It’s time to sit back, relax and enjoy a little joe …
Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance.
Well … another busy week is behind us. So with that in mind, let’s get this party started!
You can’t help a friend by putting coins in his pockets if he’s got holes in them.
– Elizabeth Bowen
Credits and Debits
Debit: Did you see this? A trip to a Disney theme parks is more expensive than ever; the cheapest one-day, one-park ticket for Disneyland ranges from $104 to $206 depending on the day. We know; you’ve heard this before – but it just keeps getting more absurd. For example, SFGate priced a three-day vacation in June for a family with two children under the age of 10. At $531 per night for Disneyland’s cheapest hotel and four basic three-day, one-park per day tickets, the cost was $3500 – not including food, transportation, and souvenirs. It also doesn’t include Disney’s $400 line-skipping service – per person. Uh … yeah no.
Debit: Meanwhile, back in the real world, the price of car insurance premiums climbed an average of 15% in 2024, with American drivers now shelling out an average of $2313 annually for full coverage. Both Maryland and New York had the biggest percentage increases last year (53% each), with annual full-coverage car premiums of $4060 and $3804, respectively. Hmm. That doesn’t sound like the machinations of a smooth-running economy to us. By the way, here’s another machine that’s anything but well-oiled …
Debit: Then again, at least most people never have trouble finding somebody willing to sell them car insurance. If you believe Fed chair Jerome Powell, he believes that, “10 or 15 years, there are going to be regions of the country where you can’t get a mortgage,” noting that banks and insurance companies have been pulling out of coastal and fire-prone areas they now deem to be far too risky. Then again, in many cases these same companies refuse to pay out any claims on their policies anyway – or at least they don’t without a long painful fight.
Debit: On the other hand, who needs home insurance if you can’t afford a mortgage in the first place? We say this because a new survey is out that reveals Americans are growing increasingly pessimistic that housing affordability conditions are going to improve anytime soon. In fact, a growing share of Americans expect home prices, rent prices, and mortgage rates will all go up in the coming year. Not that many can afford one now …
Credit: Turning to macroeconomics, the sagacious macro analyst Franklin Sanders observed this week that, “Most people don’t grasp the point of investing in gold or silver because their numeraire is the US dollar (USD) — they value everything in USDs. Problem is, inflation is continuously devaluing the USD, so trying to measure value over time in USDs is like trying to shoot skeet off the back of a bass boat in a storm.” He can say that again. By the way, if anyone here was still wondering what the heck “sagacious” means – well … now you know.
Credit: To prove his point about the futility of comparing prices of goods in USDs over long periods of time, Mr. Sanders provides the following example: The median US house price on 31 December 2000 was $172,099. When 2024 ended the median house price was $419,200. In USDs the price has increased 144% – which pleases homeowners who bought at the turn of the 21st century while simultaneously frustrating first-time homebuyers who are unable to cope with the current housing affordability problem. Or should we say, just the ones who hold their savings in USDs. Oh … and speaking of not coping … (Wait for it!):
Credit: While the median US house price climbed 144% in 24 years, Mr. Sanders gives us the rest of the story: “Hold it right there!” he implores. “Now let’s price the house in gold and see what’s happened. With gold at $272 on the last day of 2000, that house cost 633 ounces. With gold at $2629 the last day of 2024, the house cost 159 ounces; a 72% loss in 24 years. That is the reason you buy gold: To preserve the purchasing power of continuously depreciating dollars.” Indeed it is … because we all know that the federal government that’s entrusted with responsibly spending fiat USDs certainly has no interest in doing so.
Credit: Speaking of high prices, we see that President Trump has directed the Treasury Department to stop minting new pennies, citing the rising cost of producing the one-cent coin. How expensive is it? Well … the US lost $85 million last year to produce nearly 3.2 billion pennies. That’s because every penny currently costs 3.7 cents to produce. In other words: The USD has become so devalued that a penny doesn’t even buy a penny anymore.
Debit: Somewhat ironically, the Treasury lost even more money in 2024 minting nickels than pennies: $123 million, to be exact. In fact, today the Treasury loses 8.7 cents on every nickel the mint produces. Does anybody else see the trend here? One can only imagine how much money the US Treasury would be losing if it was still producing silver dimes, quarters, half-dollars and dollars.
The US government’s price to produce a penny, nickel, dime and quarter between 2004 and 2024. Source: Washington Post
Credit: On a somewhat related note, the new US Treasury Secretary, Scott Bessent, pledged to “monetize the asset side of the US balance sheet.” This, in turn, has increased speculation around the globe that a gold revaluation – or, more accurately, a USD devaluation – is coming in the near future.
