Tuesday, December 20, 2011

My interview with Johannes Mueller, Swiss Bullion Dealer

Storefront where interview took place.
Interview with Johann Mueller, Summer 2008

By The Silver Squirrel

This interview is a few years old, but the content is timeless!

Johannes Mueller (website: http://www.einraeppler.ch/index.php?setlang=en) is a numismatist and bullion/jewelry dealer in Bern, Switzerland.  He has a calm and friendly demeanor and seems very comfortable in his chosen profession.  He mints his own silver bars with a family mint-mark – they are not for sale and he will not disclose how many he has ;) .  After talking for awhile about Ron Paul, the Liberty Dollar, and the world economy, he agreed to do an interview.  Mr. Mueller is author of “Geld – Schwiezer Munzen und Banknoten als unbestechliche Zeitzeugen”, a book about the history of Swiss coins and banknotes.  The interview was conducted during business hours, with interruptions from customers, and Mr. Mueller would seamlessly transition from doing business in German, French, and Italian to answering economic questions in English.  His simple and direct answers paint a clear picture of the situation in which honest citizens trying to preserve their wealth find themselves in today.

Q: How long have you been in this business?

A: 25 years in Bern

Q: Have you heard of Ron Paul?

A: Yes I have read his book.  It came out five days after the release date in America. Actually, my wife bought it for me.

Q: Where do you think gold and silver are going in the next one to five years?

A:  The correct question is "what is the future purchasing power of paper money?" My answer is, "not very much".  So of course gold will be “higher”, but only in nominal terms. There is no magic in gold – it never multiplies or disappears.  Interest rates are for idiots - smart people only think in terms of purchasing power, not nominal amounts.

The biggest problem is that when confidence in paper assets goes down, people will flee to real assets, such as land and commodities.  History shows that gold and silver are the best store of value in this category.  The global financial collapse will happen from a sell-off in bonds, which is where most of the world’s money is.  When people realize that bond yields are lower than inflation, they will sell and try to preserve their purchasing power by moving into real assets.

Q: Why is silver so low in relation to gold at the moment?

A:  This is because of “paper silver” – contracts of delivery from banks and other institutions. Most silver investors right now are in silver certificates, not real physical silver.  It’s a fractional system, just like the rest of the banking system, and it is not truly backed with hard assets.  This creates artificial supply which keeps the price low – there are more people with silver certificates than there is actual silver in the possession of the banks.  They are merely buying “calls” and investing in the price of silver, not the actual commodity silver itself.  What if, say, Bank of America cannot deliver on a large silver contract? People think its not possible, but we now see several American banks failing.

Q: Have you read Ted Butler’s take on short positions in the silver market? What do you think about that?

A: Yes, Ted is a smart man.  The problem is that these people’s (the bankers) friends will change the rules if that scenario comes to pass.  Everything Ted says is OK, but regulators could change the system.  That’s what they did with the Hunt Brothers.  The Hunt Brothers were right, but the government changed the rules.  That is the trick of criminals.  They have the power to make any rule they want.  They can suspend the laws of supply and demand. They could even make a rule making it illegal to go long on silver. Who knows?

Q: Do you have any optimism that we will ever have honest money?

A: I have to hope it.  Its like asking a prisoner if he wants to be free.  If you ask a man on death row, he will have to think he will be freed, even if he knows he probably will not.  I’m not na├»ve in this belief though, because nature and the natural order hate large constructions, monopolies, and unfair deals.  Honest money is what justice demands and it is the only way to have security.

If you play a game and the Fed is the game-master and if it changed the rules in the middle of the game, always in favor of the banks, this would create injustice.  In the long-term, this can only create either war or revolution.  The main problem is the Fed because they are not neutral like a game-master should be.  For instance, they only take credit from banks, not people, which is unfair.

Q: Is there any paper currency in the world that you think is well-managed for the time being? Swiss Franc? Australian Dollar?

A: None.  They are all derivatives of the U.S. system.  All of them have debt based money – it’s a joke.  The Fed and its banks can create money without work, while everyone else must work for money.  Lets say that you find 1% inflation to be low and acceptable.  Even just 1% inflation means that someone is stealing 1% of the wealth in society.

Q: What can regular people and people of average means do to protect themselves from the coming crisis?

A: A financial meltdown can happen any day – it doesn’t have to be five or ten years from now. When the bond sell-off begins, it (the system) will be over.  The government will start a war against the free market, which is, in reality, a war against free peoples.  You must pay off all debts and never go into debt again.

Also, you must not be fooled by nominal amounts.  Take the housing crisis in America.  Someone who bought a home in the year 2000 for $300,000 which is now worth $600,000 thinks they have doubled their money, but in fact they have lost a third.  They paid 1,000 ounces of gold for the house in 2000 and now it is only worth 650 ounces of gold.  Gold is the truest measure of purchasing power.

Q: Do you think that the silver to gold ratio will ever return to 20:1 or 15:1 again?

A: Yes, of course.

Q: Why?

A: Because long-term, the free-market will determine the real relationship between the metals.  This relation is 15:1, which has been the case through almost all of history.  Under the US gold standard it was 17:1.  However, the relationship could go even higher – 5:1 is possible.  Anything is possible.  Silver is needed for so many industrial uses, such as cleaning water, and there are many demographic pressures so anything is possible.

Another reason why the price is currently suppressed is psychological.  Silver is currently seen by big investors as too heavy.  You have to remember that big investors can be talking in terms of tons here.  Has anyone ever complained that gold was too heavy?  When silver goes up, say to $120, big investors will find it more appealing and will jump on board.  Then it could really take off.

Q: Why do you think only a few Americans are aware of these seemingly obvious facts?

A: They have forgotten that the start of the United States was one of liberty and freedom.  They won’t remember until they’ve completely lost it.  Then it’s too late.  It’s good that young people like you are listening.  The internet is a great place to learn about this subject so learn everything you can while there is still free speech.


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