Liberty Dollars
from the homeland-non-liberty dept.
Here is a fuzzy picture of three ounces of silver, each in the form of $20.
Well, the good people at libertydollar.org who make these fine silver pieces have been raided by the FBI and Secret Service. There are details on digg. I am very angry about this. If you are unfamiliar with the business, here are some first principles:
LDA = Liberty Dollar Associate
ALD = American Liberty Dollar
USD = United States Dollar
CAD = Canadian Dollar
CD = Certificate of Deposit (not Compact Disc)
o $1 ALD = $1 USD < $1 CAD
o $1 ALD represents n in silver
o $1 USD represents nothing but paper
o $1 CAD represents nothing but paper
o n = 1/20th ounce of silver (for now)
o n is worth about $0.75 USD (at the moment)
o Ergo $1 ALD is *worth* $0.75 USD if sold as scrap silver.
o Yet, $1 ALD has a face value that is equal to $1 USD.
So even though USD and CAD has nothing to back them up with and ALD does, they trade in the market-place 1 USD to 1 ALD (nobody really trades CAD for ALD, I just threw in CAD for extra perspective). ALD has the disadvantage of having a face value that is worth less than scrap. USD has the disadvantage of being worthless. So these two disadvantages are assumed to cancel each-other out and allow the 1 to 1 trade ratio. Simple!
Actually, many people think that the ALD disadvantage of having a face value that is worth less than scrap is actually an advantage. If $1 ALD was worth some amount more than $1 USD in scrap, people wouldn't use ALD as ALD, they would just melt it down and sell it off as as scrap. So the "worth less than scrap" part is actually important to keep ALD in circulation.
The LDA fee is $250 USD. $100 ALD of which is returned in silver. So that means I would have to justify the cost of $150 USD. The LDA membership packet comes with books and a DVD as well. Plus there is a $100 ALD reward for getting others to sign up, but I suppose I should ignore all that for the purpose of justifying (recovering) the remaining "lost" $150 USD.
I also found out that at a certain point, the LDA fee will change to $500 USD. In that case, $250 ALD is returned in silver (plus a $250 ALD reward for new LDA's). This move will happen when the spot price of silver reaches $16.50 USD per ounce or above for thirty day moving average. This is called the "move up" point. At that time, all one ounce silver face values go from $20 ALD to $50 ALD, so the fee change is just part of a wider range of changes resulting from general inflation.
Of course, I would much rather try to justify $150 USD now, as opposed to waiting and trying to justify $250 USD later, but I think either scenario is totally possible.
The main way to justify the $150 USD would be for me to predict that an ongoing expense like food can be paid in discounted silver. So, for example, if vegetables and other produce is priced at $5 USD each week, the silver could be as much as $4.96 USD and as low as $4 USD. So that could account for a yearly discount between $2.08 USD and $52 USD.
But I think we spend more than $5 USD for produce in a week. Imagine if all groceries could be paid in silver. So, for example, if groceries are priced at $700 USD each month, the silver could be as much as $691.25 USD and as low as $560 USD. So that could account for a yearly discount between $105.00 USD and $1,680 USD.
So I think I could find at minimum a $2.08 USD discount and as much as $1,680 USD, depending on where silver is and how diligent and creative I can be. So whether the total LDA fee is $250 USD or $500 USD, I think there is a range of possibilities that will allow success.
For the above scenarios, I'm just talking about the silver discount. The other benefits of holding silver is the fact that it is inflation proof. That is a benefit regardless of the discount.
So if I buy $5 ALD in silver for the worst discount possible ($4.96 USD), but I hold it for enough time, that $5 ALD would be worth $10 ALD, $20 ALD, or $50 ALD. This flexibility of "hold or spend" is one of the main reasons for dealing with silver. You can't "hold or spend" a CD, you can only hold it. You can't "hold or spend" USD, you can only spend it (I guess you *can* hold it, but you shouldn't). With silver, you can do either without being forced to convert it first.
In 1998, $100 ALD in silver could be purchased for around $80 USD to LDA members. That same silver is now $200 ALD and is about to move up to $500 ALD. If you found a crisp green 1998 $100 USD bill from the US Government that was neatly folded and placed in a old forgotten jacket pocket for 9 years, it's still $100 USD.
In the silver example, the $100 ALD would require a $30 USD fee to "restamp" the correct face value. So the original investment, plus $30 USD means that something that costs $110 USD (80+30) becomes $500 ALD in perhaps only 10 years? That's almost a 500% increase over that time (assuming the $50 ALD base "move up" point happens in 2008).
I admit the above $100 ALD jump to $500 ALD might be a pipe dream, especially now that the FBI raid has happened. Let's look at it in the real world numbers:
Ok, at the moment, today (ignoring the FBI raid issue) it will only be possible to "restamp" that $100 ALD from 1998 to $200 ALD for $30 USD. So that means something that originally costs $110 USD becomes $200 ALD in 9 years, almost a 200% increase in face value over that time.
Let's say in 1998 we put $100 USD into a 6 month CD at 6% per year, rolling it over every 6 months into a new CD (that's a really high interest rate for the amount, and even a 6 month CD has an annual percentage rate not monthly, and we're totally ignoring inflation, so I'm really simplifying but let's go with it). That means it would become $168.95 USD in the same amount of time the silver became $200 ALD.
Sure, there's no restamping fee in a CD, but restamped silver still outperforms the CD. And there are a few ways around the restamping fees too.
Now, here's something really important to remember. The $200 ALD in silver can be converted back into USD cash. Right now (would for the FBI raid), $200 ALD in silver can be converted into $172.20 USD by Liberty Services. There's a limit of $200 USD per month. So if we really wanted to, we could slowly cash out of silver. But notice that the conversion is still more than the CD pays (i.e. $172.20 USD > $168.95 USD)? And remember that CD was 6% rate which is impossible for only $100 USD investment (they usually want at least $10,000 to get 6%).
I know most of you didn't read this far, but thanks for scrolling down to look for more pictures. :) So here's a look at the historical silver numbers:
Posted: Friday - November 16, 2007 at 02:08 PM |
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