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Ardent Listener
Administrator
USA
4841 Posts |
 Posted - 04/04/2010 : 17:13:27
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The #1 Reason Most Americans Don’t Own Gold and Silver
The #1 Reason Most Americans Don’t Own Gold and Silver
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By Patrick A. Heller on April 1st, 2010
Emphasis: Jake
There are many reasons why most Americans don’t yet own any gold and silver for investment or insurance purposes. On March 31, I witnessed a textbook example of what I consider to be the most important reason why gold and silver have such a small following in this country.
The event was a presentation by Dana Johnson, the senior vice president and chief economist for Comerica Bank. His speech was titled “The Outlook for a Sustainable Expansion.” The attendees were business executives and government officials whose organizations mostly have accounts with Comerica plus several Comerica managers. Comerica is one of the largest banks to have originated in Michigan, with assets of about $60 billion.
Johnson’s general thesis was that the current recession 1) was not as horrible as many perceive when you compare data with past recessions; 2) had hit bottom in the third quarter of 2009; and 3) is now being followed by a slow economic recovery.
The thrust of his presentation was that the worst was over and that, by sticking to mainstream financial activities, the country would come out of its current financial doldrums. The recovery would not be strong or necessarily fully return to early 2007 levels, but there was reason to expect that the economy would generally improve from now into the future. By implication, he thinks the value of the US dollar will not fluctuate enough to be of any concern worth mentioning.
Johnson showed a number of tables and graphs to the audience to support his thesis. He presented data covering gross domestic product, employment, inflation, housing, mortgage rates, automotive industry sales, Federal Reserve purchases of US Treasury debt, and state business tax burdens. Some data was national and some covered only Michigan. One area that Johnson mostly avoided was political issues.
On the basis of the information he presented, Johnson appeared to make a solid case that staying the course was a prudent course of action for businesses and investors. In other words, he made an argument against the need to own gold or silver as protection against calamities affecting the value of paper assets.
Johnson’s presentation matches closely what many mainstream analysts are saying. It is the same information that is widely reported in the mainstream regular and financial media. If this data was accurate and sufficiently complete, I could agree with Johnson’s thesis. On that basis, I would not think owning gold and silver was worth consideration.
Unfortunately, as Johnson went through his presentation, I came up with a constant stream of “Yes, but” thoughts that the accurate underlying information to his tables and charts largely contradicted the support he was trying to show for his thesis. As I listened, it struck me that this kind of misinformation and disinformation, dressed up as being “the truth”, is exactly why so few Americans own gold and silver.
Because this presentation was made mostly to non-economists, Johnson did not pin down in detail which source of data he was showing. For instance, some of the statistics are reported as raw data and as seasonally-adjusted data, but only once did Johnson mention which information a table or chart showed.
In Johnson’s discussion of gross domestic product, employment and unemployment, the extent of the recession compared to past history, and inflation, he pretty much accepted US government statistics over time as being both accurate and being accurately comparable over time. However, when I chatted with him briefly after his presentation, he acknowledged that the gathering of such data is not an exact process and that current data is not necessarily comparable to historical data for the same subject.
Johnson said he was not familiar with the work of John Williams (You must be logged in to see this link.). Williams reconstructs various popular government statistics using comparable methodology as formerly used by the US government to develop past data. For example, the government’s current CPI-U inflation rate is about 2.5%, but Williams calculated it at around 10%. For the Bureau of Labor Statistics definitions of unemployment (U-3 at about 10% and U-6 at about 16%), Williams figured it is now about 21%. For the change in gross domestic product, the BEA index shows is right about 0%, while Williams computed it as -4%. Last, the Federal Reserve board figures the current trade weight average value of the US dollar at 55 (January 1985 = 100) in contrast to Williams’ figure of 50.
American Silver EagleThe US government (and pretty much all governments) are prone to changing their statistical analysis over time, supposedly to make the indices more accurate. Technological changes over time necessitate such changes. The price of feed for horses is no longer a component of transportation costs, while the price of gasoline has become very important, to give an extreme example. There are also quality changes, such as the features of an automobile today versus just two decades ago. While modifications are necessary, it somehow always seems that the changes made by the US government just happen to make the future statistics look more attractive, for purposes of the US government, than the previous methodology. Thus, unemployment and inflation is now understated and gross domestic product and the value of the US dollar are overstated.
If there were accurate statistics for these categories of data, and Williams’ analyses are not necessarily on target, my expectation is that the tables and charts that Johnson presented would not support his thesis that the worst is over and the economy is starting to recover.
