Government Risk!

Accept No Substitutes for Real Gold and Silver

Today, with socialism on the march everywhere from New York to California, it’s more important than ever that you protect yourself with real, physical gold and silver.   Not paper gold, shares, or title to gold.  

That’s to protect yourselves from government risk.  

Right now Mexico is the world’s largest silver producer.  Its production is more than six times that of the US.    It produces so much silver that from time to time someone in Mexico proposes backing the Mexican peso with silver.  That’s not a bad idea.

While there is a lot of silver in Mexico’s silver mines, buying mining shares in this environment bears no relationship to owning tangible gold and silver for protection if the developing monetary crisis.  Mines are vulnerable to all kinds of problems, environmental interventions, mismanagement, stock manipulation, natural disasters, and nationalization. 

Right now there appears to be a risk that Mexico’s socialist president could nationalize the country’s silver mines.

And POOOOF!  There goes your investment.

How likely it is Mexico will nationalize Mexico’s mines is unknown, but it’s the sort of thing that socialists dream about.

So don’t be surprised if it happens, particularly in a crisis.   Last year Mexico elected a hard leftist president, Claudia Scheinbaum.   Her father was a communist and it is not clear where she differs from Karl Marx.  Because people like her destroy wealth and ruin currencies, the Mexican peso immediately fell, quickly losing about 9 percent of its value.   

Here is author and analyst John Rubino thinking about nationalization:

It’s impossible to predict which destructive thing will happen where.

Suffice it to say that a flat-out nationalization of Mexico’s silver resources would be a serious problem for the miners now operating there. AND it would be a potentially dramatic boost for the price of silver, as supplies became suddenly unreliable.

Our recommendation is to understand just close the world is to a monetary event of enormous proportions.  

We agree that silver is a good bet for profit at the same time that it is a wise means of wealth preservation.  But the chief value of both gold and silver is that unlike other investments, they are not someone else’s liability.  And be particularly aware of governmental risk to all your investments.  Put priority on physical, tangible gold and silver that you can take in your personal possession.  

As Rubino says, “Emphasize physical metals to a greater extent than would be necessary in a world free of geopolitical risk.”