Tag Archives: Silver

What is “real” money?

Throughout recorded history, true money has been defined as a tangible item accepted for exchange and considered to have value.

Diverse items ranging from tulip bulbs to seashells to weaponry have been considered money at some point in history. However, none of those items have stood the test of time.

Neither have government issued fiat currencies. Throughout history all fiat currencies have failed or likely will fail again.

Currencies are not “real” money

If you ask the average guy on the street to define “money,” 99 out of 100 will likely answer “paper money,” the U.S. Dollar or a similar response. Technically, that?s an incorrect answer. Paper money and base metal coinage are just government issued currencies, a form of debt.

On the other hand, gold, and to a lesser extent silver, fit the historical definition of money and have for thousands of years.

So why have gold and silver survived the test of time as a true form of money? And why have gold and silver been universally accepted as money throughout recorded time?

gold bullion vs gold coins

Unlike government-issued currencies, gold and silver have been considered “real money” throughout history. [Photo credit: BullionVault Bullion bar in sea of coin via photopin (license)]

Why gold & silver are “real” money

Here are a few reasons why gold and silver are well suited to be considered money:

1. Gold and silver are LIQUID, meaning they are easily exchanged, traded, bartered with or sold for non-monetary government issued currencies.

2. Gold and silver are CONSISTENT. That refers to the fact that gold and silver are easily recognized, and their appearance and composition have never changed.

3. Gold and silver are DIVISIBLE. Smaller or larger units of precious metals are proportional in value. Most other tangible items of value are not.

4. Gold and silver are CONVENIENT, meaning even small units hold noteworthy value and are easy to carry and transport.

5. Gold and silver are DURABLE. That means, as with all precious metals, they are not biodegradable, nor can they evaporate and disappear without a trace. That is not the case with many forms of “so-called” money.

6. And finally, and maybe most importantly, gold and silver cannot be created “on a whim.” Both are FINITE. Whereas there?s almost an infinite amount of paper on this planet, there?s a very finite amount of accessible precious metals.

If you have any questions about true money, which is by historical definition physical gold and silver, please contact the non-commissioned professionals at Jack Hunt Gold and Silver at your convenience.


An Introduction to Buying Silver 101

This article is a follow-up to our last blog which discussed the merits of owning physical gold. Both novices and long-time investors stand to benefit from a review of the basics of owning physical silver. The following list contains some, but not all, of the reasons to buy tangible silver. Some items on the list hold true for any precious metal, others are unique to silver.

  1. The most obvious reason to own silver is its comparative affordability. As I write this it?s possible to own physical silver for less than $20.00 per troy ounce. As a point of reference, gold is currently 80 times more expensive than silver. We frequently mention to our customers that it?s far more likely for silver to double in value to $37.00 than it would be for gold to double in value to $3000.00 per ounce. Simply put, if your primary motivation for buying precious metals is profit, silver offers you the best opportunity for appreciation.
  2. Silver is more of a commodity than gold. It has numerous practical uses in the fields of technology and medicine amongst others. Whereas virtually all of the gold mined throughout history is above ground and accessible, most of the silver ever mined is gone, much of it inaccessible in landfills, too expensive to recycle. Estimates of the above ground quantities of gold and silver vary wildly but all agree the accessible silver on this planet is far less than the current silver to gold 80:1 price ratio suggests. Based on supply considerations only, gold is either obscenely over valued or silver is grossly undervalued. We tend to believe the latter is true.
  3. If gold, platinum and palladium continue to trend higher many investors will choose to buy silver simply because the other metals are no longer in the average buyer?s budget. This point was touched on in our first pro silver argument. However, in this scenario silver would likely rise due to higher demand. In a precious metals bull market silver could become or already is ?the only affordable game in town? for many precious metal buyers.
  4. Readily available smaller units of silver would be far more useful in an unlikely but possible currency devaluation or financial collapse as well as during, God forbid, a natural disaster or war. Along the same lines, silver?s liquidity during a short-term financial crisis, whether it be unexpected bills or a medical emergency, makes it far more practical than its more expensive counterparts, gold, palladium and platinum.

