Solvency and You Today

Solvency? What’s this all about?

In finance, solvency is the ability of an entity to pay its debts with available cash. Solvency can also be described as the ability of a corporation to meet its long-term fixed expenses and to accomplish long-term expansion and growth. The better a company’s solvency, the better it is financially. When a company is insolvent, it means that it can no longer operate and is undergoing bankruptcy.

Becoming solvent and staying that way should be paramount for everyone today. You just read about solvency in business in the paragraph above.  Now take what you have learned and apply it to your personal life. Here in the United States where there are high prices on homes and automobiles, college educations and private schooling.  Food and the cost of the basic necessities are going through the roof.  Just trying to make a living and having to cope with what you have to spend just to survive is what makes me wonder do I have enough to cover it all.

Let’s take me for an example.

I am married man with three grown children who do not live at home.  I live in the San Francisco bay area.  That’s in California USA.  Here the housing cost is so high that the average person cannot afford a single family home with one income.  The average yearly salary here is around $35,000.  With housing selling around $850k to $1,500,000 we cannot qualify. Even with 2 income you would still having trouble getting a loan.

Now I will not go into the food, cars, and the necessities as you can already see that most people can’t come close to making it.  All of us in the United States are insolvent.  We need to start looking at ways to change this and become Solvent.

You are insolvent if:

• You have a mortgage
  
• Use credit cards and don’t pay them off every month
  
• You have a loan on your automobile
  
• You have a second mortgage or equity loan on your home
  
• You don’t have at least 3 times the sum of your expenses save in the bank
  

We all are aware that to make it today we must juggle this to pay that and turn around and do it again for the others.  Most American, no fault of there own, earn $100 dollars but spend $102 dollars.  Gasoline is now close to $5.00 a gallon and traveling upward in price to $15.00 a gallon by the years end.  Think Solvency Now.  How do we do it?

I will be posting several entries for this blog in the near future.  Keep an eye out for them.

Chuck Madere

Public Gold

Chuck Madere here with a kind of funny story about a conversation I had with a man by the name of Randy on the telephone the other day. I didn’t know this man at all at the time of the call, you see he misdialed and got me instead of his brother-in-law.

Now let’s get to the funny part of this story.

Hey, What About Silver People

When gold becomes too expensive, and when paper money fails, silver is the only thing left to use as money.

What’s Money?

Some say what you spend is money, or that you buy things with money.  Or that currency is money.  Others say the dollar must be defined as a certain amount of silver as in the constitution or the Coinage Act of 1792, regardless of the changes since then. 

The words for silver and money are the same in many languages.

To be considered money as medium of exchange:

>>It should have liquidity, and be easily tradable, with a low spread between the prices to buy and sell, in other words, a low transaction cost.

>>It should be easily transportable; precious metals have a high value to weight ratio. This is why oil, coal, or water are not suitable as money even though they are valuable. 

>>It should be durable.   Gold or silver coins are often mixed with 10% copper to improve durability, and coins are made with ridges around the rim to prevent coin shaving or debasement. 

>>It should be divisible into small units without destroying its value; precious metals can be coined from bars, or melted down into bars again, with a low percentage cost.  This is why leather, or live animals are not suitable as money.

>>It must be a specific weight, or measure, or size to be verifiably countable. You must be able to weigh, measure, and count, your unit of account!

Here is a little history:

In the early days of the United States, the term "Dollar" was commonly known as a coin minted by Spain called the Spanish Milled Dollar. These coins were the standard money then in use in the country.

On April 2, 1792 Alexander Hamilton, then the Secretary of the Treasury, made a report to congress that were the result of his task to scientifically determine the amount of silver in the Spanish Milled Dollar coins that were then in current use by the people. As a result of this report, the Dollar was defined (See the Act of April 2, A.D. 1792 of the Senate and House of Representatives of the United States of America in Congress assembled, Section 9) as a unit of measure of 371 4/16th grains of pure silver or 416 grains of standard silver. (Standard silver being defined as 1,485 parts fine silver to 179 parts alloy; See Section 13 of the Act.).

