Euro Pacific Precious Metals is now SchiffGold. Follow the link below to explore our new website and watch a personal message from our Chairman Peter Schiff.

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A recent article on the Wall Street Journal’s blog draws attention to the high cost of producing a single penny – 1.6 cents each, to be exact. They blame this unsustainable price on the high cost of zinc, which makes up 97.5% of every American penny. The online publication Quartz ran with this story, giving it a new headline: “It costs 1.6 cents to make one penny because of the rising price of zinc”. Time for a short economics lesson.

An alternate, more accurate headline for this story would be, “It cost 1.6 cents to make a penny because of currency debasement.” Rather than pondering whether or not the United States should simply stop producing pennies to save money, Americans should really be thinking about the long-term effects of currency debasement that has been going on for generations.

To debase a currency is to weaken its purchasing power. This is often done by inflating the money supply through quantitative easing, which the Federal Reserve has been practicing for years. When a currency is debased, a unit of that currency doesn’t buy the same amount of stuff that it once did. The US dollar has been seriously debased over the last hundred years or more. Just take a look at the handy infographic at the end of this blog post to see how bad it has become.

Currency debasement is the same reason why the US ditched the copper penny in 1982, as well as silver half-dollars, quarters, and dimes in 1964. Today we call these old silver coins “junk silver,” and they’re popular physical precious metals investments. However, they’re anything but junk – they actually contain a useful commodity that has held its value for centuries. It’s not that zinc or copper or silver has become “too expensive,” it’s that those coins have lost some of their purchasing power.

The government debases our currency and says it is because it became too expensive to produce instead of the real reason – destructive monetary policies. The policies of central banks around the world are supposed to stabilize economies and protect the people from currency debasement. However, the truth is that these policies only enrich the politically well-connected, while hurting the poor, those on fixed incomes, and savers.

When currencies aren’t debased, prices tend to fall, not rise. This gives more purchasing power to the poor, those on fixed incomes, and savers. It also decreases the need to gamble savings in the stock market, which means you have fewer bubbles like the one we’re experiencing right now.

So the next time a friend brings up the pretty well-know fact that it costs more to produce a penny than its worth, take the time to educate them about currency debasement.

Follow us on Twitter to stay up-to-date on Peter Schiff’s latest thoughts: @SchiffBlog
Interested in learning about the best ways to buy gold and silver?
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Listening to the financial media, you might be convinced that the precious metals – gold in particular – are simply not considered reliable investments anymore. This is a viewpoint peculiar to the West, as Peter Schiff has repeatedly emphasized. However, every now and then, the mainstream media shares some news reminding us that while Americans and Europeans might be disenchanted with the yellow metal, other countries are still very concerned with protecting their savings with the hard asset that has served as a safe-haven for thousands of years. Often that news comes from countries that have a much longer history of troubled economies, and therefore a greater understanding of what assets carry real value in this world.

Today, for instance, Bloomberg published two stories about central bank and Chinese gold demand. In the first, “China May Boost Gold Reserves Amid Imbalances in Holdings“, Bloomberg reports on research from the London-based Official Monetary and Financial Institutions Forum. David Marsh, managing director of the Forum, reminds us that while China hasn’t officially announced an increase in its gold reserves since 2009, there is a good chance that it will very soon. Marsh vaguely suggests that China has been adding to its reserves since 2009 “in different ways.”

Additionally, Bloomberg notes that according to the official figures, Russia has surpassed China to become the fifth-largest gold-holding country in the world. In general, central banks of the world have been net buyers of gold for 14 straight quarters, or 3-1/2 years. So while Wall Street speculators might have been shying away from the yellow metal since it has come down from its 2011 peak, the powers that actually control the world’s money supply have been gobbling up gold. As Marsh puts it:

“Gold will become more traded amongst central banks in the next 30 years because there are colossal imbalances in world gold holdings as a percentage of overall asset reserves.”

Bloomberg’s second article on Chinese gold demand notes that the Chinese Gold & Silver Exchange Society of Hong Kong has become the first non-mainland entity to be allowed warehouse access by China. Construction of the new vault storage facility will begin in Shenzhen next year. It will have a capacity of 1,500 tons. This is just another signal that China is preparing to position itself as the hub of the international gold trade in the years to come.

Follow us on Twitter to stay up-to-date on Peter Schiff’s latest thoughts: @SchiffBlog
Interested in learning about the best ways to buy gold and silver?
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This week, Chuck Jeannes told The Wall Street Journal that either this year or next, miners will have reached “peak gold.” Peak gold means that the amount of gold being pulled out of the earth will begin to shrink every year, rather than increase, which has been the case since the 1970s. Jeannes is the chief executive of the world’s largest gold mining company, Goldcorp, so it’s probably safe to assume he knows a thing or two about mining the yellow metal.

Let’s put this into context. Central banks continue to stockpile gold (even Scotland is wondering how much of the United Kingdom’s gold it will get if it becomes an independent country). Nobody knows how much gold China is hoarding, but pretty much everyone assumes it’s a lot more than the official reports. Smart economists like Peter Schiff and Jim Rickards have been pointing out for a year now that gold buyers throughout Asia are accumulating more and more gold from Western investors, and they have almost no intention of selling it.

