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Why We’re Accepting Fiat Currency for Real Money – Precious Metals

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We occasionally get asked by our customers why we’re willing to accept depreciating fiat currency in the form of dollars for valuable real money in the form of precious metals, most notably gold and silver. In fact, this question, among others, was recently asked by one of our newsletter subscribers (subscribe here, if interested). Here are his questions, with our responses to follow:

precious metal vs cbdc mail
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The Value of the Dollar is Depreciating

We’ll address his questions in order so that our readers will better understand our position on the matter. To begin with, he makes the point that the value of the American dollar is constantly losing ground to inflation. This is absolutely correct and has been the case since the introduction of the Federal Reserve in 1913. It has accelerated since Nixon removed us from the gold standard in 1971. In fact, inflation since that time has on average been 4% per year, which means that the value of your money is halving every 18 years.

This is having tremendous consequences on society, is wiping out the middle class, and is making it difficult for retirees on a fixed income to make ends meet. In fact, many retirees have had to go back to work at an advanced age so that they can keep up with the devastating effects of inflation. I saw this firsthand with my parents’ finances. They are both recently deceased and we came across a hand written monthly budget as we were cleaning out their house. My father, who worked in sales for 40 years, was receiving a pittance of a pension from his employer and a nominal society security check. Since my mother stayed at home while we were growing up, her social security check was next to nothing.

Part of their budget included my 70+ year old father working part-time jobs at close to minimum wage. It was clear that none of these jobs were fulfilling, as he had multiple part-time jobs over a short period of time. Clearly, he didn’t want to go back to work in his retirement years, but it was necessary to afford the continued increased cost of living, which in large part is due to inflation. It probably goes without saying, but inflation is basically another way of saying that the value of the dollar is decreasing, as it takes more dollars to afford things that in the past were less expensive.

There is no doubt that keeping your savings in dollars is a losing proposition and one that we don’t recommend. While we need to have dollars in our checking account to fund our business operations, we don’t keep more in our account than is necessary, and personally, keep our savings in gold, silver and platinum. The reason for this is that precious metals will at a minimum allow us to keep up with inflation, but more than likely, increase our purchasing power on an inflation-adjusted basis.

Central Bank Digital Currencies (CBDC’s) are Coming – Be Prepared!

For years, experts in the precious metals sector have been warning about digital currencies. While we didn’t know exactly what they would be called back then, the Frankenstein project is now commonly referred to as Central Bank Digital Currencies (CBDCs). This is no longer a tinfoil hat conspiracy theory, but a reality. We recently shared this link with our readers that shows the phase various countries are in throughout the world.Central bank Digital Currency

As you can see, twelve countries have officially adopted CBDCs, including many Eastern Caribbean countries. We have heard for a while that China is going to be rolling out CBDCs, which we understand may be linked to social scores and potentially include expiration dates. They are officially in a pilot program, which is one step short of implementation. From the perspective of the authorities, if their citizens don’t act in accordance with their “moral code,” the country can limit their use of CBDCs and effectively shut them out of certain sectors of the economy.

Another stumbling block for many countries is that their citizens typically buckle down and reduce spending during economic downturns, recessions and depressions. CBDCs, which are government controlled, can counter these measures by assigning an expiration date to a portion, or if so desired, all the CBDCs owned by the public. While individuals would much rather hunker down in this environment, given the option, they’re going to spend their currency versus allowing it to expire.

According to the chart from the above link, the U.S. is in the “plans to issue CBDCs.” We know from reports that the Federal Reserve had a pilot program with many of the largest banks in the U.S. last year. While we haven’t heard one way or the other how the pilot program fared, the assumption is that we’re moving full steam ahead. While we don’t have an official launch date yet, it would not be surprising to see the implementation after the 2024 election.

It will be interesting to see how the CBDCs are rolled out. It’s possible that there will be an announced launch date, in which case the government runs the risk of a mass withdrawal of currency from the banking system, as over 75% of the population is opposed to CBDCs. The more likely scenario is the conversion of bank accounts to CBDC over a holiday weekend or an unexpected bank holiday to give the authorities time to convert the accounts of the masses.