Therefor paper is not the dollar, instead, it is ‘worth’, not ‘is’, 1 dollar (U.S Silver certificate.) Since the creation of the Federal Reserve, the dollar note has plummeted in value, like all other fiat currency in history, will eventually fail. In section 20 the Act, it is specified that the "money of account" of the United States shall be expressed in those same "dollars" or parts thereof.

All of the minor coins were also defined in terms of percentages of the primary coin the dollar such that a half dollar contained 1/2 as much silver as a dollar, quarter dollars, 1/4th etc. In an act passed on January 18, 1837 the alloy was changed to 10% thus having the effect of containing the same amount of silver but being reduced in weight to 412 1/4 grains of standard silver which was changed to 90% pure and 10% alloy. On February 21, 1853 the amount of silver in the fractional coins was reduced so that it was no longer possible to combine the fractional coins to come up with the same amount of silver that was in the dollar.

Various acts have been passed over the years that affected the amount and type of metal in the coins minted by the United States such that today, there is no legal definition of the term "Dollar" to be found in any Statute of the United States. All statutes describing the manufacture of coins by the United States with the term "dollar" upon their face are inconsistent and conflicting in terms of weight and material, i.e. value.

Let’s look at the nature of silver

Like gold, silver has all the properties of money, that we just examined and defined, above.

Most importantly, silver has been a great store of value since 2003 since it has been actually increasing in value at a much faster rate than the stock market or bonds. 

It is ok that silver is not the common medium of exchange at this time; that only proves it has less demand than is reasonable; which proves that now is a good time to buy it, and use it as a store of value!

Look for more on Silver soon

Chuck Madere

Public Gold

A World of Uncertainty

We live in a dynamic, fast-moving world where change has become a routine part of our daily lives. For example, the effects of changing government policies, shifting political alliances and mounting internal and external social pressures can and often do combine in unforeseen ways to impact the economic health of our country and that of other nations.

In our uncertain world of the 21st century, the whims and fancy of a select few can quickly alter the economic security, stability and order we have come to expect and take for granted in our free society. In the end, it is the responsibility of each of us, individually, to be prepared for change, recognize change when it happens, and take the steps necessary to adapt to change when it occurs.

Currency and Why You Should Avoid Saving Them

If you do a little research into what is backing up our American Dollar you will come away with an answer that may cause you to be somewhat unsettled.  There is nothing backing up the money the United States of America uses.  Nothing at all.  When the US did away with the gold standard as a way to secure our dollar they put "In God We Trust" on the back of it.  As if this would satisfy the American people.

The currency we use is legal tender as long as we the people keep accepting them.  What happens if we decide to stop?  The dollar will stay the same.  It was worthless to start out with and it will still be worthless if legal tender becomes something else.  This could happen and it is already in the works.

You need to invest you dollars in gold and silver.  Yes the very thing that our government took away from you years ago.  Time to get it back.  This is what President Herbert Hoover had to says about this:

"We Have gold because we cannot trust Governments"

The symbol of kings and the treasure of nations, desired by all but possessed by few, gold has been cherished for all of recorded history. In the 5th century B.C., Aristotle pondered the question of the perfect medium for money. He concluded that gold is perfect money for 5 reasons:
Durability
Gold won’t rot, break, crumble, decay, corrode or tarnish. Gold is unaffected by air, water, and even most acids.
Convenience and portability
A lifetime of wealth will fit in your pocket.
Divisibility
Gold can easily be divided into smaller amounts. An ounce of gold can be split 100 or even 1000 times. Consistency
One ounce of pure gold is exactly the same as any other ounce, enabling worldwide trade and liquidity of gold – unlike unique items of jewelry or artwork.
Demand
Gold has a staggering variety of uses, even more today than in Aristotle’s time. Its unique properties keep the demand high and the relative scarcity of the metal insures continued value.

Gold is still perfect money, perhaps more perfect money than money. Gold remains the time-honored standard of wealth that no other currency can match.

This is food for thought:

Chuck Madere

Public Gold