Jack Hunt Gold and Silver, 2017 1oz US Silver Eagles Coin

There are numerous other reasons to own tangible silver, but many of these reasons apply to all precious metals, not just silver. I?ll review a few of them:

  1. Purchasing and owning tangible silver can be legally anonymous, especially if purchased through Jack Hunt Gold & Silver.
  2. Unlike bank deposits, equities, Treasuries and other paper investments, physical silver cannot default, go broke or file for bankruptcy.
  3. Physical silver is real?it is tangible. Currency, equities, Treasuries, etc., are just paper and promises from the issuer.

In conclusion it should be said that asset diversification is more important than ever in our turbulent and confusing times. We believe that a balanced portfolio should contain some traditional assets such as real estate, equities, bank accounts and cash. However, we strongly believe that a moderate percentage of one?s liquid assets be in precious metals. The non-commissioned professionals at Jack Hunt Gold & Silver would be happy to assist you in any form of precious metal related transactions. 


Removing Capital Gains Taxes from Precious Metal Trades

Recently lawmakers in Idaho and Arizona have passed bills removing Capital Gains Taxes from transactions involving gold and silver bullion.

Normally, when individuals sell gold or silver they must pay capital gains on any increase of the value of their precious metal investments.

However, many consider precious metals, especially gold and silver, to be a form of currency, not an investment in the traditional sense.

It seems that lawmakers in Idaho and Arizona have now realized that their citizens shouldn?t have to pay taxes on their precious metal holdings simply because of the Federal Reserve?s questionable dollar related philosophies.

Gold & Silver Moving Toward Role As Currency

So now we have two states in the last few weeks that have passed bills removing capital gains tax on gold and silver. The Arizona and Idaho legislation is a noteworthy step towards the reintroduction of precious metals in their rightful role as both real money and as a high quality storehouse of value.

Gold silver idaho currency

Idaho and Arizona lawmakers recently voted to eliminate capital gains taxes on gold and silver trades, helping to move the precious metals toward their role as currency, rather than investments. [Image: Tenth Amendment Center]

In 2011 the state of Utah was the first state in 80 years to pass a bill that made gold and silver legal tender once again. Thus, citizens in Utah are legally allowed to use silver and gold to pay either taxes or for goods and services if both parties agree.

But what’s even more interesting is that Utah just recently introduced a bill for a State Gold Repository. This bill would build on the state?s Legal Tender Act, creating a foundation for further action to encourage the use of gold and silver as money.

This would be still another step toward breaking the Federal Reserve?s monopoly on money. The legislation would add several key provisions to the state law designed to encourage the use of gold and silver as legal tender.

Passage would set the stage for the expansion of gold repositories in the state and authorize further study on numerous sound money policies. Specifically, this bill authorizes the investment of public funds in specie (coins with precious metal content) legal tender held in a commercial specie repository.

Demand For Gold & Silver Will Increase When Dollar Falls

As I write this, we now have three states encouraging the use of gold and silver as real money. Not only does this legislation help to reintroduce gold and silver as sound money, it also sets the stage for new depositories across the states to house citizens? precious metal holdings.

Granted, there are only three states onboard with plans equating precious metals with currency. However, I believe that this is just the start for numerous other states to follow suit. The dollar will eventually tumble due to massive monetary printing and staggering debt.

Americans are hopefully preparing for what may be on the horizon. Precious Metals are currently being valued in a manipulated highly leveraged gold and silver paper trading market, a system that cannot last forever.

When the paper markets finally crack under the massive weight of debt and derivatives, there will be a mad rush of investors looking for gold and silver. The overall demand for tangible assets will lead to shorter supplies and higher prices for precious metals.


The War on Cash: Implications for Gold & Silver

Government bureaucrats, central bankers, and Wall Street executives all have reasons for ridding the masses of their cash. It should be no surprise to anyone that they are working together to achieve that goal. But why? The self interest of bureaucrats is one factor, they don?t like privacy. They dream of the day when they can access all your financial information with just a few keystrokes. The knowledge will help them more aggressively tax and regulate.

