Building Wealth with Silver
How to Profit from the Biggest Wealth Transfer in History
By Thomas Herold
Smashwords Edition © 2011 by Thomas Herold
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Revision 1.3
Thomas Herold
Dream Manifesto, LLC.
http://www.WealthBuildingCourse.com
Limits of Liability and Disclaimer of Warranties
Introduction – Why Silver Is the New Golden Investment Opportunity
1. From Pinching Pennies to a Six-figure Portfolio in Just Three Years
2. Forget What You Think You Know Now – The New Rules of Money
2.1. 1931 – The Birth of the Fed and Beginning of the End
2.2. 1971 – Nixon's Gambit and the Death of the Gold Standard
2.3. The Rabbit and the Hat –Government and Fed Perform an Old Trick
2.4. Fractured Finance – Fractional Reserve Banking
2.5. From Something to Nothing – Your Money Now
2.6. Daisies and Dollars – Beautiful to Look At, Impossible to Eat
2.7. Plastic Wealth – Being in Debt Forever Based on an Illusion
3. The Time Is Right For Precious Metal Investment Profits
3.2. Silver Works in the Real World
3.3. Gold and Silver Have a Long History Together
3.5. Gold and Silver Provide the Best Defense
4. The Story of Silver and Why It Is A Better Choice Than Gold
4.1. Silver Is More Than Precious
4.2. Silver Is on the Bargain Table
4.3. Silver Is Used and Abused
4.4. Silver Is the Happy Child of an Essential Industry
4.6. The Gold and Silver Relationship – Can I Have the Next Dance?
4.7. From Grandma's Photograph to Heart Monitors
4.8. Silver's Love Affair with Electrons
5. How You Can Make a Fortune Investing in Silver
5.1. Timing, Markets, and Value – Looking Good Right Now
5.2. The Twenty Year Cycle and Silver
5.3. Housing Silver Long Term and Short Term
5.4. Silver ETFs in the Digital Age
5.5. Leveraging ETF AGQ for More Gain
5.6. Silver Numismatics – Not Just a Coin Toss
5.7. Silver Collectors – The Rare Made Valuable
5.8. Silver Mining Stocks – Don't Dig for Dollars
6. Seven Steps to Creating A Successful Investor Mindset
6.1. How to Crash and Burn with Instant Gratification
6.3. Personal Responsibility Equals Success
6.5. Skin Your Knees, Bruise Your Elbow, Get Back on that Bike!
6.6. It's All About Plot, Character Development, and Self-understanding
6.7. Grok It Fully Before You Go for It
6.8. Keep Teaching the Dog for Laughs and Giggles
6.9. It Seems Like an Eternity
6.10. A Little Thing Called Your Financial IQ
7. The Nuts And Bolts of Buying and Selling Silver
7.1. Margins and Leverage Accounts – Taming Calculated Risk 101
7.2. Taming Calculated Risk 102
7.4. Pattern Trading Is a Balancing Act
7.5. When to Take It to the Bank
7.6. The No-no of Negative Profit
7.7. More Leverage with Option Trading
8. Powerful Silver Investment Strategies that Make You Money
8.1. Keeping the Purity of a Single Solid Approach
8.2. Taxes for the Short and Long Terms
8.3. Buying Strategy 101 – On the Way Down
8.4. Buying Strategy 102 – On the Way Up
8.5. The Rule of 21 – Buying Beer and Silver
8.6. Taming Calculated Risk 103
8.7. What Temperature Is Your Thermometer Reading Now?
8.8. Kicking Out the House Guest
9. The Next 10 Years - Predictions For The Global Economy
9.1. Sturm und Drang – The Thunder of the Next Ten Years
9.2. The Fat Lady Isn't About to Sing Yet
9.3. Nero Said Everything Was Just Peachy
9.5. Please Mister, Can You Spare a Hundred Bucks?
9.6. Leveling the Unlevel Playing Field with a World-wide Solution
9.7. Bye Bye White Picket Fence
Bonus - How to Start Building Wealth in 90 Days
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Why Silver Is the New Golden Investment Opportunity
The global economy is a mess. I really don’t have to tell you that. Some people actually want us to believe that the recession is over. They are either joking or really have no idea what they are talking about. The rumors of recession having actually ended may, in fact, be mere propaganda designed to keep this leaky balloon called our economy from releasing too much hot air too soon. Don't get me wrong. The movers and shakers in this world have good reason to slow down or trying to prevent the balloon from bursting. An overblown dollar that pops too quickly can spell disaster for everyone, not just the movers and shakers.