Yes; the increase in the USD price of gold has been incredibly strong over the past few years, but does that suggest it’s finally running out of steam? Considering the current state of our debt-based fiat monetary system, we don’t think so. (h/t: @vulehoangbao)
Credit: Of course, the big question is: If there is a gold revaluation in our future, what price will the world’s central banks ultimately settle upon? Well … one way to determine that is by dividing the weight of all the central bank foreign currency reserves by the amount of gold they claim to be holding in their vaults. Currently, that figure is almost $11,000. Needless to say, if the central banks are holding less gold than they claim, then the yellow metal’s “fair price” is even more undervalued than the following chart indicates.
Credit: Now you know why metals analyst Chris Powell of GATA reminded us this week that, “rising demand for metal (from) Asia. Russia, China, and the BRICS countries have been openly contemplating building gold into a new international trade currency system to escape from the seemingly infinite financial derivatives with which the US has been rigging markets and creating infinite imaginary supplies of gold and silver.” Indeed it has. Let’s hope that this 50-year old grift is finally coming to an ignominious end – if only because an honest monetary system is the bedrock of a free and fair society.
By the Numbers
Collection accounts stay on a person’s credit report for seven years and can cause significant credit score damage. Not surprisingly, an increase in collection accounts indicates that people are having trouble paying their bills. With that in mind, a new report was released that identifies where Americans’ financial futures are most in jeopardy. Here are the 10 states with the most collection accounts:
10 Idaho
9 Kansas
8 North Dakota
7 Georgia
6 South Carolina
5 Texas
4 Delaware
3 Montana
2 Nevada
1 Wyoming
Source: Wallet Hub
The Question of the Week
Last Week’s Poll Result
How much will you be spending for Valentine’s Day this year?
- Between $1 and $100 45%
- Zero 44%
- More than $100 11%
More than 1800 Len Penzo dot Com readers answered last week’s poll question and – in one of the closest polls here in a while – the slightest of pluralities said they planned to spend between $1 and $100 for Valentine’s Day. As for yours truly, I swear it seems like I spent almost $100 myself on Cupid’s holiday this year – and that was just for the Hallmark card.
If you have a question you’d like to see featured here, please send it to me at Len@LenPenzo.com and be sure to put “Question of the Week” in the subject line.
Useless News: The Evolution of Education
(h/t: J Siefert)
Squirrel Cam (After Dark)
Watch carefully; at the very beginning of this video you’ll see an owl fly into our backyard to catch a mouse (which we caught on our close-up camera under the fountain a few seconds later). The mouse got away and the owl had to fly away with an empty belly – this time.
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Buy Me a Coffee? Thank You So Much!
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More Useless News
Here are the top — and bottom — five Canadian provinces and territories in terms of the average number of pages viewed per visit here at Len Penzo dot Com over the past 30 days:
1. British Columbia (2.11 pages/visit)
2. Alberta (2.05)
3. Newfoundland & Labrador (1.85)
4. Northwest Territories (1.67)
5. Manitoba (1.61)
9. Quebec (1.47)
10. New Brunswick (1.42)
11. Ontario (1.41)
12. Yukon Territory (1.25)
13. Prince Edward Island (1.13)
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Letters, I Get Letters
Every week I feature the most interesting question or comment — assuming I get one, that is. And folks who are lucky enough to have the only question in the mailbag get their letter highlighted here whether it’s interesting or not! You can reach me at: Len@LenPenzo.com
After reading 11 Ways to Make Your Retirement Savings Grow Faster, Nicholas asked this question:
Look, it’s not a home run at work every day but … why live like a poor person so you can quit your job and live like a poor person?
Well, Nicholas, it’s because, well … wait. Is that a trick question?
If you enjoyed this edition of Black Coffee and found it to be informative, please forward it to your friends and family. Thank you! 😀
I’m Len Penzo and I approved this message.
Photo Credit: stock photo
Thanks Len, all the best……
re Gold….the always interesting topic. 🙂
Question. With the increasing autocracy going on right now, if the US dollar and economy really really got into trouble etc, in your opinion would the powers dare to confiscate gold again as in 1933? Or, in your opinion would things just morph into crypto scams or other forms of insider grift in the long descent? I did a simple G search and the quick answer was:
Can the US government confiscate your gold?
Of course it is possible; it has been done before and governments in times of stress simply change the laws. As you can see above, gold bullion was forced to be sold to the government in 1933. Then in 1974, that executive order was repealed.
I don’t have a lot of optimism these days with the news and what is publicly floated by absolute dunces exerting control. Look at the price of diamonds these days vrs other methods of storing value. They grow/make diamonds in lab factories now, and all the De Beers manipulation is for naught as a result. And yes they can take your gold and people also lose homes to outrageous local property taxes or un-insurable natural disasters.
Perhaps the only ‘safe haven’, if there is such a thing, is personal resilience, a foundation of skills, and having no debts to anyone helped by having some cash in the bank and some extra squirreled away for emergency needs. And maybe some heavy bright stuff, physical, entrusted to no one. Hidden.
