Building Wealth - Cutting Costs

I am going to be brief on this post and just tell you how I feel and what I think about it along with what the Constitution and its authors actually said.

First you have to understand what the “Bill of Rights” is all about. Many of the authors of the Constitution did not want a “Bill of Rights” as they were afraid any right not included might be infringed upon.   Believing that such a list could become justification for future restriction upon right. As in “it isn’t in the Constitution so it isn’t protected”.   You see you and I are not granted rights by the Constitution, no it simply protects what is seen as a “God given right” to all humans including those around the world, not just Americans.   Such is the nature of being a “shining light on the hill”.

In other words our founders believed all men had the right to arms and did not grant anything, they only sought to preserve that right from tyranny.   Next I am tired of the crap about how the 2nd Amendment applies to the “national guard” or other such nonsense.   While the “militia” is mentioned in the Amendment the “right” is bestowed upon “the people”.   No one doubts what the clear words of “the people” means in the other amendments so why would we doubt it as it is used yet again in the second Amendment.

Further one of the very authors of the Constitution, George Mason stated, “”I ask, sir, what is the militia? It is the whole people, except for a few public officials.”   Yes the only people the founders did not see as protected by this amendment were “a few public officials” in other words the government is excluded in favor of “the people”.   Understand in this Republic we are not “granted rights” or even “granted privilege” by the government, we grant privilege and power to the government at will and at will we are empowered to remove it.   Sound like “revolutionary language”, hell it should the authors were all revolutionaries and considered traitors by the British because they sought and were willing to die for liberty.

My point is you and every other American has an absolute right to keep and bare arms and more I believe the founders saw it as a civic duty to do so.   Think about how you were told in school you should vote simply because you are fortunate to have that right protected and due to that fact you should vote in order to protect that right.   Well, how is gun ownership different?   If you don’t own a gun the thought of someone taking guns away may not bother you.   Go buy one, get trained on it, be safe and understand the empowerment of not waiting 10-30 minutes while your home is being invaded and the lives of your loved ones is in jeopardy.   Do that and then think about a law taking that gun away from you. It will change the equation.

So do I think everyone should be able to own a gun?   Not exactly I think that anyone who has not taken an action to warrant giving up that right should retain it. Just like jail, you have a right to freedom, steal from someone, violate their right and you loose your right and go to jail.   So prohibiting felons, the criminally insane and clearly nuts individuals from getting guns makes sense.   Anyone else should be permitted to quickly establish their identity and buy any gun of their choosing.

I also believe it is your civic duty as a healthy adult American to own a gun of some type.   If you have no experience first take a course and learn safety and proper use. Then spend time once in a while at the range and know how to use your gun effectively.   The more of us that do that, the harder to take away our right it will be for our government. Further let me ask you what would happen to our crime rates if say 80% of home owners had guns, knew how to use them and were willing to do so?

I am a big believer in concealed carry too but that is another post.   So what does this all have to do with building wealth, cutting costs, etc. It has everything to do with it. Proper planning involves “protecting your assets” and let me ask what greater assets you have then,

• Your Home
• Your Family
• Your Health
• Your Possessions

It is a sad state that there are vermin that will take these things away from good people but there are many such scum in our world.   In your home a gun in the hand of a properly trained adult can protect those things. Either that or dial 911 and wait!   That option isn’t good enough for me, I worked hard for what we have, I love my wife, I love my son and anyone that threatens them by entering my home unwanted has a very good chance of leaving in a horizontal position.   I make no apologies for that and neither should you.

I just thought it was a good time to point some of these things out.   I am amazed how many people think we are “granted rights by our constitution” or by the government.   No one is “granted” a right, a right by its’ very nature is inherited and should not ever be taken away from any man unless he violates the rights of others.

Just remember the law that a right left unused is often lost doesn’t just apply to voting.

I have already written a bit about my affinity in my post, What I Blow Money On, but today as a follow up to my article on investing in gold it seems like a good time to talk a bit more about precious metals before we move on. In addition I am going to provide you some of my own rules on buying silver coins.