Central bankers have a different motivation. Their policy of preference is NIRP?.Negative Interest Rate Policy. Bankers in Switzerland, Sweden, Denmark and Japan have already launched NIRP. Their counterparts elsewhere, including the U.S., are planning for it. The plan is to create an environment where customers must either spend their savings or pay their bank interest to hold deposits. For this to work the government must coerce the masses into turning their cash into electronic money. Otherwise everyone will just withdraw their cash over time and literally hide it under their mattresses. When you have to pay a bank say, 1% to access your money, holding physical cash gives you a better return (0% vs. ?1%). Those of you convinced that the Fed is set on higher long term interest rates should note the following: History shows that economic downturns/recessions lead to lower interest rates. With current rates near historic lows it?s not difficult to imagine a negative interest rate scenario. Already, U.S. banks are making it more difficult to withdraw cash. Most banks only keep nominal amounts of cash on hand and then make you jump thru hoops if you attempt to withdraw any quantity of consequence.

Do we take it for granted that we can keep physical cash? Photo Chance Agrella

Bankers are drooling over the profit potential for all transactions to be done electronically. They stand to rake in processing fees every time you use a card or cell phone for purchases as opposed to using cash. In a cashless society bankers will gain a larger customer base, as the public will no longer have the option of holding currency outside the banking system.

The public needs to remember the true reasons that the powers that be want to eliminate cash from circulation. You can be assured that politicians and bankers won?t be truthful as to their reasons for eliminating cash. Wall Street wants you to focus on the convenience of electronic payments. Bureaucrats are preoccupied with stigmatizing cash as a tool for drug dealers, tax cheats and terrorists.

If the public ultimately loses the ?War on Cash? here are some likely ramifications for precious metals investors. Negative interest rates should drive significant demand for gold and silver. NIRP is a testament to the fact that central bankers will try literally anything to produce inflation. Such a controversial policy should set off alarm bells for anyone who isn?t concerned about inflation, or who may be betting on deflation. If central bankers want inflation, they have the power to create it. As always, inflation fears will drive demand for physical bullion.

While politicians and bureaucrats can theoretically win the ?War on Cash? because they have complete control over the issuance of paper money, they cannot win a war on bullion. Physical bullion is private and ?under the radar?, a nightmare for regulators.

If politicians attempt to tax and regulate precious metals they are likely doomed to fail. Gold confiscation had only marginal success in 1933 when the U.S. population consisted of approximately 85 million obedient patriots. A similar confiscation attempt today in our country of 325 million diverse individuals would likely be a logistical nightmare at best and chaos at worse.

Politicians and their allies in the banking industry aren?t likely to eliminate the masses desire, or ability, to transact privately using barter instruments such as gold and silver bullion. The drive to eliminate cash will inevitably push the public into cash alternatives, most notably precious metals.


Diversification is the Key to a 21st Century Portfolio

It?s no secret that here at Jack Hunt Gold & Silver our focus is on buying and selling precious metals. Being confirmed Capitalists we hope that those who read this consider putting a conservative percentage of their wealth into tangible gold, silver or platinum.

However, unlike many financial “advisors,” our non-commissioned brokers will never suggest that one place a majority of their wealth into precious metals. The truth is, contrary to many of our competitors, we?ve persuaded some overly zealous hard asset fans to spend less on metals than they initially planned.

We encourage our clients to be thoughtful, deliberate and well informed before making any decisions about asset allocation. Our belief is that a properly positioned portfolio for this day and age will contain a mix of equities and cash (both domestic and foreign) along with a healthy percentage of tangible assets such as real estate and precious metals.

Why Invest in Gold and Silver

Why precious metals? At some point higher interest rates and inflation will become an issue both in the U.S. and abroad. In a rising interest rate environment, all dollar denominated assets (stocks, bonds, annuities, whole life insurance) could be at risk. That?s where precious metals come in.

