The Smart Newbie’s Complete Gold & Silver Crash Course

Because we don’t really have all that much time…

by Paul “Half Dollar” Eberhart

The magical dollar is barely fooling anyone anymore.

Why should you be interested in buying gold & silver?

Here’s the short answer: The US dollar is about to be tossed into the dustbin of history!

Here’s the ultra-short answer: Gold & silver are money.

Period.

And as you read on, you’ll learn that like, really quick!

I like to refer to gold & silver as one in the same. Some people call it “God’s Money”, some people call it “Honest Money”, and some people call it “Sound Money”, but really, what it should be called is “Constitutional Money”.

Indeed, the US Constitution requires that our money be gold & silver (Article 1, Sections 8 and 10 specifically), so it’s not even really a choice.

The US Dollar as we know it today, American currency, that is, fiat currency, as in, currency by decree, and force, the formally named “Federal Reserve Note”, is not money.

At best, the US Dollar, as we currently know it, is our modern day crappy monetary system. The US Dollar is a type of cash, an unbacked cash, be it literally cash money in an actual wallet, or be it the balance in some online account, that Americans, and much of the world, really, are forced to use as money.

It is only because of the US Federal government’s own brutal enforcement that the US Dollar has any actual value.

But that’s all about to change.

And it’s all about to change, like, really, really soon.

To understand what’s happening, it is important to understand what exactly “one dollar” is.

Amazingly, or pathetically, or sadly, or whatever, most people have no clue what the definition of one single dollar is, much less do people know what the definition of one single dollar is supposed to be.

Here’s the gross oversimplification: One dollar is a very specific weight and purity of silver.

Yup.

That’s it!

Higher denominations of the dollar are specific weights and purities of gold, but let’s stick with silver to keep it simple.

I mean, you know what they say about keeping it simple?

No, seriously, you know what they say about keeping it simple?

I’m asking, because I’m not actually smart enough to know.

Now, the definition of one single dollar was established by the Coinage Act of 1792, and this has been our US Dollar for more of US history than not. Specifically, one single dollar was defined as 371 and 4/16th grains of pure silver, or 416 grains of standard silver. The important concept is that the weight and purity are something that is fixed.

In other words, our money, the US Dollar, is a tool that is used for measuring the value of goods and services. The US Dollar can be thought of just like any other tool used for measuring. For example, a clock is a tool, which measures time, and time is something that is fixed in the sense that one minute always equals sixty seconds. Also, a ruler is a tool, which measures distance, and distance is something that is fixed in the sense that one foot always equals twelve inches.

So the US Dollar is a tool, and arguably, the single most important tool an American could have, and much like all tools that measure things, the US Dollar is simply the brand of tool that is used in the United States.

In fact, when it comes to the “dollar”, it was the weight and purity of the silver coin that mattered.

This is why when the US Dollar was legislated into existence, the Coinage Act of 1792 reads, “Dollars
or Units -each to be of the value of a Spanish milled dollar as the same is now current…”.

You see, since early Americans were using Spanish Dollars because, well, because they were in fact money, the United States implemented the same weights and purities of silver to define one single US Dollar, which makes a lot of sense if you really think about it: Those early Americans could spend their Spanish Dollars as if they were US Dollars because they were quite literally one in the same with regards to what mattered, which was the silver content.

Additionally, this is why we have “dimes”, “quarter dollars”, and “half dollars”.

The various face values make our money more useful, all the while the fixed silver content remains the same. That is to say, one dime is equal to one-tenth of the silver that makes up one dollar. Two quarters have the same amount of silver as does one half dollar, and two half dollars have the same amount of silver as one dollar.

This is one of the properties of money: It’s easily divisible!

Here’s the problem: The various denominations of the US Dollar are no longer weights and purities of gold or silver.

Remember: It’s not really a choice.

The US Constitution requires it.

For the nerdy people out there, myself included, if we really want to get specific about it, we can say that the US Dollar in its current form is unbacked, debt-based fiat currency dependent on exponential, unsustainable growth.

That’s more than just a huge difference, and it’s a far cry from 416 grains of silver!

You see, when our money is actually gold & silver, you can’t just print it up or double-click it into existence, which is exactly what all of the nations around the world are doing now with their modern day currencies, because there is no nation on earth that is formally on a gold standard, much less on a bi-metallic gold & silver standard.

What went wrong, and how did we get to this funny money system that we are all forced to use today?

