I had a late lunch with a very good friend of mine yesterday and he was reminding me of all the flailing and stomping I did just a few years ago. I had been starting to buy gold at under US$290 and silver at historical lows, and I was telling all my friends to get out of the stock market and into metals and to dump their homes. In fact, when gold hit bottom, we got rid of our 4 bedroom home to move into a 2 bedroom condo (at a time when my income was increasing). For a 20-something with no degree to go against the financial wind was a bad idea, I was told. Before we parted ways, my friend had told me that we really need to find the time to see each other more often — I told him that we both were lucky that we really did have the time saved, but he had huge things over his head that prevented him from redeeming his saved-time for time to be spent right now.

When it comes to the price of gold and silver, it looks like things ended up in my favor — I was able to build quite a nice collection of savings, real savings that I can spend an evening with going through and remembering exactly where I bought that St. Gaudens or the 90% Liberty dollar. I can also sit back and listen to my friends who lost a significant portion of their wealth to market realities and the hidden inflation costs. I can look at this collection of coins and realize not just do I have something pretty to look at, I have a physical proof of my time saved — and it tends to protect that time saved very well over decades.

My friend reminded me that I was telling him to buy Rhodium at US$1000 (another historical low) and today its over US$4000 not many years later. I missed that boat completely, not putting my money where my mouth is. Yesterday I decided to go and sell some of my old assets (an unused TV, some computer gear that was depreciating, and a bunch of other junk in the shed). It was the first nice day of spring and I like to get rid of stored items. I put all that into hard metal, on the day when prices hit 25 year peaks after seeing a few weeks of real volatile pricing. My friend was surprised I’d bought silver so high and gold almost as high, but I didn’t care — it wasn’t an investment, it was merely a ultra-safe store of wealth. I’d rather save my time in something that might lose 10% versus the dollar in its dips, versus keeping the dollar in my pocket and losing 100% the next time I drive past Best Buy or Target. Spend cash today or redeem time tomorrow?

And yet I get that question often — why not buy a huge home at 5% if the inflation rate really is closer to 7-10%? Won’t I come out ahead? Why not buy stocks — they “always go up.” Why not buy ETFs which have a lower cost to trade and are more liquid? If I can make my life much better tomorrow, won’t I have more time to spend? Do you know anyone older than you with a huge net worth that truely redeems their saved time living life — or do they spend all their free time taking care of all the junk they’ve accumulated over the years plus the hassles of watching their investments?

I won’t do any, not anymore. I have no faith in the housing market — the idea that houses always goes up in price makes no sense to me and never has. I believe in downsizing more than your friends and family tell you to — not that anyone would ever tell you to buy a smaller home. My housing costs monthly are under US$800 per month all inclusive for every thing I need but food. I plan on adding another 700 square feet this year and my costs will drop to around US$650 by year’s end. I used to be 5 times that for space I never used.

I won’t buy stocks — I lost enough in value over the years I traded. I bought stocks but never from the corporation themselves, so my money did nothing for the company I was buying. When I buy a percentage of a local company, I buy newly issued shares, not another man’s profit-maker. If I invest US$5000 in a local business I expect a huge portion of that money to be used directly on that business — inventory, marketing, overhead. Investing US$5000 in Google buy’s someone else’s shares that were likely someone before then. Not one dime ever reaches Google. The stock market looks great as a graph that keeps going up, but if you compare it to the inflation rate of paper money, the graph is boring. It makes no sense to me to only make 6-10% when I can make 3-10 times that in my own ventures. I’m no college smartypants, either, so if I can do it, anyone else can.

I don’t like ETFs because I like to know my money is there — my real money. I feel safer knowing I can get to all my assets within a day or less. I feel safer knowing my money is available to me on a whim. I feel safer knowing that my money is real — with EFTs I only have an accounting auditor telling me the metal is there, and I have no faith in accountants — the same guys who happily lobby for more restrictive IRS rules.

The more I debate my friends who are making 5% a month on whatever the investment-of-the-month is (they always end up losing more than they put in), the more I realize why I am this way. It isn’t some deep hatred for government (I have no love there, but I don’t have hate). It isn’t some tinfoil hat conspiracy skull-and-bones theory. It isn’t to get attention. The number one reason why I don’t like any of the above ideas is because I like to earn my money and I like the safety of real hard money — the ultimate savings of my time.

