This content was aired on Debt Free Wealth Radio. Option: Listen as you read.
In a recent social survey, it became almost hysterically clear that the average American is CLUELESS about gold and silver, about value, and about the state of our buying power.
In a follow up survey where Entrepreneurs were the responders, the responses were the absolute opposite.
It appears that those who are familiar with the process of CREATING INCOME and leveraging strength for a profit have a better appreciation for money, value, and even precious metals.
So what do you think about gold and silver? If you were faced with the same option – which would you pick?
Today I am going myth buster style on the information about gold and silver. Social surveys done recently indicates the general public and entrepreneurs are NOT on the same page in this arena. Are you aware this is no longer the exclusive playground of the rich?
This blog will have something for the blue collar worker, the white collar worker, the financially savvy, and those who are comfortable, but realize there is no such thing as having too much money.
In the video above, Mark Dice is on the street with $5 cash and a 10z silver dollar coin in hand approaching people and giving them the option to choose and TAKE either the $5 cash or the 1oz silver dollar. Within the 5 minutes Mark is out on the street, he has given away $45 and still has his silver dollar.
After seeing this video, I ran the same question on my facebook fanpage to a bunch of entrepreneurs and some of those responses were shown earlier on this page.
I checked the market prices and today, the bullion silver dollar retails for between $33 and $36.
I was blown away when I watched Mark Dice’s video to see how many people took the $5 cash over the silver dollar, but my eyebrows hit my hairline when I read the responses from these entrepreneurs. Why is it that entrepreneurs have a greater appreciation for silver than for cash? This triggered further research and my conclusion was already given away at the top of the show. those who are familiar with the process of CREATING INCOME and leveraging strength for a profit have a better appreciation for money, value, and even precious metals.
You see, those who create income really operate on a different mental pathway than those who simply extend their hands to receive an income. Both sets of individuals may be very hard workers, but the employee trades time for money. The entrepreneur uses time – the employees time -to create money. It is like driving down parallel streets.
When I hire an assistant to teach a class and I pay that person $75, but that class generated $500 cash, without my being physically present, I created a $75 payout to that person, and a $425 payout to me. That person may feel elated to have been paid $25/hour, but I basically earned $141/hour net to me, and I was not even there. Now if I asked that person to consider doing what I do, and take the risks that I take to maybe make the money that I make – most people with an employee mindset would not be willing. If I advertised the $25/hour job I would have a long line of takers. But if I advertised the $150/hour business opportunity, I would not have as many – if any, lining up to hear what I had to share. (curious about the gold and silver business opportunity?)
There is definitely separate paths for those who hold out their hand for a paycheck, and for those who create the opportunity that generates the paycheck. Now the world cannot survive if everyone is the Head Honcho. We do actually need workers, and together we all make the world go round.
The equalizer is the fact that most people would agree – entrepreneur or employee – that there is no such thing as having too much money. So keep listening in, and regardless of who you are, let’s talk about how to generate more money for our realities.
To have more money does not always mean we have to add more hours to our work day. Taking on a second or 3rd job, or doing overtime is one way to go, but I bet it is not the best way for adding to your quality of life experiences. In fact, it does just the opposite.
I want to start with busting two big myths that are so pervasive out there, that you have all heard it – or maybe even thought or said it. Broke people can’t save. And Broke people can’t get rich.
Now, I will agree, it is hard for someone who is broke to imagine taking some of the money that is already stretched too tight and save some of it. I will agree. That was my experience, and during the economic recession this became my challenge.
You see, my husband and I live in Florida – one of the hardest hit states, and to make it worse, we were both in the real estate industry during the worst real estate bubble to burst in the history of histories. Saving seemed impossible and even though I gave it the boys scout effort, I was failing big time and realized that it was practically insane to keep trying what was clearly not working. Putting money in jars, creating undisclosed saving accounts – none of those options worked. Whenever there was a situation – it did not even need to be a major crisis – I would find myself dipping into that cash I had set aside as savings. If at the end of every month we have no money or worse, negative money, then we cannot move forward toward wealth.