Certain events over the past 100+ years have incrementally removed gold & silver from our money to the point where not only do the people not understand what money is and what money is not, but people actually think they’ll be able to re-invent what money is going forward, which they won’t.

That said, here are a few of those infamous, notorious events from the 20th Century:

  • The 1933 gold confiscation and 1934 Gold Reserve Act
  • Silver removed from US coinage in 1965
  • Nixon removing the dollar-to-gold convertibility in 1971

There are other events, but these three events had the most impact on removing the gold & silver from our money.

In 1933, for myriad reasons, President Roosevelt essentially “confiscated” the people’s gold with an infamous executive order:

Long story short, citizens were required to turn in their gold coins, and in return, citizens would have a deposit in the bank, or, more likely, citizens would get $20.67 per ounce of gold in exchange, which basically meant the $20 Gold Double Eagle Coin would be turned-in to the bank, and $20.67 would be given in return.

Think for a moment about the implications.

If you were to turn in the $20 gold coin, you got a little, instant “return” on your money, and if being used right away for the payment of something, getting that return could have been enticing. Here’s the question, however: If a person turned in their gold and got the $20.67 in return, how much stuff would that $20.67 buy today at the big box store? Follow-up question: How much is a pre-1933 $20 gold coin, or any one ounce gold coin for that matter, worth today, and, more importantly, how much stuff would that ounce of gold buy today at the big box store?

The Bureau of Labor Statistics calculates the US Government’s official inflation statistics, and we can see how the Federal government would answer those questions:

Yikes!

That’s evidence that the US dollar has already hyperinflated, but more on that later.

Now, at the time of the gold confiscation, there was still silver in our coinage at that point in American history, however, back then, our paper dollars were known as “Silver Certificates” instead of “Federal Reserve Notes”. The paper dollars were a substitute for the real thing, actual silver dollars, meaning, a person could walk into a bank and exchange ten $1 silver certificates for ten $1 silver coins.

Money can get heavy, so for some people, or for some types of purchases, it can be easier to carry around twenty $1 paper bills than it is to carry around twenty $1 silver coins, and since one could easily exchange the twenty paper bills for twenty silver coins if one so happened to choose, paper bills became a popular way to carry around cold, hard cash.

Perhaps this is one of the reasons why Americans in that era allowed such drastic, arguably Unconstitutional government action to be taken in the first place?

Regardless, with the exception of half dollars through 1969, silver was removed from our coinage in 1965. This is why people often talk about old silver coinage as “pre-1965”. Some people call it “junk silver”, some people call it “90%” because of the silver purity in pre-1965 coinage, and other people call it “Constitutional coinage” because gold & silver are what the US Constitution requires to be our money. No matter what you call it, however, in 1965, instead of containing a specific weight and purity of silver, our coinage became what is known as “clad”, and really, that’s just a fancy way of saying “a combination of base metals of very little value”.

Needless to say, the people caught on to what was happening to their coinage, so pre-1965 coins disappeared from circulation rather fast as smart people chose to spend their clad coins made of the base metals before they spent their silver coins made of precious metal, which were way more valuable.

By the time 1970 came around, however, the people were no longer using real money, gold & silver, and instead were exclusively using unbacked money, Federal Reserve Notes.

Of course, on an international level, individual nations could still turn in their US Dollars for gold because of the Bretton Woods Agreement coming out of World War II, so while individual citizens could no longer turn in their dollars for gold, individual nations around the world could do that, and that’s exactly what they did!

This was depleting the gold reserves of the United States at a very fast pace. So much gold was leaving the United States that during a shock Sunday night announcement on August 15, 1971, President Nixon addressed not just the American people, but the entire world, and during the “Nixon Shock”, as it’s now called, Nixon “temporarily” suspended “the convertibility of the dollar into gold”. From that point on, and to this very day, even though it was supposed to be “temporary”, the US dollar was, and is, no longer “backed by gold”.

Notice what happened to the US National debt since Nixon put an end to the gold standard:

With the bulk of US debt coming after going off of the gold standard, this is just more evidence that the US dollar has already hyperinflated!

Nonetheless, Nixon removed the gold backing from the dollar in 1971, and backed the dollar with monetary madness instead.

Today, in the United States, and throughout the entire world, really, we are now on what we call the “Dollar Standard”, which some people call the “Petro-Dollar Standard” or the “Oil Dollar Standard”. Some people even go so far as to say, “the US dollar is backed by the United States military”, with the implied meaning of “conduct your international business in US dollars, or else!”.