Gold and silver are not correlated to conventional financial assets. Historically precious metals tend to gain, or at least retain, value during times when other asset classes are in bear markets. In fact, gold prices often move inversely to investor confidence.

gold silver diversification portfolio

Investing in gold and other precious metals as part of diversified portfolio can help reduce your financial risk. [Image: Precious Metals IRA]

Despite the obvious advantages of including precious metals in a diversified portfolio, the financial industry has, in the past, been institutionally biased against precious metals. Bankers, stock brokers, insurance agents and financial planners had an inherent conflict of interest as they did not profit when investors diversified into hard assets.

That trend appears to be changing though. We have recently seen a significant uptick in financial advisors foregoing their own economic interests. They are now suggesting that their clients purchase precious metals (even if they do not profit from such a purchase) as a safety net to offset the unpredictable nature of the stock market. In essence, they are advocating that their clients purchase gold and silver as a form of wealth insurance.

Precious Metals Reduce Financial Risk

A recent study found that investors who put 7% to 15% of their assets in precious metals enjoy superior risk-adjusted returns. Yet the average investor has less than 1% of their assets in bullion. If the average investor started allocating 10% of their assets in precious metals, imagine the shock to the financial system!

How much an individual allocates to precious metals is ultimately a personal decision that depends upon one?s life circumstances, goals, risk tolerance and future expectations. If you expect a currency crisis within your lifetime you may want to consider boosting your metals allocation.

Don?t underestimate your current asset allocation. Consider all your financial assets, from brokerage and bank accounts to savings bonds and life insurance policies. In the event of a currency crisis, your investments with these counter-parties (whose liability is your asset) could be at risk. Do you own enough tangible assets to offset that risk?

Please consider Jack Hunt Gold & Silver for all your precious metal needs. We?re locally owned and have been in the same location for over 35 years. Our “no pressure” non-commissioned brokers are here to answer your questions and execute your orders.


The War on Paper Money Part 2: India Recalls 500 and 1000 Rupee Notes

Many loyal customers of Jack Hunt and followers of this blog may recall our article from April of this year titled War on Cash. That article dealt with the potential for the future abolition of currency, both in the United States and abroad.

The speculative nature of that blog has suddenly become far more credible with the recent startling news from India.

India Eliminates High-Value Rupee Notes

Indian Prime Minister Narendra Modi announced a few weeks ago that 500 ($7 USD) and 1000 ($14 USD) rupee banknotes will be withdrawn from circulation, allegedly as part of a crackdown on rampant corruption and counterfeit currency.

As of midnight Tuesday November 1st, the country?s two largest banknotes were no longer considered legal tender after Prime Minister Modi?s surprise announcement just hours before.

Citizens will have 50 days to exchange the old money for new at banks, but only by providing ironclad identification. Individuals who deposit over 250,000 rupees ($3,700) face severe tax penalties starting at a rate 45% of the deposit value.

Impact of Removing High-Value Notes

The impact of such a policy becomes even more significant when one considers that almost 50% of Indians do not hold a bank account and over 80% of Indian transactions are conducted in cash including for large purchases like cars or a homes. It?s not uncommon to Indians to pay over 1-2 Million Rupees for a home in India.

The surprise step is purportedly designed to bring several billion dollars of cash in unaccounted wealth back into the mainstream economy. This move will also, allegedly, hit the finances of Islamic extremists targeting India who are suspected of using fake 1000 rupee notes to fund terrorism.

While abolishing these notes might reduce crime and tax evasion perpetrated by a few, the removal of the high denomination notes restricts economic freedom of all Indians.

Regardless of your country of citizenship, the more one is required to use a bank account the more the banks (and its partner the government) know about where and how depositors spend their money. Ultimately, it?s another form of a government stealing liberty from its citizens.

Could the ECB Kill the 500 Euro Note?

It is also reported that the European Central Bank (ECB) has begun planning the demise of the 500 EURO note, the one banknote which not only makes up 30% of total European circulating currency by value, but also provides the most cost efficient alternative to Europe?s effective money “tax,” better known as NIRP (Negative Interest Rate Policy). The prospects for NIRP to expand worldwide including to the U.S. have also been highlighted in previous blogs at this site.

Former U.S. Treasury Secretary, Fed Chairman wannabe and Harvard alum Lawrence Summers recently wrote a dissertation urging countries around the world to stop issuing high denomination banknotes, allegedly to deter crime and corruption.