First let me lay out my case for why silver is a good investment. Simply put all metal commodities are doing very well right now and will continue to do so. Heck even copper is getting rather expensive. Back in the 80s I remember copper going for about 70 cents a pound. Today it is hovering in the range of 2.80-3.00!

Many people see silver as a “poor man’s gold” and I think that is rather short sighted. First I don’t care if silver is ounce for ounce far cheaper then gold if you have 1000 dollars worth of gold or 1000 dollars worth of silver you are holding the same value. Now silver and gold are true brothers in my opinion and the price of one is indeed tied to the price of the other. While they are not completely pinned to one another and the Hunt Brothers debacle will skew numbers from the 80s and early 90s there is a strong correlation (precentage wise) to movements between the two. To get an idea of the correlation look at the two graphs below which cover 1997-2007…

As you can see again while not lock step with each other the two metals perform very closely to each other on the open market.

So why not just buy gold? Understand I am not saying to not buy gold it is just that I truly “invest in gold” I buy through my broker and I buy both actual gold, gold funds and stock in gold companies. I have nothing against doing the same with silver but I prefer to actually buy, hold, touch and own my silver mostly in the form of coins.

Why? Two answers….

First, because I love silver coins, they are history, they are beautiful and they are something material to me that I can look at and appreciate. In this way Silver Coins offer me something that 95% of my other investments can’t. Sure I can look at my stock certificates but there isn’t much fun in that. Most of my other investments are just numbers on paper then don’t have the feel, look and glitter of my coins.

Second, because investing in many different things and in many different methods creates diversity. The beauty of silver coins (at least of the type I purchase) have most of their value in the silver basis price. I can “cash in” anytime I want and do so with no paper work or government red tape. I can literally walk into a shop, sell my coins and walk out. Holding silver coins is like holding cash money with out the cancer of inflation upon it.

So what rules to I have for investing in silver? Here they are but understand these are no ones rules but my own. A few you really should follow but others are more about your risk tolerance and your personal view about numismatic values.

1. I do not belong to nor do I buy my silver in any kind of “club” or any highly advertised coin supplier. In particular Littleton Coins is among the worse places of all to buy coins. Their prices are generally 40-90% higher then local coin shops in my area. I buy from local merchants or only via mail order if the price is as good or better then local pricing.

2. Directly related to the above, I am not on any type of auto shipping or monthly arranged purchases. I buy what I want as I find it and as I want it. My silver investments are truely incremental investments outside of my conventional portfolio.

3. I never buy “junk silver coins” which are large unknown lots of mostly 1960s and older dimes and quarters. Most are worn so badly you can scarcely read the dates.

4. While I don’t buy junk coins I also don’t buy highly numismatic valued coins. In other words I never buy a coin where the bulk of the coins value is based on how “collectible” or “rare” it is. Such values are highly subjective and only represent a “real value” if you can find a buyer. Try buying a 200 dollar silver dollar this week and see what the same shop will pay you for it (with out a big jump in price) the following week. This is the one rule that I understand when others break, this is my personal preference but I have my reasons.

5. What I do buy are Silver American eagles as they are priced right about bullion prices. I also buy high quality but common Franklin, Kennedy and Walking Liberty Half dollars which are still quite affordable and made of 90% pure silver. My other big favorites are the more common Morgan and Peace dollars. These coins to me represent a nice mix and all are very affordable and most importantly highly tied in value to the silver basis.

So what is my advice? Well I think it makes a lot of sense to buy some silver over the years and just have it as a hedge against inflation not to mention an investment that remain liquid in both the best and worst of times. The beauty is you can buy say a 10-20 dollar coin just once or twice a month if you don’t have a lot of extra money to invest. Even that over the years can build a nice collection and a lot of real value. I personally buy between 20-150 dollars a month of silver and have been doing so since 1995. As you can see by the graphs in this article that has been a very good move.