Here’s the key takeaway in knowing all of this monetary history: Since our money has been turned into unbacked, debt-based currency, hyperinflation is now baked into the cake.

Perhaps you’ve heard about the “Weimar Hyperinflation”, or the “Zimbabwean Hyperinflation”, or the “Venezuelan Hyperinflation”? Well, the US dollar is on the same exact path, and not only is the current US dollar not special, but the US dollar will, at some point, suffer from the same exact monetary fate.

For some reason, we’re no longer following the requirement set by the US Constitution, so the Federal government is seemingly able to print money and spend money without limit. There is one very real limit, however, which is the point in time when there is the complete and total loss of confidence in the currency itself, and at that point in time, the US dollar as we know it will be no more.

Think about it like this: Can you write “$20” on a napkin with a marker, take your dollars to the local convenience store and buy a can of soda, a bag of potato chips and perhaps a few scratch-off lottery tickets?

Of course not!

Because only gold & silver are money!

But the US Federal government does this by way of official policy.

Now sure, they’re not handwriting “$20” on napkins over at the Department of the Treasury and calling it a day, for we’ve got fancy dollar bills with all sorts of anti-counterfeiting features embedded into the very paper itself, but that doesn’t make our current dollars any more valuable.

The only thing that makes our current US dollars more valuable than our napkin money is the fact that the US government forces us to use the US dollars, so it’s not really a choice on our part.

The problem is this: The more dollars that the US prints and spends, the less value each dollar has.

Allow me to explain.

Let’s say I got away with my napkin money, and you caught on, and not only that, but you’ve one-upped me in that you’ve written “$50” on your napkin so that you can buy a heck of a lot more stuff. But then, somebody catches on to your napkin money, and you get one-upped with a “$100” napkin, and pretty soon, napkin money is coming from all over the place because, well, you just write a number on it, take it down to the local convenience store, and buy stuff!

Only, in the real world, that’s not how things work.

Just because you can write numbers on pieces of paper, that doesn’t mean the napkin money has any value, and making matters worse, there’s only so much stuff that can be bought at the convenience store. Soda and potato chips are real things, and it takes real effort to produce them, but anybody can write a number on a napkin.

If it can be done, however, it will be done, and therefore, with so much more napkin money available than there are bags of potato chips at the convenience store, hungry customers begin paying more for their chips because they want to be sure that they are the ones who get the chips, and since you just write whatever amount you need to buy the chips on the napkin, voila.

It’s magic!

It’s just too dang easy to print up money to buy stuff, but if it was really that easy, every single person and every single nation on the entire planet would be super-duper rich.

But it’s not that easy.

The United States can do it because our current US dollar is the “World’s Reserve Currency”, but other nations aren’t so lucky

When other nations print up too much money, there are consequences.

Printing up money can be thought of as “inflating the money supply”, or simply, all of this money printing can be thought of as “inflation”, and once a nation goes down the path of money printing, sooner or later, “inflation” turns into “hyperinflation”.

When Zimbabwe prints up a $10,000,000,000,000 Zimbabwean dollar bill, that doesn’t mean that I’m the world’s richest person for having ten trillion dollars:

It doesn’t work like that.

Going back to the tool reference, in the world of tools, this is what we call a “knock-off”. It’s a cheap
copycat tool that if it actually works, it won’t work for long!

So it’s not if, but when, the people are no longer able to use their own tools effectively that matters, and when that point in time comes, it’s not that the people no longer need tools, but rather, the people seek out the tools that actually work.

When we’re talking about the tool being money, this is called a “loss of confidence”.

That is to say, the government is printing up so much money so fast that not only are the people not able to use their money as an effective tool, but the people lose confidence in the tool altogether and seek out a tool that actually works. In the case of another Zimbabwean hyperinflation, this would mean ditching the broken Zimbabwean tool and going with a working one, the US dollar, which also happens to be the most common, reliable tool around.

But what happens when the US Dollar itself is the problem?

When other nations get into trouble by printing up too much money, their citizens can seek out the safety of US dollars, but now that the US dollar is being printed into oblivion, just like the Zimbabwean dollar, only, on a global scale, where is one to go?

Nations and people can go to real money, of course, which is gold & silver.

Any nation other than the United States can fall back on the US dollar if need be, and people of all nations can fall back on the US dollar if need be, but all nations, including the United States, and all people, including the American People, can only truly fall back on one single thing when the problem is the US Dollar itself, and that one single thing is gold & silver.