Getting a loan, to me, is accepting the easy credit our government has created. This easy credit is paid for by two groups of people: the elderly who watch their savings value drop faster than new money is created, and the foreigners who are going to pay in the future in less buying power because they bought our bonds. To me, the new money we get in our economy is still paid for by someone else, and I don’t like not earning my money myself. A loan is not me working, it is me paying someone back less in the long run than they gave me when I couldn’t afford something. The stock market is not working, it is loaning someone my saved-time so that they can try to profit from it and give it back to me — yet it isn’t really working. I’d be OK with it if I could focus 6 hours a day on the market, but the returns aren’t safe or solid enough for me. I don’t like ETFs because I know they are part of the manipulation of the higher price of gold and silver — making the metals too liquid, and destroying some value in the metals. The ETFs don’t let me see the financial fruit of my labors.

I love gold and silver — not in a greedy way, though. I love to go through my coins with my beloved and talk about the work I performed that earned each coin. I recently bought my first coin earned by my various websites — after paying off all my hosting costs and other costs for a year. It was great for me to say I earned US$1 face value on a silver coin that took months of work — it was real, it was payback for an investment in my time, it was clarification that I was doing something good for others and that I had something to truely show for it.

You might have a better car (title) than I do. You may have a bigger home (loan) than I will ever have. You may have a huge 401K (bought so others could exit and profit) which I will never have. But in the long run, none of those things matter to me because I have found something that precious few can say they could even earn or find — time. Not time when I am 65, but time when I am 32. Time to travel. Time to see my parents. Time to be with my friend at 2pm on a Thursday in a dark chophouse eating what could be the best hamburger I’ve had in a year.

Is your life too busy? Do you always seem to have to do something you just don’t want to do? Do you wake up with a frown and wonder if that Botox stuff can help? Do you go to sleep a little aggravated? It isn’t because of money, friends, it is because you don’t have the time. For those of you who bought your first ounce of gold or silver because of something I had said, I hope you store one in your wallet or purse. The next time you feel too busy to live life properly, grab that coin, rub it with your thumb, and remember what the best store of time is — and realize it is also the best way to redeem that time.

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I was quietly hoping to see gold and silver dip quite a bit this week on reports of Bernanke raising the federal funds rate. In the past, raising the rate usually came along with a strong dollar, but now it seems investors are wising up to the fact that the rate has nothing to do with inflation — printing more money is the key to inflation. When we do see real deflation (reducing the money supply), commodities such as gold and silver tend to fall versus the currency. This is to be expected as less money is available to buy things, so sellers of metals tend to lower prices in an attempt to get people to buy.

Looking at various gold news networks today shows headlines of “Gold dropped” but the charts show the opposite. Gold at the time of this posting is up a few pennies versus the dollar — a surprise to me as I had expected the market to dump gold for dollars. Yet I am less surprised than I would have been 2 years ago as more people I know in real life are starting to understand that paper money is not stable and neither are stocks. It is quite possible we’re seeing a stand-off between investors and physical users.

In such a stand-off you’d see the investors waiting for the price to budge in a given direction — if it was to go up against the dollar, the investors would sit tight and wait for a selling point. If it was to go down against the dollar you’d see profit taking that tends to drop the price more. From the opposite end you have the physical users (jewelers, goldbugs and industrial applications) waiting on the line as well. They need gold cheaper so they can buy more, and they’re likely waiting to see if gold drops a bit so they can buy it up. If it goes up, they wait for the next dip when investors are buying off in unison.

Why are gold and silver moving sideways? Either we’re seeing a true stand-off, or we’re seeing that odd situation where investors are selling off and physical users are buying it up in an equilibrium. I’m a little bothered that it hasn’t dropped, I’ve been sitting on a few federal reserve notes waiting in hope for a significant drop. I’m not an investor (I don’t buy metal for profit but for safety), but I still like to buy during a dip plateau. Call it old indoctrination from my days of stock trading, something I hope I can dispel once and for all as gold starts to push to more realistic numbers — hopefully much higher than we’re seeing today.

I would not be surprised by either a US$500 gold price/US$8 silver price, nor by a US$650 gold price/US$12 silver price. Both make sense to me from a market perspective, and the only ones who are in the know are the mining companies (who can manipulate the available new product), the central banks (who can liquidate their holdings to drop the price) and the physical users (who can buy a massive amount at a low point which tends to push the price up in their favor down the line).

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