There are also many kinds of data that could be cited. I noticed that Johnson omitted some key statistics that would have contradicted his thesis. In some ways there is too much information available and filtering of data is necessary. That makes it is easy to present only what supports a concept. As an example, Johnson showed data on 30-year residential mortgage interest rates, showing that levels have been stable at low levels for the past several months. What he did not show was a chart of the interest rates for the 10-year US Treasury debt. The 10-year Treasury interest rates right now are about 70% higher than they were at the start of 2009, just 15 months ago. This latter statistic gives some indication of where future mortgage interest rates are likely to trend. Had Johnson presented both sets of this data, this combined information would not support his overall thesis.
Johnson also was touting the benefit that the Federal Reserve has now stopped purchasing US Treasury debt. The best information I have is that this is technically true, with a huge “but.” Those who have investigated the issue, because the US government is not reporting such statistics, is that the Fed is supplying funds to its trading partners to continue purchasing Treasury debt. By going this route, the Fed is effectively purchasing such debt, but it is not being reported this way as it is not the direct buyer. It looks like the trading practice has been occurring for at least the past six months. If Johnson were able to dig up accurate information on the amount of Treasury debt that the Fed is still financing, directly and indirectly, this information would not support his overall thesis.
Further, Johnson did not take into account the execution of the orders from the President’s Working Group on Financial Markets for the US government’s trading partners to prop up US stock markets for the past year. Had he excluded the effect of this manipulation, his information on the stock markets would not support his overall thesis.
My comments are not exhaustive at covering every point Johnson raised. They are also not meant to pick on him in particular and are not a personal attack on him. When I chatted with him after the presentation, I found him well versed in the specifics of the data he cited and keenly aware of the limitations of the reported statistics.
In my judgment, his presentation was representative of what is being widely reported to Americans, even though I believe that the effect of such data can lead people to make poor financial decisions.
Instead, I want to highlight how an effort to dig up accurate underlying information can lead a prudent person to conclude that the economic and financial outlook is not as optimistic as Johnson and a myriad of mainstream economists and analysts try to claim.
If the US and world economies are not past the bottom of the cycle and are not on the roads to recovery, then owning some gold and silver can be a reasonable and conservative step to take for wealth preservation.
I think that if Johnson’s presentation had included additional information such as I listed above, it would show that inflation and unemployment are much higher than generally perceived and that the value of the US dollar and the decline in US gross domestic product are worse than believed. Such data would spur more Americans to move at least a portion of their assets out of the US dollar and paper assets such as stocks and bonds an into owning gold and silver. Instead, now these Americans are lulled into inaction. Unfortunately, I expect that the coming financial crises will force many more people into buying gold and silver, but only after prices have reached much higher levels.
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All posts either by the members, moderators, and the administration of http://realcent.forumco.com are for your edification and amusement only. It is not the intent of realcent.forumco.com or its host to provide investment, medical, matrimonial, legal, security or tax advice and nothing posted here should be considered to be so. All rights reserved.
Think positive. |
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dakota1955
1000+ Penny Miser Member
2212 Posts |
Posted - 04/04/2010 : 19:15:14
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| Some will keep their heads in the sand and otherswill look into the future. It's their choice. |
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Delawhere Jack
1000+ Penny Miser Member
USA
1680 Posts |
Posted - 04/04/2010 : 19:23:49
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Why most americans don't own gold and silver, Jacks' opinion.
Basketball, Baseball, Hockey, Nascar, Golf, and currently, MARCH MADNESS! All at the same time!
You can't watch sports on ASE's, stupid coin nerds....
 Good. More PM's for us...
Bloomberg, CNBC, Fox Bus. Channel, WSJ, ABC, NBC, CBS, and all the rest of the financial and mainstream press. Puking the padlum about the recovery.
Good. More PM's for us...
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"Educate and inform the whole mass of the people... They are the only sure reliance for the preservation of our liberty." Thomas Jefferson
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tunylune
New Member
USA
20 Posts |
Posted - 04/05/2010 : 02:54:11
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| Look for the Govt. to pump a lot of stimulus money into the economy up until the Elections. Then watch the economy drop like a rock this fall. Eleven States are moving into bankruptcy as we speak. 300 cities have declared they will need Federal money or they will default. One California City declared Chapter 9 last week. The amount of home loans in default are snowballing. Commercial real estate contracts will start coming due to be refinanced in the end of 2010 beginning of 2011. Credit restraints will not allow them to refinance. The Fed has increased the monetary supply by 250% since the beginning of 2009. The Chinese are dumping our Municipal bonds and have been told only to buy our Federally insured bonds and to cut way back on those. If the Fed. pulls the excess from the money supply the banks go under. If they don't pull the money back out of the market we will have hyper inflation. If you study the Great Depression we are mirroring what happened back then. We had a crash. We had a short rally when the Fed dumped money in the market then the big crash. The only thing that pulled us out was when the Federal govt. confiscated our gold at a fraction of what it was worth. Then raised the gold price back up and shored up the Dollar. I doubt America is holding enough gold to do this again. You can thank President Wilson for restoring the Central Bank in 1917 they have caused every recession and depression since. Progressives in our Govt. are to blame and they need to be voted out of office. We are a Republic not a Democracy. Just my two cents worth. Mark |
When the People fear the Government there is tyranny. When the Government fears the People there is Freedom. Thomas Jefferson |
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orionstarman
Penny Pincher Member
USA
106 Posts |
Posted - 04/05/2010 : 10:18:26
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Nuff said!