Just as sure as humans will always use knives, because knives are one of the most important tools there are, and humans couldn’t really live without knives, humans will always use gold & silver, because gold & silver are one of the most important tools there are, and humans couldn’t really live without money.

Theoretically, it’s possible to live without money, but really, it’s not.

It’s not rocket science, it’s hyperinflation!

Our currency is unbacked and debt-based, and the end result of that combination, a mathematical certainty, is ultimately the loss of confidence in the currency and its eventual outright rejection.

Here’s some more evidence the US Dollar has already hyperinflated:

That’s the purchasing power of the dollar over time, and the important takeaway is that the purchasing power does not have to fall to absolute zero for the outright rejection to take place.

Hyperinflation is a process, and in the Venezuelan hyperinflation, that process went from printing bills with higher and higher denominations to the people ultimately, literally weighing the cash money for transactions because it was simply too time consuming and nearly impossible to count out the currency needed to buy something like a loaf of bread.

Hyperinflation is a process, yes, but when it gets to its climactic end, that process goes really fast!

Hyperinflation is also the “path of least resistance”.

That is the course we are on, the path we are on, and hyperinflation will be how the United States Dollar in its current form comes to its spectacular end. The ever-increasing national debt is unsustainable, and US Politicians and Central Bankers have adopted a “debt doesn’t matter” attitude along with the mindset to just “print and spend”.

Now sure, the government could jack up taxes on everything to make the people pay off the debt, but at the end of the day, the people only have so much money they can pay, which wouldn’t even be enough to pay off the debt anyway because of the whole “debt-based” thingy going on which renders the US Dollar irredeemable. Not only that, but there also comes a certain point in time in which the people are taxed too much, and at that point in time, the people will quite literally revolt.

And arguably, rightly so.

Think “torches and pitch forks”.

Of course, the US government could also default on the debt, as in, just not pay it, but that would result in the outright rejection of the currency and the inability to unsustainably borrow and spend from that point forward. Besides, it is so much easier for politicians to just borrow and spend, more suitably called “print and spend”, which is what we call “inflating away the debt”, than it is for politicians to hike taxes on the people or default on the debt.

It is worth repeating because it is very important to understand what is happening: Hyperinflation is the path of least resistance. The currency may be increasingly worthless, but technically, the government is still paying whatever it is that needs to be paid.

Like, you know that $2,000 monthly Social Security check that sooner than later will only be able to buy one single pair of generic tennis shoes and maybe a pair of “irregular” jeans?

Yeah, well, at least that “entitled” recipient got paid, right?

It is time to think beyond the loss of purchasing power and beyond the unsustainable debt.

Many people have only ever known the US dollar as it is known today, which is unbacked and debt-based.

Complicating matters, generally speaking, most people think that the US dollar is something that will always be our money, if people even think about the US dollar like that at all.

Eventually, however, everybody will be thinking about how they can get rid of their dollars just as fast as everybody gets them, and that means turning those increasingly worthless dollars into anything and everything real, which would be things like knives, or clocks, or rulers, or jeans, or tennis shoes, or soda, or potato chips, or whatever.

The loss of confidence in the US Dollar is already building, but for most people, it will be too late.

Why are brand new trucks so hard to purchase in the Summer of 2021, and why are they selling for over their sticker price? Why have video game consoles and computer graphics cards been selling for over their sticker price for nearly two years with no end in sight? Why do houses in desirable areas sell for way over their asking price in what often times turns into buyer bidding wars? Why do digital paintings and imaginary sculptures sell for millions of dollars in the art world?

There are just too many dollars that have been printed, and for that matter, there is just too much unbacked, debt-based currency that has been printed from nations all over the world.

Smart people who understand what is happening have already begun to take action.

People have been getting out of their dollar-based financial assets and getting into real stuff.

People have been purchasing food for reserves, people have been purchasing real estate and farmland, people have been purchasing durable goods that last a really long time, like new cars, or washing machines, and people have been purchasing all sorts of things that not only ever seem to only go up in price, but never go down.

Of course, smart people are relentlessly buying gold & silver, real money, so that they can save their money for future use. Remember, first and foremost, money is a tool. An ounce of pure gold is an ounce of pure gold is an ounce of pure gold, just like an ounce of pure silver is an ounce of pure silver is an ounce of pure silver, and the people who understand this are buying gold & silver hand over fist right now.

Where to start when it’s all so overwhelming?

It can be, and it is, overwhelming.

Everybody learns about real money in their own unique way, and since this is the hyperinflation of the dollar that we’re talking about, more and more people are learning about money every day. The important thing is to act as one learns, and to try to minimize the mistakes that one makes along the way.