Summers was quoted as saying, ?Even better than eliminating the 500 Euro note would be a global agreement to stop issuing notes worth more than, say, $50.? In another recent blog titled ?It?s time to kill the $100 bill,” Secretary Summers made it clear that the elimination of paper money is only in its infancy.

Elimination of Cash a Real Possibility

Not surprisingly, just like in Europe and India, the argument is that eliminating high denomination U.S. currency will somehow eradicate crime. Quoting the former Secretary of the Treasury, ?a moratorium on high denomination notes will make the world a better place.?

If the Fed heeds the advice of Mr. Summers and EU Central Bank president Mario Draghi, or follows the actions of Indian Prime Minister Modi, eliminating all currency may be in our future. Currency is the only paper based alternative store of wealth to a negative interest rate digitalized future that is potentially in store for all of us.

That being said, what would be left as an alternative to a currency (or lack thereof) related to a potential economic collapse? Gold and silver, of course. Precious metals have been the one true tangible currency for thousands of years.


Gold, Silver and the U.S. Dollar

There are many drivers of precious metal prices, such as global economic growth, supply and demand, inflation expectations, interest rates, geopolitical turmoil, etc. However, one of the primary influences on the price of gold and silver, that investors must always keep their eye on, are movements in the global currency market and especially the U.S. Dollar.

How the U.S. Dollar Affects Gold and Silver Prices

The U.S. Dollar is the base currency for both gold and silver. This means in the global commodity markets gold and silver are generally bought using U.S. Dollars. Therefore, if the dollar weakens, gold and silver become cheaper to purchase and metal prices generally increase. Whereas if the U.S. Dollar strengthens it becomes more expensive for investors to buy gold and silver and on average precious metal prices will drop.

u.s. dollar vs gold comparison chart 1995-2016

As the value of the dollar increases, the price of gold decreases, and vice versa. [Macrotrends]

While this partially explains the negative correlation between gold and silver and the U.S. Dollar there is more to it. The key driver behind the value of the U.S. Dollar is the level of the U.S. benchmark interest rate established by the Federal Reserve. This is because the more interest one receives for holding U.S. Dollars, a greater number of people will be exchanging their money into U.S. Dollars. Therefore, a rise in U.S. benchmark interest rates, or an indication that a rate hike is near, historically strengthens the U.S. Dollar. This in turn will weaken gold and silver, not only because it becomes more expensive to buy precious metals, but also due to the opportunity cost of owning a non-interest bearing asset. If holding the U.S. Dollar pays you reasonable interest, then holding precious metals becomes less attractive as they obviously pay no interest.

Gold becomes stronger as U.S. Dollar weakens

Movements in the U.S. Dollar tend to have a strong negative correlation with the price of gold; the gold price can also affect movements in other currencies, especially those in emerging markets. During times when a countries domestic currencies are weakening dramatically, central banks tend to buy gold to compensate for that loss in value. This was witnessed recently when the currencies of Malaysia, Indonesia, and Thailand all saw a dramatic drop in their value in relation to the U.S. Dollar. As a result their central banks as well as many emerging market investors subsequently began buying physical gold as a safe haven investment and hedge against their local currencies.

Gold became an increasingly attractive option to emerging market central banks and individuals as well due to its strong performance in 2016 to date. Furthermore, countries suffering with high inflation tend to buy gold as an inflation hedge. Since gold is liquid and frequently traded it is often viewed as an alternative currency. For developing countries with volatile currencies gold has become a popular investment with central banks, especially in times of U.S. Dollar weakness.


Silver and Gold are the Best Performing Assets Year to Date… Why?

Silver and Gold are ranked number one and number four respectively in numerous listings of best performing assets in H1, 2016. Silver was the highest ranked asset showing a 38% price increase since the first of the year while Gold reflected the fourth highest increase in valuation this year with a 26% jump year to date. Only sugar and soybeans barely kept gold out of second place. They were the top ranked assets prior to Brexit and in the subsequent market turbulence since Brexit have retained their lofty status compared to other assets. Platinum and Palladium fared well too with 2016 gains of 16% and 6% respectively.

