of the year but what wasn’t reported is SLO is financially broke and becoming more broke by the day.  SLO is no different from most cities or governments that have used new debt to grease the economic wheels but did it fix the problem.  According to the latest from Standard & Poor’s (kinda fitting) the levels of debt are unsustainable at most levels and the cost to service this debt will only rise if a payback plan is not put into place soon.  All while gold and silver do what they do best which is expose inflation, fear of debt, and irresponsibility.

The cheap money intervention showdown is just starting as the debt ceiling battle rages around the blooming cherry trees at the US Capital.  The conflict is one side wants to raise revenue, tax, yet the other side wants to cut spending but neither side truly believes the fix is this simple.  Deep down both sides know it is check-mate and the debt ceiling will be raised in all likelihood kicking the full effects of depression down the road.  The change we can all believe in will only take place when borrowing is no longer an option.  The big question is how can a debt reduction take place when new debt ($.40 of every federal budget dollar is borrowed) is the only thing keeping the gig going?  The borrowing option will go away when debt holders ask for unreasonable interest on the boat loads of new debt that has quickly become the life blood of our economy.  All while gold and silver takes advantage of the ones strapped in debt.

The temptation to borrow money is like candy in my pantry.  If it’s in the house eventually, in a weak moment, I will fall short by supporting the Mars Family with my chocolate addiction.  The only true cure for the fiscally weak is to turn back to a Gold Standard economy like the days of old thus removing the debt option. I see nothing but blue sky for gold and silver holders but who knows for sure?

QUESTION:  Do I have to pay sales tax on new gold or silver purchases?

ANSWER:  It depends on two things.  One, if you are buying legal tender coins, like American Eagles, there will be no sales tax since they are money.  Two, if you are buying rounds or any other form of precious metal you maybe subject to sales tax or use tax.  Each state is different and some states only charge sales tax up to a certain dollar amount.  I believe California charges sales tax for purchases less than $1500 but laws change regularly so check in your state.

TIP OF THE DAY:  Many states are requiring online purchases be reported, use tax, since most states are looking for fresh revenue.  Keep this in mind when buying gold and silver out of state.


  • ONE OUNCE SILVER BULLION:                   $50.98

  • ONE OUNCE SILVER ROUND:                       $48.64

  • ONE OUNCE GOLD BULLION:                       $1581

  • ONE OUNCE GOLD BAR:                                 $1543

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