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We are f---ing doomed. |
Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety.--Benjamin Franklin
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Lemon Thrower
1000+ Penny Miser Member
USA
1588 Posts |
Posted - 04/05/2010 : 10:34:08
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people can't think outside of the box. they are linear and only extrapolate current trends. Fooled by Randomness and Black Swan are 2 good books that discuss these human tendencies/limitations.
also, people reject any ideas that threaten their world view. we homeschool so i am familiar with this phenomenom. If it comes out that you homeschool, implicitly you communicate that you believe the public school in your area is inferior to doing it yourself, and to such an extent that you are willing to make a significant personal sacrifice. That is very threatening to someone whose kids attend the public school.
its the same deal with gold. people just don't want to admit that their paper money has not intrinsic value. |
Buying:
Peace/Morgan G+ at $15.00
copper cents at 1.3X
wheat pennies at 3X
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Copper Catcher
Administrator
USA
2092 Posts |
Posted - 04/05/2010 : 10:36:00
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I'm sorry, but the guy giving the presentation must live on another planet!
Question: The #1 Reason Most Americans Don’t Own Gold and Silver
Answer: Many people are flat broke and so in debt that the last thing on their mind is gold or silver!
The Facts:
The government reported unemployment rate is less that 10%...yea right sure it is! The real number is closer to 22% You must be logged in to see this link.
Nov 2009 Mortgages: One in Four Borrowers Is Underwater
Source: You must be logged in to see this link.
Report shows loan delinquency rates have surpassed 10%
The January 2010 Mortgage Monitor report, released by Lender Processing Services Inc. (NYSE: LPS), a provider of mortgage performance data and analytics, showed that home loan delinquency rates in the U.S. have now surpassed 10 percent. Factoring in foreclosures in process, according to the data in LPS' database, the total non-current rate sits at 13.3 percent. When extrapolated to reflect the entire mortgage industry, this rate indicates that more than 7.2 million mortgage loans are now behind on payments. In addition, an estimated one million properties are now owned by banks. The January 2010 Mortgage Monitor report is an in-depth summary of mortgage industry performance indicators based on data collected as of Dec. 31.
Source: You must be logged in to see this link.
Average credit card debt per household with credit card debt: $16,007
U.S. credit card 60-day delinquency rate: 4.5 percent. (Source: Fitch Ratings, March 2010)
U.S. credit card default rate: 11.37 percent. (Source: Fitch Ratings, March 2010)
Source: You must be logged in to see this link.
According to Trans Union, the national auto loan delinquency rate will increase by approximately 7% by the end of 2010.
You must be logged in to see this link.
Oh yea, everything is wonderful now and I'm sure it want get worse. Ugh!
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Delawhere Jack
1000+ Penny Miser Member
USA
1680 Posts |
Posted - 04/05/2010 : 18:23:52
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quote:
Originally posted by tunylune
Look for the Govt. to pump a lot of stimulus money into the economy up until the Elections. Then watch the economy drop like a rock this fall. Eleven States are moving into bankruptcy as we speak. 300 cities have declared they will need Federal money or they will default. One California City declared Chapter 9 last week. The amount of home loans in default are snowballing. Commercial real estate contracts will start coming due to be refinanced in the end of 2010 beginning of 2011. Credit restraints will not allow them to refinance. The Fed has increased the monetary supply by 250% since the beginning of 2009. The Chinese are dumping our Municipal bonds and have been told only to buy our Federally insured bonds and to cut way back on those. If the Fed. pulls the excess from the money supply the banks go under. If they don't pull the money back out of the market we will have hyper inflation. If you study the Great Depression we are mirroring what happened back then. We had a crash. We had a short rally when the Fed dumped money in the market then the big crash. The only thing that pulled us out was when the Federal govt. confiscated our gold at a fraction of what it was worth. Then raised the gold price back up and shored up the Dollar. I doubt America is holding enough gold to do this again. You can thank President Wilson for restoring the Central Bank in 1917 they have caused every recession and depression since. Progressives in our Govt. are to blame and they need to be voted out of office. We are a Republic not a Democracy. Just my two cents worth. Mark
Tuny, Welcome to the forum. You're obviously well versed, and I agree with most all of what you've stated. I would contend that what finally brought us out of The First Great Depression (GD1 OR GDI)was WWII, but it's really a moot point now.