Policies, Economic Turmoil Contribute to Growth of Silver and Gold

Gold and Silver made these gains due to continuing loose monetary policies, diminished U.S. rate increase expectations, concerns about global economic growth, U.S. and global geopolitical concerns and Q1 market turmoil. The UK decision to leave the EU has exacerbated these risks and highlighted them for the complacent investors who seem blissfully unaware of growing of geopolitical and macroeconomic risks.

silver highest ranked asset 2016

Silver is the highest ranked asset in 2016, showing a 38% price increase since the first of the year. [Image credit: Royal Canadian Mint]

There is also the inconvenient truth that many European banks, notably in France, Italy and Ireland, are woefully under capitalized and borderline insolvent. It?s not just banks in the aforementioned countries that are vulnerable. The current share price of both Germany?s Deutsche Bank and Switzerland?s Credit Suisse Bank should give even the most complacent equity bull cause for concern. Both of these banks have massive derivative exposure and the bankruptcy of either one could be the EU?s version of the 2008 Lehman Brothers fiasco. That scenario could lead to the collapse of the EU and severely damage the global banking system as we now know it. To those that say a global banking crisis could never happen should remember that we came extremely close to that situation just eight years ago.

Popularity of Gold & Silver Reflects Global Financial Bubble

Gold and Silver are reflecting the fact that we have a massive global financial bubble, especially in the U.S. stock and bond markets, based on loose monetary policies and the creation of currency to artificially support global markets.

The global financial and geopolitical situation is one big mess. Recent national and international turmoil played out daily in all forms of media reinforce this notion. Historically. in turbulent times, many investors consider a position in tangible Gold and Silver as a hedge against economic uncertainty.

By Douglas Trinder, Precious Metals Analyst, Jack Hunt Gold & Silver


Gold, Silver & Negative Interest Rates

Could negative interest rates be on the horizon? As we discussed in a recent article on this site, a documented “war on cash” has already been initiated in several countries worldwide. In Sweden, Switzerland, Denmark and the euro zone, central banks are using negative interest rates policy (NIRP) as a primary weapon in trying to force feed stagnant economies into growth. Here in America, Janet Yellen recently said that if circumstances warrant, negative interest rates are ?on the table.? Another Federal Reserve governor was quoted last fall as stating ?negative interest rates are inevitable in the U.S.? The same thought process is in play at the Bank of England.

How Negative Interest Rates Could Affect Banking

negative interest rates cash banks

Negative interest rates have been described as “inevitable” in the U.S., which could lead to customers pulling their money from banks. [photo credit: Greedy Corporate America via photopin (license)]

Some highly respected central bankers and influential financiers have suggested that negative interest rates should also usher in the abolishment of cash, a topic we recently elaborated on at this site. These supposed intellectuals theorize that by imposing negative interest rates on consumers, depositors will spend their money as opposed to paying a bank to store their cash. These same bankers publicly state that the masses won?t object to negative interest rates because currency in a bank is easier to spend than cash in our electronic world. The truth is more likely that central bankers and federal governments simply want to abolish cash and go to an all-electronic form of currency. Imposing zero or negative interest rates is major step in attaining that end result.

I believe that depositors will not view money in the bank as a convenience because they can spend it more easily. Much of the world is cash-poor already and they won?t give up their cash for a perceived convenience. The public will ultimately find alternatives to avoid paying a fee, in this case negative interest, to a bank that is likely already robbing them with ATM fees, minimum balance fees, etc., etc?

Think about it from your own personal perspective. What would you do if all the banks announced that, at the start of the business day tomorrow, all your deposits are now subject to various fees and charges equating to negative interest rates? From now on you will essentially pay the bank to warehouse your money, much like some individuals pay the local self-storage facility to warehouse boxes of their junk.

Are you really willing to pay your bank to store your money? I doubt it. Since this is an arrangement never envisioned or experienced in the history of America, bank customers will likely yank their cash out of the bank, assuming the cash is actually there. They will store it at home or move it into assets that will hopefully maintain its value such as collectibles, gift cards, cashier?s checks and of course precious metals.