If you own a business, especially in retail, you know that the recession is actually getting worse. You know your costs and your likely margins. You know that your competitors are scrambling just as much as you are. You know your customers. There simply is not a lot of spending going on at any level. Multiply that by an entire nation, an entire global economy, and it spells real problems that cannot simply be smiled away by politicians and the talking heads on the six o'clock evening news.
On a personal level, it means that your financial security is in peril due to the changes – often catastrophic – that are rippling down from the world at large. Prepared or not, change is about to happen to everyone – big time.
I will tell you this up front: in economic, social, environmental and many other terms, we are all in for the biggest ride in history. What you see right now is just the tip of the iceberg. You can compare some events in U.S. history with the Titanic. When she was built she was the biggest luxury cruise ship in the world. She was built with pride using the best materials available. She was touted as the safest, most luxurious vessel afloat.
People were confident that she could take on the worst weather, push her way through the biggest icebergs and endure through any calamity the seas could throw at her. However, the Titanic was flawed from the very beginning, and it was that initial weakness in her design that ultimately led to her sinking.
Similarly to the story of the Titanic, very proud and intelligent persons in the U.S., along with some equally self-serving advice from their European banking counterparts, engineered a marvel of finance on a grand scale. In 1913 the Fed, which is nothing more than a cartel of private bankers that control the money supply, was sold to an unsuspecting public and their representatives. An extension of the idea of centralized banking systems that had seen development in almost all western countries during the 18th and 19th centuries, the Fed was seen by many at the time as the stalwart captain at the helm of the ship of money and finance. The Fed has now run into just the tip of an iceberg that will ultimately sink the U.S. economy and take other economies along with it. Like the Titanic, the Fed has a fatal flaw, possibly the biggest in the history of the United States. Like the Titanic, the Fed's makers and captains have realized only too late the nature of their hubris around this flaw when it comes to navigating the behemoth U.S. economy to safe harbors around the world.
A second flaw was created in our economy in 1974 when President Nixon convinced the senate to abandon the gold standard, and to push the rest of the world to make the dollar the global trading currency. Together, the creation of the Fed and the abandonment of the gold standard are the cornerstones of our current financial disaster. You will learn more about these two pivotal events in a following chapter.
In 1912 the world learned of the horrific tragedy of the Titanic's sinking, a disaster that claimed more than 1,500 lives. In 2008 we all were witness to how the olympian U.S. economy hit its own iceberg and began its startling descent, pulling hundreds of thousands of individuals and businesses into the vortex along with it. The death toll for this disaster has yet to be fully determined. We now know that the U.S. economy had been perilously close to sinking for some time, by the estimates of some experts a matter of hours away from total bankruptcy, kept afloat only by 'lifeboats' of dollars printed out of nothing more substantial than air.
Like the dot com bubble before it, the housing bubble of 2006 had burst, this time with even more far-reaching consequences. The lifeboats can only go so far. Sooner, rather than later, the U.S. economy will ultimately lose its remaining buoyancy and nothing in the world can stop its plunge to the depths.
When the U.S. economy does sink it will negatively impact all major industrialized countries even more than before. The initial bump into the iceberg as just a hint of what is in store for the world at large. No one anywhere in the world will be immune from the tsunami created with so many economic vessels on their way to oblivion. There are no lifeboats large enough to withstand a wave of economic destruction on that scale. Nevertheless, readers of this book can benefit from the information found within no matter what their nationality or place of birth.
