NIA Provides Answers About Inflation, Gold, Silver and Real Estate

NIA Provides Answers About Inflation, Gold, Silver and Real Estate

April 17, 2010

National Inflation Association - The National Inflation Association today announced the top 10 most interesting new NIAnswers recently added to its database.

1. How much over spot is a good price for silver and gold?
   
   A good price for a 1 oz silver coin like an American Eagle or Canadian Maple Leaf is 12% over spot, and a good price for a 1 oz silver bar is 6% over spot.
   
   For gold, a good price for a 1 oz gold coin like an American Eagle or Canadian Maple Leaf is 4% over spot, and a good price for a 1 oz gold bar is 2% over spot.
   
   The larger premium for silver compared to gold indicates a shortage in the physical silver market.



2. Now that GATA has blown the doors off the LBMA ponzi scheme, and we know there is only 1 oz of silver for every 100 oz represented on paper, why hasn't there been a panic to dump paper and go into physical? What will it take to trigger a short squeeze?
   
   We don't believe there is only 1 oz of physical silver for every 100 oz represented on paper. Most likely, there is 1 to 3 times more paper silver than physical silver. This is still a major problem that will ultimately result in a major silver shortage and short squeeze, once a large number of COMEX holders begin to demand physical delivery of silver. This is a topic that we will be covering extensively in our new documentary coming out next month.



3. If the silver market is controlled by JP Morgan and others, how does the little guy stand a chance of making money?
   
   The manipulation by JP Morgan through naked short selling is providing an opportunity for normal everyday investors to purchase silver at dirt-cheap prices. Without JP Morgan's naked short selling, it's possible silver would already be well above $30 per ounce right now.
   
   Remember, JP Morgan is not manipulating silver up, they are manipulating it down and the manipulation can't last forever. When investors around the globe call for physical delivery of their silver, there will be a shortage of physical silver and JP Morgan will be forced to cover their naked short position, causing silver prices to explode to the upside.
   
   NIA believes silver will eventually see the biggest short squeeze in the history of all commodities.



4. What is the best way to respond to the overused and baseless argument that we needed the stimulus package or else the U.S. economy would've crashed and we would've had another Great Depression?
   
   The stimulus package didn't stimulate the economy but it actually stifled it because we needed to go deeper into debt and borrow the money that was used on projects that added no production to our economy. The jobs that were created were temporary but we still owe the debt. We will need to print the money to pay the debt back, which will ultimately lead to hyperinflation.
   
   Our country does not have access to unlimited financial resources. The money that we borrowed for the stimulus package took away from the money that could've been borrowed by a small business, which could've invested the money into building a factory that would've produced goods and generated real wealth for decades to come.
   
   Our economy needed to enter a recession in order to clean out the toxic assets and imbalances. Today, all of the toxic assets still exist on the balance sheet of the Federal Reserve and the economic imbalances that caused the last crisis have grown larger than ever before.
   
   Instead of going through a steep recession, we will now be forced to eventually endure a hyperinflationary Great Depression. Remember, when there is a boom created by cheap credit, there must eventually be a bust. There is no way around it. All the government has done is push the real collapse down the road while making the eventual outcome a lot more devastating.



5. Why do you not like investing into Real Estate? Isn't it smart to buy Real Estate that is cash-flow positive and then use that cash-flow to purchase precious metals?
   
   Real Estate that is cash-flow positive today, might not be so in the future. In our opinion, it will be impossible for landlords to increase their rents at the same rate as inflation. If you are a landlord, your real cash-flow will diminish over time.
   
   During periods of high inflation, preserving ones purchasing power becomes a lot more important than generating cash-flow. We believe Real Estate will continue to decrease in real value because Real Estate is not very liquid and prices are still at artificially propped up levels. Those who own Real Estate will do poorly compared to those who own precious metals.



6. Do you believe the discovery of many large oil shale deposits in the U.S. will drive down oil prices?
   
   There are several major shale deposits in the U.S. that contain large amounts of oil and natural gas. The cost of extracting oil from these formations is very high and we doubt it will have much of a damper on oil prices. Although it is cheaper and easier to extract natural gas from these formations, we believe the existence of these shale deposits is already factored into our current low natural gas prices. We expect to see many vehicles convert to run off of natural gas in the future, which could lessen the demand for oil, but it will take many years for these conversions to take place. We believe $100+ oil is inevitable due to increasing demand from China and India, and the Federal Reserve's monetary inflation.



7. Do you believe Special Drawing Rights (SDRs) being issued by the IMF will accelerate the U.S. into hyperinflation? Are SDRs being setup to become the new world reserve currency?
   
   From 1970 to 1981 the IMF issued $30 billion worth of SDRs, and gold and silver prices soared to record real highs. The IMF recently issued approximately $300 billion worth of new SDRs. Certainly, this shows that inflation is a major problem around the world and now is the time to own gold and silver.
   
   We don't believe SDRs are being setup to become a new world reserve currency. It would be much more beneficial to China for them to allow their own currency to become the reserve currency.



8. I am considering a career in the military. With the coming collapse, will the military offer me and my family any type of security or will the hyperinflation affect the military as well?
   
   We don't think the U.S. government will be able to afford the military it has today for much longer. Our military needs to be scaled back immediately if we want to prevent hyperinflation. During hyperinflation, the army will most likely be used mainly to protect government officials. Those who are left in the military will demand to be paid in gold, until our gold reserves are completely depleted.



9. I work at Disney Orlando as a server. I make about $300 a day on average. My seniority is rather high. What will happen to my job when the economy collapses?
   
   We can't picture Disney World in Orlando ever closing its doors and going out of business. Certainly, your wages will decline in purchasing power and workers will demand higher nominal wages. Disney will have to increase admission fees and if visitors can't afford them, Disney will layoff employees. Hopefully your level of seniority will ensure your job safety.
   
   The good thing about Disney World is many Asian visitors and foreign tourists come each year. We might see the percentage of foreign visitors increase in the years to come and make up a larger percentage of Disney World's theme park revenues.



10. If the government imposes a value added tax, how will that affect inflation?
    
    We believe Americans are already taxed to the hilt and any additional taxes will have the effect of reducing tax revenues. We need to move the discussion in America away from taxes and towards inflation. It is impossible to fund our current level of government spending and pay back our national debt through taxation. It will all be paid through massive monetary inflation.

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