An Argument For Gold and Silver

This is not a hypothetical essay on eliminating cash. Negative interest rates and cash elimination are under serious discussion by central bankers and influential politicians worldwide. There are several European consumer banks already committed to imposing negative interest rates on depositors this year.

If there ever was a message that makes a clear-cut argument for buying gold and silver, this is it. In a world where your bank deposits effectively lose money annually, the 0% interest that gold earns annually suddenly doesn?t look so bad. If negative interest rates are the next stage of the global financial crisis, gold and silver may become one of the only forms of money to protect you.

By Douglas Trinder, Precious Metals Analyst, Jack Hunt Gold & Silver


War on cash

There appears to be a growing war on cash as evidenced by more frequent reports in the mainstream media suggesting central banks and federal governments are supporting the banning of currency (cash) in the foreseeable future. Consumer spending in most developed countries makes up at least 50% of the Gross Domestic Product. However, with sluggish growth at best in most developed countries, the ?powers that be? are looking to encourage the populace to spend money rather than save it. Thus the motivation for the war on cash.

War on cash leads to hoarding

In a world of low, zero and negative interest rates, there is little incentive for the traditional saver to accumulate deposits within the current banking system. Therefore, there is an increasing tendency for individuals to hoard cash or cash equivalents outside the banking system.

Japan’s recent plunge in negative interest rates serves as evidence of this. Since rates have gone negative there has been a significant increase in Japanese citizens withdrawing large sums of cash from their banks. In addition sale of cash equivalents, especially gold and silver bullion, have taken off. Interestingly the sale of home safes has boomed as Japanese citizens need a secure means to store the cash and/or other cash equivalents they are accumulating to replace their bank deposits. The main point here is that hoarding cash as a result of low or even negative interest rates is exactly what the ‘powers that be’ want to prevent.

Cash withdrawals, deposits and your local bank

Examples of the war on cash already exist. Have you tried to withdraw or deposit more than a few thousand dollars in cash at your friendly local bank lately? Good luck with that! Besides rejecting your request there is a very good chance that the bank will file a Suspicious Activity Report (SAR) with the Financial Crimes Enforcement Network (FinCEN) based upon your request. By the way, you will would never know if it happens. Banks face severe penalties if a customer is ‘tipped off’ to the filing of a SAR.

Even here at Jack Hunt Gold & Silver our hands are legally tied if a client attempts to spend $10,000 or more in currency for ?related transactions? within a calendar year?.unless of course you want to fill out the IRS Form 8300. The Form notifies IRS of a large cash transactions and opens customer reported to further government scrutiny.

war on cash. Will this note remin legal tender?

War on cash; will this note remain legal tender for all debts public and private?

Classic Keynesian economic theory suggests that if cash was banned everyone would be forced to have a bank account. If everyone had a bank account banks could offer low, zero or negative interest rates with the expectation that people would rather spend their money, thus stimulating the economy, as opposed to losing money with zero or negative interest rates. However, it?s this monetary philosophy that has put the world into unsustainable and unserviceable debt and perhaps has fatally damaged the global banking and financial system.

Benefits of the war on cash, not for you and me

The primary supporters of eliminating currency, which include most developed debt ridden governments, central banks and credit card companies look forward to the following benefits of banning cash:

1. It would assist banks in meeting minimum reserve requirements.

2. Banks could use greater deposits to leverage credit and increase profits.

3. It would be easier to control and manipulate any future bank runs.

4. Makes bank ?bail-ins? more effective.

5. Finally, a society with no access to cash is more easily controlled, making it easier to collect taxes and monitor all aspects of individual and corporate finances.

It?s interesting that these benefits go far beyond the stated benefits of a cashless society. Mainly that only tax evaders, drug dealers and terrorists use large sums of cash. The idea that an individual would want to keep their money in cash outside a bank because of perceived risk holds no merit. If you want to hold large sums of cash it?s assumed that you are a criminal.

The war against cash is yet another argument in favor of individuals purchasing and accumulating tangible gold and silver bullion, and storing it outside the banking system.