Help yourself to an avatar, but remember, Mr. E. Fudd is MINE! 
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"Educate and inform the whole mass of the people... They are the only sure reliance for the preservation of our liberty." Thomas Jefferson
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 04/05/2010 : 19:52:34
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quote:
Originally posted by Copper Catcher
I'm sorry, but the guy giving the presentation must live on another planet!
Question: The #1 Reason Most Americans Don’t Own Gold and Silver
Answer: Many people are flat broke and so in debt that the last thing on their mind is gold or silver!
The Facts:
The government reported unemployment rate is less that 10%...yea right sure it is! The real number is closer to 22% You must be logged in to see this link.
Nov 2009 Mortgages: One in Four Borrowers Is Underwater
Source: You must be logged in to see this link.
Report shows loan delinquency rates have surpassed 10%
The January 2010 Mortgage Monitor report, released by Lender Processing Services Inc. (NYSE: LPS), a provider of mortgage performance data and analytics, showed that home loan delinquency rates in the U.S. have now surpassed 10 percent. Factoring in foreclosures in process, according to the data in LPS' database, the total non-current rate sits at 13.3 percent. When extrapolated to reflect the entire mortgage industry, this rate indicates that more than 7.2 million mortgage loans are now behind on payments. In addition, an estimated one million properties are now owned by banks. The January 2010 Mortgage Monitor report is an in-depth summary of mortgage industry performance indicators based on data collected as of Dec. 31.
Source: You must be logged in to see this link.
Average credit card debt per household with credit card debt: $16,007
U.S. credit card 60-day delinquency rate: 4.5 percent. (Source: Fitch Ratings, March 2010)
U.S. credit card default rate: 11.37 percent. (Source: Fitch Ratings, March 2010)
Source: You must be logged in to see this link.
According to Trans Union, the national auto loan delinquency rate will increase by approximately 7% by the end of 2010.
You must be logged in to see this link.
Oh yea, everything is wonderful now and I'm sure it want get worse. Ugh!
I agree, Americans don't seem to be able to even hold on to grandmother's gold wedding ban. They are pawning or selling what ever little gold or silver they happen to have. Buying it is the last thing on most people's minds. |
Realcent.forumco.com disclosure. Please read.
All posts either by the members, moderators, and the administration of http://realcent.forumco.com are for your edification and amusement only. It is not the intent of realcent.forumco.com or its host to provide investment, medical, matrimonial, legal, security or tax advice and nothing posted here should be considered to be so. All rights reserved.
Think positive. |
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theo
Penny Hoarding Member
USA
588 Posts |
Posted - 04/05/2010 : 22:26:09
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quote:
Originally posted by Copper Catcher
I'm sorry, but the guy giving the presentation must live on another planet!
Question: The #1 Reason Most Americans Don’t Own Gold and Silver
Answer: Many people are flat broke and so in debt that the last thing on their mind is gold or silver!
I think he is talking about those who have money to invest. Far too many investors are sticking with the meanstream investment strategy of blue chip stocks and various types of bonds; along with perhaps a few shares of Exxon as a socially acceptable inflation hedge.
I was listening to a financial expert on a local radio show who was poking fun at talk radio and other "gloom and doomers" claiming that the U.S. economy was about to collapse. He specifically accused Beck and Limbaugh of bias since many of their advertisers sell gold and silver. I wanted to call in and ask this guy, "If your income depends on people buying your stocks, bonds and mutual funds, doesn't that make you biased against physical gold and silver?" His obliviousness to the obvious double-standard was disturbing but not surprising.
Investing and holding physical assets represents a stark change from a status quo that too many people depend on to maintain their wealth and power.
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Edited by - theo on 04/05/2010 22:28:38 |
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Gresham
Penny Pincher Member
184 Posts |
Posted - 04/05/2010 : 22:28:48
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| It has been my experience that people are really only interested in it if they can make a quick buck. Any talk about it is more on the lines of I wish I bought some of that when it was around 3-4 hundred or if I had some of those think what I could buy if I sold it. They aren't thinking of the implications that there paper is worth less not that gold is worth more and that they really should buy some so that they can sleep at night knowing that it will still be there (provided that no one steals it) in the morning and knowing that 5-10-20 years from now it will still be worth something. |
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#1 Reason Most Americans Don’t Own Gold and Silver
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