Saving is not necessarily a wealth building strategy in itself, but it is definitely a strategy, or a component of a strategy, even if that saving is just to finance the emergency fund. There are other wealth building strategies, but let’s just agree that if you run out of money before the end of the month, there is no way you can begin to take the path to personal wealth.
The Strategy of Saving in Gold and Silver
So, as I reviewed our finances, I realized that the gold and silver I had bought because it was something I thought rich people did, and pre the economic crisis, when we were financially comfortable, we began to implement the strategies taught by the so called experts to building wealth. Well, I had the presence of mind to not just follow the experts but to duplicate the behaviors of those who achieved what I wanted. So buying gold and silver was something I thought rich people did, so I began to purchase gold and silver. Let me just say right here, that mindset was WRONG! The more I bought, the more I found out that it was not just rich people who bought gold and silver, but the public thinks so.
The average person thinks like I used to, that only rich people buy gold and silver, so if they did not perceive themselves to be at least financially comfortable, then buying gold and silver was not even something to have in a conversation, let alone in a vault somewhere.
Which takes me to myth #1. Broke people cant save. My family of 4 was on a road trip recently and we stopped at the drive thru to buy food and spent in excess of $30. Do you know that if we decided to bypass that trip and prepare properly and pack a more affordable and healthier lunch, that I could have used that $30 and bought a 1oz silver bullion piece. That is what you call strategy. What is your spending plan? I bet if you look through your expenditures there are many $30 spendings you could have done differently. Strategy. I know people on food stamps and cash assistance that can find $30 of spending they could have done differently and possibly bought a piece of silver instead. Do you realize that buying a silver piece means at the end of the month you have basically SAVED that money? I have personally found, and proved it to be true in many others of my peers who do the same, and I am talking quantitative proof that exceeds 50K of us, that have accumulated gold and silver and by extention, wealth that we may not otherwise have saved had we tried to hold the same money in cash.
There is a psychology that comes with purchasing the gold and silver that takes the cash out of the spending pool and deposits it in the wealth box. At the end of the month that $30 is still in hand and guess what, if you are truly in a crisis, that silver can be converted back to cash, but that extra step to do so means we are less tempted – and in my case, not at all tempted to reach for that option to fund whatever comes up. So the month ends and now there is an accumulation of wealth that was not happening before.
So, go through your financial records, aka – your spending plan, and see where you could have re-routed money toward your wealth. Did you really need another pair of shoes? Did you really need so many meals away from home? Even if you have not put together an official budget, you still have one by default. I know a lot of people hate the word budget, but organized or not – you have been operating on a spending plan and if I look through your checking record, credit card statement and receipts in your wallet, I could easily create your budget of spending for you. What would it show? Would you see that you are giving the bank $300/month extra in overdraft fees – yes, that is a nice item to have in your budget right? Or maybe, although you didn’t pay your electric bill, that you had a dining out expense of $250 with McDonalds and Olive Garden. Now, next week we are going to talk about how to use your spending plan to create wealth, but the point is, most people blow $30 or more dollars each month, and if you were operating on an effective spending plan, you could probably find $30 to put toward your wealth.
Now here is the other part that really makes this strategy unique – gold and silver tends to be the great protector of financial worth. What do I mean by that? Well, it might be best understood with this analogy. If you are a female and tried opening a tight jar, then handed it off to a male partner who in one twist, opened the jar for you – then you have just observed how strength leads to less energy output to do the same job – right? Same thing with money. Money value is best understood via price. So if today you pay $3 for gas, then tomorrow it is $3.25, everyone will talk about how price went up – rather than the strength of the money going down. When money gets weak, it is like the female who could not open the jar. When the dollar is weak, it takes MORE DOLLARS to achieve the same goal. Gold and silver, is like the strong male who in one twist opened the jar. Same jar, same moment – but it took less effort to open it because the male in this example was stronger than the female. So, if I used $30 and bought a piece of silver today, but next week I needed $35 dollars to buy the same silver – did silver go up? No. 1 oz of silver, is 1 oz of silver today, tomorrow, and next week. What changed was we needed more dollars to buy the silver. Guess what though, the silver you bought last week for $30 if you trade it in will get you the $35 cash today. So the silver tends to retain value while money does not. One gallon of gas today is one gallon of gas, and one gallon of gas next week is still one gallon of gas. If it takes me $3 to buy that gallon today, then I will earn $3.25 next week for the SAME ITEM. The value of gold and silver do not depreciate the same way a car does the moment you drive it off the showroom floor.
