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A Short Pause in the Action
(April 7, 2008) While gold corrects some 12% from its March 2008 (and all-time) high, we finally find space to breathe, clear off some old business, and try to throw some words up on the old website after a hectic first quarter.
In case there are any doubters left, we are officially in a gold bull market, now in its seventh year. Of course, when prices broke through the $1,000 level the bull was pretty obvious. that was the point at which gold finally came to the attention of the masses of Americans who, from generation to generation, normally don’t pay attention to such things.

I won’t here reveal all the details (I’m saving the juiciest bits for the book “My Life as A Gold Merchant,” which will be written and, no doubt, vanity-published after I have retired) but the word about gold is definitely in the air. Both our sales and purchase volumes are up tremendously, not only from this website, but at our humble little store in Phoenix. For instance, in the first fifteen business days in January of this year, we did more dollar volume of business than we did in the entire calendar year 1995.

The activity that we are seeing is basically one group of people purchasing precious metals as a hedge against the declining dollar, and another line of people selling their unwanted gold jewelry (If we throw just one more Realtor sales award pin into the melting pot, I’m just going to cry.)

Both of those groups are properly acting in their own best interests. If you have old gold sitting unused in a drawer somewhere, by all means you should take advantage of today’s prices and cash it out.

As for gold purchasers, there is no end to the reasons to buy at this time. But they all boil down to this: gold is mined very slowly, but dollars are created at warp speed.

Witness the past few weeks of massive monetary creation as the Fed and Treasury pour out hundreds of billions in ‘loans,’ accepting as ‘collateral’ the famously non-performing assets known as securitized mortgage bonds and other derived financial trash.

Take the controversial bailout of Bear Sterns, which will put the Treasury (read: you and me) on the hook for some $29 billion. Assuming that there are 100 million US taxpayers, each of us is out about $290.00, either in increased taxes, or more likely, further inflation of the dollar.

But don’t write that check for $290.00 yet, because there’s more - the total taxpayer tab for the past four weeks’ injections of liquidity ($200 billion here, $75 billion there, and a newly invented Fed vehicle with which to dispense those funds) looks to easily be several grand from each of us.

Of course, the good news for taxpayers and dollar-holders is that it’s really just some loans that we’re taking over, and not just an act of charity towards the banks. And all of those loans are fully collateralized by securitized mortgage bonds and other professionally bundled nuggets of risk.

Sure, the same financial effluvia was totally unsalable a couple of weeks ago, when it was stigmatized with the label ‘nonperforming assets.’ But to avoid being so harsh and judgmental, let’s call them ‘late-blooming assets,’ destined to perform, uh, someday. Probably the same day that their underlying 3BR, 2BAs out in Nowheresville are worth a million bucks or so.

But wait, there’s more! Friday 3/31/08 saw the announcement of a proposed complete reorganization of the US financial and monetary regulatory system, consolidating and swelling the Federal Reserve’s powers.

This scheme brings to mind the hasty consolidation of powers under the Homeland Security Agency, post 9-11. And we all know how well that has worked out. So the pattern is this: when an emergency arises out of the blue, the US government builds a new bureaucratic mega- structure to deal with it. The question comes to mind: Is there any possible emergency that will not be met with federal empire-building?

But don’t get me started. The simple point that I’m trying to make is the same one we have repeated in this space for eight years running: only gold will protect you from the dollar sinking into the sunset. At the start of the year 2000, such an event looked highly unlikely. Today, although the dollar remains one of the most viable currencies in the world, that’s just a shadow of its position eight years ago. The dollar is simply no longer the world champion it once was.

So while gold prices are currently in a correction phase, think about your wealth and exactly what forms it takes today. Consider also that over the past eight years, not just the dollar, but every currency in the world has lost value in relation to gold. This is no surprise to those who have studied the rise and fall of fiat currencies in history.

Currencies will come and go, while gold is a permanent store of wealth. So what are you going to do so that you can sleep better at night?


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Onlygold did business at the same location for more than sixteen years. CMI Gold & Silver Inc. has done business from three locations in Phoenix since 1973.

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In addition to gold, silver, platinum, and palladium in coin and bullion form, we also purchase a wide range of numismatic coins and currency for our retail business. Feel free to call us for quotes or price indications on anything in coins, bullion, and paper money.

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