Thinking about the upheaval and rapid changes these days, even outright threats, I read a bit about Emerson’s quote of ‘trust thyself’.
From Goodreads
Trust thyself: every heart vibrates to that iron string.
A century before the Golden Age of consumerism — that ultimate trance of commodified conformity from which we’re only just beginning to awaken — Emerson urges:
Society is a joint-stock company, in which the members agree, for the better securing of his bread to each shareholder, to surrender the liberty and culture of the eater. The virtue in most request is conformity. Self-reliance is its aversion… Whoso would be a man, must be a nonconformist.
In our rural life, just saying, squirrels are not friends. Cute little buggers and fun to watch, they’ll chew a hole to get into your soffits. They take over our swallow houses for nurseries. They ruthlessly decimate our hazelnut trees and bury their booty in every flower pot and garden bed. The holes they chew will be used by rats. I have a Jack Russell that protects us from them. Have a good week.
Hi, Paul. Thanks for the comments!
There was very little gold actually confiscated from Americans in 1933, save for a few raids on bank safe deposit boxes and home search warrants as part of unrelated criminal investigations. Almost all of the gold that was collected by the US government was done so voluntarily; US banks then sent gold specie to the US Treasury as it came in to be melted down.
I’ve seen estimates that 2 in 3 Americans ignored the order and simply withdrew the specie in their possession from circulation; this is evidenced by the (relatively) large number of pre-1933 US gold coins available for purchase today.
As for society being a “joint stock company” – that sounds romantic on its face. But I believe the following words of wisdom are more appropriate:
“When you consider socialism, do not fool yourself about its nature. Remember that there is no such dichotomy as ‘human rights’ versus ‘property rights.’ No human rights can exist without property rights. Since material goods are produced by the mind and effort of individual men, and are needed to sustain their lives, if the producer does not own the result of his effort, he does not own his life. To deny property rights means to turn men into property owned by the state. Whoever claims the ‘right’ to ‘redistribute’ the wealth produced by others is claiming the ‘right’ to treat human beings as chattel.” – Ayn Rand
On squirrels: I had an uncle who hated squirrels so much that he used to sit on his back porch and shoot them with a mini crossbow.
I love owls! I wish they were more active in the daytime. Only time I get to see them is on a video clip or at the zoo!
They are beautiful creatures, Madison. We had a beautiful large barn owl trapped under our eaves last summer – it got stuck behind some chicken wire I used to keep the pigeons out. We were able to get it out and watch it fly home – but we didn’t think to video the rescue!
Almost 4 cents to make a penny? 14 cents to make a nickel? As far as I’m concerned we should get rid of BOTH pennies and nickels. Who uses change anymore? What does it buy? Round everything to the nearest dollar and be done with it.
That’s not a half-bad idea, Cowpoke.
Inflation coming in hot again. Looks like Powell shouldn’t have cut interest rates by 50 bps right before the election.
Ya think?
Hi Len, I hope you’re enjoying the weekend! I agree with Cowboy, stop production of pennies AND nickels, esp. since I’ve been collecting wheat pennies and saving my nickels for years now.
In other news I just saw where the DC housing market is being flooded with new listings since Trump and the DOGE have taken over. Maybe you should consider starting a second blog for those leaving the Federal Gov’t. and having to live in the REAL world. You could teach them how to budget, to live within their means, shop smart, save money, etc., because I doubt these former Federal workers have ANY experience in those things…
Enjoy your week, y’all! 🙂
I’m curious, do you think a secretary paid by our taxes lives any different than a secretary paid by overdraft fees? Federal workers do jobs that any other employee does at a for profit company. They have modest salaries, must clock in, pay taxes, have deadlines, and even have rules they must abide. The true folks out of touch with the REAL world are the billionaires who live in their private world divorced from us poor folk and run our lives from on high.
Michael, the secretaries and other Federal Gov’t. workers I know absolutely live differently than workers living/working outside the DC area. Having lived there from age 14 to age 32, I have many friends and family who’ve made careers working for the Fed. Gov’t. They receive on average a higher salary than in private industry, and they also receive rather lavish pension, medical and other benefits when they retire from Federal service. EVERYONE in the DC area, from Gov’t workers to the secondary industries that feed off the Gov’t., knows that they can print money or raise taxes for anything they want, so they have no boundaries.
P. S. Cowpoke, sorry I called you “Cowboy”; here in South Dakota we have a lot of them so it’s a natural slip! 🙂
No offense taken, Lauren. You’re family here!
Hi Lauren, yes … last week I retweeted a shot of some real estate software showing all of the new homes coming onto the DC market. A crash will almost certainly be incoming. Reminds me of the big aerospace industry layoffs in Southern California in ’89 and ’90 that helped spur the SoCal housing market crash. Of course, with my perfect timing I ended up buying a house three months before the market topped. As a result I was stuck with an upside mortgage for the next seven years! Not fun!