For physical precious metals investors, all of this news should hit home. What happens when this robust demand for gold runs up against the hard limits of the mining industry? This is simple supply and demand – prices go up.

“As gold production declines, the miner’s job becomes harder, as companies compete for increasingly rare deposits. Discoveries have already tapered off. In 1995, 22 gold deposits with at least two million ounces of gold each were discovered, according to SNL Metals Economics Group. In 2010, there were six such discoveries, and in 2011 there was one. In 2012: nothing.”

Read the Full Article Here

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The Silver Institute’s August edition of Silver News is now available. This issue explains the fundamentals behind the surging growth in demand for industrial silver, which is expected to exceed global GDP growth through 2016. The constantly evolving industry for silver technology is largely to thank for this increasing demand. August’s Silver News highlights some of the fascinating new applications of silver, including:

• Two forms of 3D printing with silver
• Using heated nanosilver to treat cancer
• Screen-printed silver circuits that cure in UV light
• Antibacterial silver on home hardware products

You’ll also find an explanation of how silver is used as an essential chemical catalyst in the production of ethylene oxide (EO), which in turn is needed to create ethylene glycol. Ethylene glycol is one of the most important substances in our modern world.

“Ethylene glycol, in turn, is used to produce many products including polyester fibers for clothes and carpets, plastics, solvents and other chemicals, and even antifreeze formulations. By itself, EO is used to sterilize many health-care products and medical instruments, including delicate electronic or optical tools, which would be harmed by the high heat or radiation sterilization processes. EO is also used to accelerate the aging of tobacco leaves, as a fungicide, and even as a preservative for spices.”

Read Silver News Here

Image: Tanaka’s printed silver circuit board.

Follow us on Twitter to stay up-to-date on Peter Schiff’s latest thoughts: @SchiffBlog
Interested in learning about the best ways to buy gold and silver?
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The financial media regularly plays down reports of consumer price inflation that are much higher than the official numbers. Even worse, analysts generally argue that more inflation is needed for the health of the US economy. Pippa Malmgren, author of a new book, Signals: The Breakdown of the Social Contract and the Rise of Geopolitics, has been studying price inflation that is cleverly hidden – she calls it “shrinkflation.”

Shrinkflation occurs when consumer products cost the same, but contain less. For instance, Malmgren points to Cadbury chocolate bars that were reduced in size in 2011, while the price remained the same. Nestle’s Shredded Wheat and Carlsberg beer are two other major products that are practicing shrinkflation. Haagen-Dazs shrunk its “pint” of ice cream by 20% in 2011. Here’s an entire list of shrinkflation products published by CNN Money three years ago. Peter Schiff has talked about this very phenomenon in his videos and podcasts for years.

The financial media will likely downplay this trend in favor of broader, “official” measures of inflation that show prices are well under control. However, they’d be missing one of Melmgren’s most important insights: “Shrinking the size of goods is exactly what happened in the 1970s just before inflation proper set in.” At a certain point, a company can’t just keep lopping squares off the chocolate bar – they’re going to have to raise the price.

Remember, if there’s one thing you want to be holding when inflation really hits hard, it’s physical gold and silver bullion.

Read the Full Article on Shrinkflation Here

Follow us on Twitter to stay up-to-date on Peter Schiff’s latest thoughts: @SchiffBlog
Interested in learning about the best ways to buy gold and silver?
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A Los Angeles Superior Court judge has issued a restraining order freezing the assets of Merit Gold owners Peter Epstein and Michael Getlin. Also included in the court document is an order for Merit to cease and desist accepting payments from its customers. The judge found that it was very likely that the company “was permeated with fraud.”  A trial date has been set for October 14.

On August 5th, Merit Financial allegedly committed what appears to be a fraudulent transfer when it sold its assets to Credit Management Association for just $1.00. This triggered the restraining order.

Merit Gold and Silver has closed its doors and is no longer selling precious metals. If you missed the news this past February, the Santa Monica City Attorney’s Office had filed a consumer protection lawsuit against Seacoast Coin, Inc., which is the parent company of Merit Financial and Merit Gold and Silver. Merit Gold was one of the largest precious metals dealers in the nation and operated large national TV advertising campaigns.

Merit Gold allegedly used aggressive “bait and switch” tactics to lure in customers nationwide. The lawsuit said it would draw customers in to buy gold bullion at just “1% over cost.” Then, Merit salespeople apparently would trick customers into buying “collector” coins that carried very large mark-ups.

It is alleged that Merit falsely told customers various deceptive statements about their collectible products, including:

“That the coins are a better investment than bullion; that the coins offer more privacy than bullion; that the coins are not “reportable” on consumers’ taxes; that the coins can’t be confiscated by the government, while bullion can be.”

The complaint says that the coins that Merit sold had “none of these advantages.” City attorneys say that Merit swindled millions of dollars from its customers, many of whom were seniors.

Euro Pacific Precious Metals has never and will never sell “numismatic” or “collectible” gold and silver products. We do not recommend them to serious investors.

Please give us a call if you would like to speak more about this:
1-888-GOLD-160 (1-888-465-3160)

Follow us on Twitter to stay up-to-date on Peter Schiff’s latest thoughts: @SchiffBlog
Interested in learning about the best ways to buy gold and silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!