In Jim Cook's Archive


Asset prices continue to soar. Stock, real estate and collectors items are climbing to the sky. Critics claim that these assets are overvalued. As I see it, nothing is overpriced in relation to the amount of money that exists. Assets are just keeping up with the expansion of money and credit. Said another way, the dollar is going down against assets.

It’s hard for the owners of these assets to see what’s happening. They feel richer and they think they are enjoying big capital gains and accruing wealth. In reality, the excess of money has to go somewhere, so it pours into bonds, stocks, property, art and antiques. Thus these assets are bid up. However, if money and credit growth were minimal, these assets would hardly rise at all. I feel richer because a collection I own seems to be appreciating wildly. In reality, I’m probably just breaking even.

Oddly enough, gold and silver which have a 5,000-year history of being the highest valued assets that people can own, have not kept up. Land can rise 500% in a decade, a Tiffany lamp can rise ten times, but gold and silver barely budge. That fact gives a lot of credibility to Ted Butler and others, who claim that precious metals have been suppressed. Foundation head, Dr. Lawrence Parks, states, “There is myriad historical, anecdotal and circumstantial evidence that the price of gold has been, and continues to be, manipulated by official institutions.”

Gold and silver were the most sought after asset for thousands of years. We all know how these metals were responsible for the discovery and settlement of the Americas. They dominated what the people of that era thought about, and were a driving force in their lives. The whole world revolved around gold and silver. As money, they were responsible for the advent of commerce and civilization. They had the attributes of a perfect money. They were a store of value, a unit of account and a means of exchange.

Today only a few people consider gold or silver seriously or want to own these metals. For one reason, their price has not kept up. In today’s world, people only want what’s going up. The higher an asset goes, the more people that are attracted. Also, governments generally dislike gold and silver because this is money that cannot be printed or expanded to pay for social programs and armies. It’s likely been suppressed by the U.S. government and by Wall Street, who promote assets that compete with gold and silver. Nevertheless, artificial suppression of the price of an asset only bottles it up temporarily, while internally it seethes and rages and ultimately bursts from its bonds to reclaim its true value. We suspect its true value will be so many times higher than today’s price as to shock and amaze. As newsletter editor, Richard Russell notes, “Nobody, it seems, is noticing what’s happening as gold moves higher in what promises to be an historic, monster bull market.”

Today’s soaring asset prices prove to us that our money is rotting. There’s too much of it. This process, we believe, will continue. New money must be created to forestall the dreaded deflation. You can continue to purchase assets that have appreciated mightily and will indeed collapse if deflation occurs. Or you can put up to twenty percent of what you own into what still appears to be cheap precious metals. They are historically proven true wealth, not the phantom wealth of today’s high priced assets. They can protect you, and they should increase with a vengeance as the bubbly world of champagne-finance and government profligacy spins out of control. If the kind of financial hell that we anticipate ever breaks loose, you will thank your lucky stars you own these precious metals.

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