Never before in human history have we relied on the titanic structure of one economy to serve as the bellwether for the entire global market. It was only recently in relative terms that the global marketplace had begun to function as an interconnected whole rather than as a bucket of bolts. Our global financial perspective was one of calm seas and clear skies, enabled by advances in electronic market reporting with billions of transactions taking place in just microseconds. Staggering amounts of money are landing in far-flung ports around the world with precision and certainty much like cargo during our grandfathers' time made its way from one exotic locale to another around the world.
However, our grandfathers' markets were a different order of magnitude altogether. The effects of modern investment and banking vehicles, coupled with nearly instantaneous exchange of untold wealth, mean potentially great windfalls as well as disastrous shortfalls. Modern investment vehicles are complex and designed to work quickly. Some are much riskier than others. Many are not well understood by those who are in positions of countering challenges to the economy. Many, through no inherent fault of their own, play to people's greed and disregard. All this can be wrapped up in one word: derivatives.
A derivative, if you are not familiar with this term, is simply anything that derives from a service or product. So orange juice would be a derivative of oranges and a mortgage is a derivative of a house. In the world of finance, swaps, futures and options are all types of derivatives. By its definition, a financial derivative is based on the value of some expected future price.
The dollar amount of the various financial derivatives that are floating around most likely exceeds $100 trillion dollars, which is equal to a one with fourteen zeros after it: 100,000,000,000,000. To give you a better idea of this number lets compare it with some other things.
• There are probably 150 Billion galaxies in the universe,
• About 200 Billion stars in the Milky Way
• And 100 Trillion is the estimated number of cells in the entire human body
One way to better understand large numbers such as these is to compare the heights of stacks of varying numbers of dollar bills. The thickness of a single one dollar bills measures .0043 inches or .0000000679 miles.
The height of a stack of 100,000,000 (one hundred million) one dollar bills measures 35,851 feet or 6.79 miles. This would reach from the earth’s surface to the approximate altitude at which commercial jetliners fly.
The height of a stack of 100,000,000,000 (one hundred billion) one dollar bills measures 6,786.6 miles. A column of bills this high would extend 28 times higher than the orbiting International Space Station.
The height of a stack of 1,000,000,000,000 (one trillion) one dollar bills measures 67,866 miles. This would reach more than one fourth the way from the earth to the moon.
The height of a stack of 100,000,000,000,000 (one hundred trillion) one dollar bills measures 6,786,616 miles. This would reach from the earth to the moon – and back – 14 times.
No GDP figures have been published since 2008. In basic terms, GDP is defined as a measure of a country's overall economic output. It is the market value of all final goods and services made within the borders of a country in a year.
This clearly illustrates the problem when you compare it to the gross domestic product (GDP) of the U.S. which was $14 trillion in 2008. Just to let you know how significant this number is, it includes the associated healthcare costs of all sick people in the U.S. as well. This figure alone does not distinguish whether or not a product or service is sustainable or contributes to wealth. For example: very single cent for war counts toward productivity factored into the GDP. So the real number, a healthy number not involving real contributing productivity would be far less than the reported $14 trillion.
What that illustrates is that the GDP is, in effect, not only inflated by some indeterminate amount due to the inclusion of nonproductive economic factors, the dollar is weaker in real terms than everyone would like to believe. Pointing to a $14 trillion GDP as a sign of inherent strength becomes meaningless in real world terms, particularly when economic crises are brewing in all economies around the world.
While there is not much you can hope to achieve as an individual on these macro-economic scales, there is one thing you can do as an individual to help protect your money and even profit from it during these times: get yourself a good financial education that clearly helps you put the historic process into perspective so you can make good financial decisions today and tomorrow.
There are two forms of investments you can make. Either you invest in capital gain or in cash flow. Either one can work – it is even better to invest in both. This book will teach you how to invest in silver and create massive capital gain. If you use this profit wisely you may want to re-invest it for cash flow. There is nothing more satisfying than seeing your bank account filled up as if by magic by the beginning of each month without having to do any work. However hard you worked in the past, you no longer have to work. It does not get much better than that!