While in theory a CDBC will help to simplify and expedite transactions, the loss of privacy and potential limitations imposed will far outweigh the minor conveniences or perceived safety. Benjamin Franklin is famous for the following quote “Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety.” I believe that this quote can also apply to CBDCs. At the end of the day, you lose your freedom, liberty, and anonymity, as all your transactions will be posted on a ledger, which will be available to the central bank and any other agencies or entities that they provide access to.

While 99% of people are law abiding citizens, it’s not necessarily anyone else’s business what you decide to do with your money or how you choose to spend it. In other words, CBDCs eliminate privacy.

This is one reason why we advocate investing in gold, silver and platinum. These precious metals, more notably gold and silver, have been used as money for thousands of years. They have been known throughout history to have intrinsic value, and maybe most importantly, are one of the only assets that doesn’t contain counterparty risk. Counterparty risk is more serious than most folks realize, as you are relying on another party to fulfill their obligations, which as we all know, doesn’t always necessarily happen.

Why We Sell Gold, Silver & Platinum for Dollars

We’ve touched on the issue of selling precious metals for dollars, but it deserves further analysis and discussion. As mentioned above, the idea is to limit the amount of funds in the bank, as not only are they depreciating in value by the day, but they’re also subject to being converted into CBDCs. Furthermore, the passage of the Dodd Frank Act following the last recession allows banks to convert your holdings to bank stock. Of course, they would only do such a thing if the banking system was on the verge of collapse, which means that your depreciating dollars could be converted into worthless bank stock.

Getting back to the question at hand, at present, the dollar is still the most widely accepted form of currency in the U.S. This means that if we want to pay our utility bills, buy groceries, pay our mortgage, etc., then we need dollars, as this is currently the preferred form of payment. Of course, with the dollar depreciating in value, it’s costing more money to pay for these necessities. With inflation at nearly double the Fed’s target, many people are finding it difficult to make ends meet. In fact, credit card balances are at record high levels with interest rates at multi-year highs. In other words, it’s costing the public much more to service their debts than usual.Gold to Cash precious metals

Circling back to the topic of inflation, as you may recall, the inflation rate spiked to 9.1% in June of 2022, but has since come down to more reasonable levels – at least the official inflation rate. That being said, when you talk to the man on the street, most people will tell you that everything is substantially more expensive than it was a few years ago and feels more like prices are increasing in the double-digit range. In fact, this might be closer to reality, and is more in line with how inflation was calculated in the 1970’s and 1980’s. For those who are interested, John Williams from Shadowstats.com reports the “true inflation” figures using the original criteria, which can be found here.

While we currently accept dollars for precious metals, at some point, we may consider accepting other forms of money if dollars become worthless or CBDCs are shunned. However, until that time, we’ll continue to do so, but as mentioned above, it’s wise to minimize your dollar exposure, when possible. We have major headwinds ahead, including above average inflation, record high national debt, concerns of CBDCs and an unstable banking system. While bad for the economy at large, these issues should be positive for gold and silver. As more of the public wakes up to these threats, the more gold and silver will be in demand. This in turn will make it more difficult to come by, which will inevitably result in higher prices.  In fact, we’ve seen a major uptick in interest since the beginning of the banking crisis began with the collapse of Silicon Valley Bank.

Is it possible at some point in the future we won’t accept dollars?

It’s always possible and would likely be the case under a hyperinflationary scenario. In other words, if no one wanted dollars, neither would we. In that scenario, hard assets or tangible items are going to be in much greater demand. We harken back to a story that we heard recently regarding the Weimer Germany hyperinflationary event of the 1920’s. During that time, the value of the German Mark plummeted to such a degree that you were able to purchase a nice flat for six to seven ounces of gold that today would be valued at roughly $750,000. This fact is known by many of our customers and is a strategy that they plan on implementing in the future.

While real estate prices may increase relative to the dollar, we fully expect them to drop, and substantially so, relative to the value of gold and silver. While some folks have expectations of buying blocks of real estate for a few gold coins, the more likely scenario is that a few ounces will buy you a single home. There’s of course no guarantee that this will be the case, but at some point, in time, it’s nearly certain that real estate will look cheap relative to the price of gold and silver. If you can purchase a hard asset at a discount for another hard asset, then that seems to make a lot of sense.

Does Accepting Dollars Guarantee Bankruptcy?