Think of it like a person getting into prepping and deciding to have some food in reserve.

When a person is starting out, what matters is the bang for the buck. Specifically, a jar of caviar, a bottle of Worcestershire sauce, and some fancy imported spices are probably not the best choices for a person who’s just starting out. Better choices would be a bag of rice, a bottle of cooking oil, and some canned or dried beans.

Well, the same is true for turning those increasingly worthless US Dollars into real money, gold & silver!

When just starting out, a person doesn’t need to buy a fancy, graded coin that sells for some ridiculous price over the cost of the precious metal itself.

That’s what we call “numismatic” coins, which supposedly and often times have some sort of additional collector’s value for one reason or another above and beyond the value of the gold or silver itself, and much like the example of the jar of caviar, if you don’t at first have the basics covered, don’t start out with something that’s exotic.

Perhaps a better choice would be regular, run-of-the mill American Gold Eagles or Silver Mexican Libertads, both of which would help a person get his or her basics covered without too much cost over the price of the precious metal itself?

There are even cheaper options, too.

Generic rounds are a great choice.

Generic rounds are not made by governments, and as such, they’re not officially government coins, but rather, they are simply coin-like round pieces of silver and gold with varying weights and purities. The sweet thing about generic rounds is that they can be way cheaper to purchase than the government minted coins. There are many reasons why generic rounds are generally cheaper, but if a person is just starting out, in my opinion, buying one ounce generic silver rounds is the best way to go to get the most bang for your buck.

In other words, just like with storing some food in reserves, a bag of rice and a few cans of beans are ideal, and not only will they stretch much farther and be more useful than a jar of caviar and a bottle of Worcestershire sauce, but the beans and rice will generally cost less too!

Gold and silver bars are also good options.

Bars can be made either by government mints or made by private mints, so there are sovereign bars and generic bars, but the same logic that applies to coins and rounds applies to bars.

The point is to get as many ounces as possible as soon as possible, if one is willing and able, of course, and then, once a person has his or her basics covered, if a person would like to indulge in a jar of caviar, or in a bottle of Worcestershire sauce, that’s perfectly fine.

In the beginning however, it’s a numbers game, and that means getting as many ounces as cheaply as possible.

Generic bars and rounds are the cheapest, followed by bars and rounds minted by governments, followed by the “semi-numismatics”, such as the so called “limited mintage” coins or the uniquely shaped gold & silver products, and coming in as the most expensive way to get into gold & silver is to buy the “numismatics”, those graded and slabbed coins that can sell for hundreds to thousands of dollars for each coin, with ultra rare coins even selling in the millions of dollars.

Mix it up to for diversity and for fun!

If a person is willing and able, mixing it up a little bit is the best thing to do.

Some “junk silver” along with some modern American Gold Eagle coins and a worn, circulated pre-1933 US gold coin are a great way to mix it up.

Financial gurus like to talk about “diversifying” that portfolio, and when it comes to gold and silver, there are plenty of ways to diversify while diversifying!

If not buying in-person from a local/regional coin dealer with cash, consider how you will pay for your precious metal when buying online.

If it can be avoided, don’t just click “buy now” and pay with a credit card. Most people don’t realize this, but bullion dealers often times charge an additional fee for using a credit card. You see, bullion can get expensive, and credit card processing fees can get quite expensive, and those fees are generally passed on to the customer.

There are other ways to pay for precious metals, such as sending bank wires, but there is one other way that’s an even better way to pay for precious metals.

The check is in the mail!

Most bullion dealers allow payment to be made by personal check. The process is generally such that the buyer “locks in” his or her price, and then the buyer physically mails in a check to the bullion dealer.

Paying by check is the cheapest method, but it can be the slowest method. If you’re sending your check to a reputable bullion dealer, however, there really are zero reasons for concern. It’s just a matter of the check getting to the dealer and then the funds clearing before the gold & silver will be shipped to the buyer, fully insured.

Furthermore, in a weird way, paying by check also makes the process of learning about money even more real!

So, what are you waiting for?

Have you ever held a real silver coin in your hand? Have you ever held a real gold bar in your hand? It can be a life changing experience, and quite literally, a life saving experience too!

Because when all else fails, including our unbacked, debt-based currencies, which will surely fail, there is always gold & silver.

As humans, we always go back to gold & silver, and as the US Dollar enters its death throes, we’ll probably be going back sooner than later.

Stack accordingly!