Now, if you choose to adopt the strategy of looking through your spending plan for spending that you could re-route to better use, and use some of that money on gold and silver –as an alternative saving strategy – since for most of us, saving in cash is not working, AND saving in cash is holding a deteriorating asset, then this strategy not only allows you to have money left over at the end of your month in the form of gold and silver, but with each passing month, even if all you bought was one piece of silver bullion, that is now $60, then $90, then $120 and so on.
Not only can broke people SAVE using this strategy, but who will deny the wealth feature of owning and holding gold and silver? Again, the public perception is, gold and silver is the playground of the rich. I tell you something too, hold a couple pieces of gold and silver in your hand and it wont take long before you feel rich. If you keep your gold and silver in the bank safety deposit box vault, then having a bank rep escort you into the vault is an experience you will notice also adds to that feeling of wealth. It costs about $55/year to have a small safety deposit box and it can hold thousands of dollars worth of gold and silver. When I had to upgrade to the bigger vault drawer, I knew I was on to something because prior to using this strategy, in an emergency, I had to dip into my savings which left me with zero savings, and worse, in many emergencies we had to resort to swiping that credit card which UPPED our debt.
Now as a former forex trader, I also enjoy watching financial charts. I no longer trade currency because I no longer value cash. The value changes so fast that it was sucking so much of my life and causing me so much stress that just that alone translated into losses. To trade forex you need to maintain clear and stress free thinking. Now I watch the charts for the movement of gold and silver, and for there is daily up and down movement, but over time, there has been an upper and lower band of support and resistance and gold has been tracking sideways in that band for about 75 weeks or so. All trader know that sideways movement in a band is a wait and see stall to see who is going to make the run next, the bulls or the bears. Personally, I think gold is going to see the $2000 mark in 2013. I could be wrong, but with the banks around the world stocking up on gold and the world gold council indicating that banks are pretty much silently returning to the gold standard – or making the holding of gold a bigger priority, I cannot see how that demand will not show up in higher prices.
Earlier in January, the US mint ran out of silver dollars and temporarily suspended sales. I cannot tell you how many panic calls I got during that week. If I were prepared to sell my personal stash, I would have made quite a nice profit – but how would that serve me? To buy that same stash back, I would have to use pretty much the same money I just collected because while it takes MORE cash, I am still getting the same silver. Silver holds its value better than cash does.
Broke people can save, one silver dollar at a time. One gram of gold today costs about $70 today. $70 bucks – are you going to tell me that if I looked at your spending record that I could not challenge you on how you spent $70? Would it be too hard to find $70 you could have spent differently or opted to use toward building your wealth?
Don’t worry about the daily changes in gold and silver prices, they are following the movement of money – so if it takes fewer dollars to buy it today, and more dollars tomorrow, or more dollars today and fewer dollars tomorrow – at the end of the day – you still have pretty much the same buying power as your cash, or possibly a greater buying power.
Here is an even bigger nugget to think about – if you did NOT purchase the gold and silver because of the price trend – would you still have the discipline to save your cash? Most of you if you are honest the answer is no. So, if you try to tell me, well Trudy, the price of gold is down, had I bought last week I would be in a loss position – well, I think I already established that gold and silver tend to reflect at the minimum – the buying power of your cash – so, the point I am making here is – if you chose not to buy the gold or silver at the end of the month would you have that cash SAVED? 3 months later, do you still have it saved? Most people will find that if they chose to save in cash, something will come up and they will spend that cash,while if they used that cash to buy gold and silver, there is a strong chance they will still have the gold and silver in hand to liquidate if desperately needed. So the strategy of saving in gold and silver is a solid strategy that not only allows you to accumulate wealth, but to accumulate it in