In response to our subscriber’s last comment, we don’t believe that accepting dollars will bankrupt our company. In fact, if that was the case, all but a few U.S.-based companies would file for bankruptcy. The important takeaway is that everything will cost more in dollars until it is no longer accepted. In other words, a $2,000 gold coin today may trade for $5,000 a year from now. This simply has to do with the loss of purchasing power and the perceived value of the dollar relative to gold.

While we don’t have the playbook from Weimar Germany or Zimbabwe’s hyperinflationary events, if it gets to this point in the future, we can expect to see mass unemployment, major shortages, a substantial decrease in the standard of living and many people barely making it by. Historically, governments have implemented price controls during hyperinflationary events, which inevitably results in shortages. Shortages in turn cause further government intervention by issuing rations to their citizens.

trillion dollar bill hyper inflation
Zimbabwe $100,000,000,000,000.00 Bill

This type of environment is typically when you see underground markets develop. In other words, essentials and even some non-essential items are available at some price, but the people selling these items won’t accept a worthless government currency. Rather, they’ll accept something that has intrinsic or subjective value, such as gold and silver. We’ve also heard that Bitcoin has also been used in places like Venezuela, where they continue to experience hyperinflation and a collapse of the economy.

Companies typically end up filing for bankruptcy when they fail to cater to the customer, are unable to keep costs under control or offer items at above market prices. Furthermore, companies that provide products or services that rely on discretionary income are at much greater risk of filing for bankruptcy when the public tightens their collective belts. While we’re not financial planners or wealth managers, considering the storms ahead, it may be prudent to sell stocks of companies that rely on discretionary income, or at least pare back your holdings. Rather, it may be prudent to invest your money in the best safe haven investment available, that being gold, silver, and/or other precious metals.

Summary

We’ve jumped around a bit today, so let’s rein things in and highlight the major takeaways. There’s no doubt that the dollar is losing value – not only due to inflation, but also as a currency used in global trade. At one point in time, the dollar was used in 90% of global trading. Today, that percentage is less than 50%. Another threat on the horizon is the eventual launch of a BRICS currency, which most financial experts believe will be gold-backed or at least commodity backed.

Central Bank Digital Currencies are no longer a conspiracy theory, but a reality. Twelve nations have adopted CBDCs, and many are in the final stages of doing so. When you look at the world map, you see that most countries are considering CBDCs. This is a tremendous attack on freedom and privacy and is something that we all need to be prepared for. Not surprisingly, this is one reason why many people are withdrawing funds from their bank accounts and are securing their financial future with gold and silver, among other investments.

While the dollar will eventually reach its intrinsic value of zero, that has not happened yet, and is still the most widely accepted form of currency in the U.S. As a result, having some dollars on hand to pay your bills and fund your monthly living expenses is prudent, but we recommend limiting your exposure to dollars. Otherwise, you unnecessarily expose yourself to a depreciating currency and the conversion of your assets to a CBDC or worthless bank stock.

Lastly, companies that fail to meet the needs of their customers or adapt to changing trends or desires are those most likely to file for bankruptcy; not necessarily those that accept dollars. Although, at some point in time, it’s possible that the dollar will no longer be widely accepted if it’s viewed as being worthless. Gold and silver will always be viewed by the public as being valuable, and as we shared, may enable you to purchase valuable assets for pennies on the dollar, or at the very least, buy the essentials that you need for you and your family.

The team at Atlanta Gold & Coin Buyers keeps our finger on the pulse of the economy and factors that affect the strength of our currency and demand for hard assets, such as gold and silver. More and more people are realizing the importance of owning gold and silver.

Considering the relatively small market, it only takes a small percentage of the population to invest in precious metals before we begin to experience shortages. Reach out to us today at 404-236-9744 to secure your financial future while supplies last.

atlanta gold and coin hq gold and silver precious metals

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Tony Davis
Tony Davis is the owner of Atlanta Gold & Coin Buyers, a full service Atlanta based coin and bullion dealer specializing in buying, selling and appraising coins and coin collections of all types and sizes. Tony frequently writes on various economic and numismatic related topics affecting the coin and bullion markets and has been published on some of the industry’s leading websites, including Coin Week, the American Numismatic Association, Coin Collector, Coinflation, and Coin Auctions Help, just to name a few. Visit Atlanta Gold & Coin’s website at atlantagoldandcoin.com to obtain additional information on the products, services and educational resources offered by his company. Tony can be reached at sales@atlantagoldandcoin.com or at 404-236-9744

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