For a while now it seems like the American dream has included for some reason a bank to finance the dream. In fact somewhere along the way it became American tradition to open a savings account for a child at a bank in order to teach the child “the value of money”. Somehow I think this tradition was perpetuated for the benefit of the bank, and not the benefit of the child. I began working in the banking industry in 1990, and I saw banks do things to customers that a gold bar or silver coin could never do to a person, especially a child for that matter.
For instance, I recall one day when a lady came into the bank branch that I worked at carrying her checkbook, her recent statements, an air of indignant confidence. She waited in line and when it was her turn at the teller window, she asked to see a manager. I was able to overhear her conversation and I was close enough that from time to time I could see her point to her checkbook and her statements and I could understand exactly what she was seeing and I could understand her frustration. Back at this time in the modern world banking debit cards were relatively new invention.
Prior to debit cards people used checks or cash (Federal Reserve notes), prior to this people used gold coin and silver coin to settle debts and affect commerce. With the lady began calmly telling the manager was that her statements showed that her debit card had been used several times over a span of a few days in Ireland, effectively draining her interest-bearing checking account. She stated that she had not been to Ireland and did not make the charges. What the manager said next shocked us both. “You will need to fill out some forms disputing these charges, and from that time it will take the bank from 30 to 60 days to research and possibly refund your transactions.” 30 to 60 days is a long time to go without all of the money in your checking account.
Gold bars and gold coins along with silver bars and silver coins, tend to stay exactly where you put them, especially if you put them in a bolted down safe. I imagine the lady eventually was reimbursed, and debit cards have evolved since then, but I’m sure that was no comfort to her on that afternoon at the bank.
When I was working in finance, from time to time I would see unscrupulous banks approve a loan with relatively little financial information at a relatively decent interest rate, and then two days later return to the bargaining table demanding extensive and very time-consuming to gather paperwork, and the ensuing review of this loan would usually result in a nasty interest rate and much higher payments. In the business these were called “teaser term loans” and wise professionals would steer clear of them not only because they weren’t good loans for clients, but because the shifty strategy of the bank could easily undo an otherwise all-around good deal but took a lot of time and effort put together on everybody’s part.
When you purchase a 1 ounce gold coin, you get a 1 ounce gold coin, when you purchase a 10 ounce silver bar, you get a 10 ounce silver bar. Precious metals are finite in purity and weight measurements, the science of weight and measures is not a negotiable science.
When I was working as a senior analyst at ITM Trading, I remember talking with the client who had a horrendous story about his bank. This man was a man of means and intelligence, and he was also a man with some years behind him and a career in business. The time was 2008, and there was a stock market crisis happening contemporaneously with the banking meltdown. Apparently during the banking meltdown all rules are off and pretty much anything goes as long as a bank can make it up. This gentleman who had several accounts with the bank including savings, checking, a money market, and the bank’s premium credit card.
He went to the bank one day, to withdraw money from his money market, in order to purchase a new vehicle. He was quickly shuffled away from the teller counter to a bankers desk. At the desk he was told that it would be financially beneficial to take our car loan with the bank rather than disturb his savings. Due to this gentleman having excellent credit, he would probably qualify for a very low interest rate, maybe even under 1%. This seemed to make sense to the gentleman, so he ended up financing his new vehicle with the bank at .9%. The story would be a happy story if it ended there, but it doesn’t end there.
About a month later, this gentleman received a call from the credit card division of the bank in order to inform him that the interest rate on his credit card was going to be increased from 7% to 11 1/2%. Being that he had never missed any payments or made late payments, and had never come close to maxing out the card which carried a generous limit, he was sure there was a mistake being made somewhere. When he asked why his interest rate was being raised, he was told that the addition of the auto loan to his credit profile changed his status under the bank’s new revised debt to income ratio model and thus the substantial interest rate hike was necessary.
But the story gets better. The man went back to the bank to talk to his banker. His banker was able to sort through the banking products available to him and was able to offer two solutions: either open a Certificate of Deposit account in the amount of $40,000, (roughly the amount of the auto loan!) so that they could re-look at the interest rate for the credit card, or he could apply for their ultra premier credit card with a 0% introductory interest rate and an annual interest rate capped at a reasonable rate.
The choice seemed obvious, so he applied for the ultra premier card. Two weeks later he was notified that he did not qualify for the card because he quote “had too much open credit”. The same day another letter arrived from the bank to inform him that the review of his credit card account, which he was trying to transfer to the new ultra premium account, was complete and due to his recent increase in loan seeking activity, his new interest rate would be 15 1/2%! Needless to say he was livid and he went down to the bank once again to try to straighten everything out.
He met with another banker, who after reviewing the gentleman’s accounts, suggested moving funds out of the money market account, which didn’t count towards achieving special rewards with the bank, and into a Certificate of Deposit which did count towards the special status that would’ve earned him a 0% credit card, except that he’d already been turned down for that credit card. The banker then said that even though he won’t get approved for the credit card, he should move his money into the CD anyway because the CD was paying more interest than the money market account and that the money market account wasn’t insured (they weren’t back then) while the CD was.
What the man chose to do was to pay off his auto loan, and his credit card with money from the money market account, and he asked for the rest of his remaining deposits in cash. Knowing this gentleman the way I do, I’m sure he had some choice words for them when he left an hour later with a check.
One thing about gold coins and silver bars and gold bars and silver coins for that matter, is that they don’t make up special silly rules just for you based on some asinine ratio that a banker decided would work best to pad his profits.
If an ounce of gold is $1125 for me, it is $1125 for you. Same way with silver. If you would like to begin playing on and even financial playing field, and you want to buy gold coins and bars, you can reach a precious metal specialist at ITM Trading by calling 1.888.OWN.GOLD.
We believe that everyone deserves a properly developed strategy for financial safety.
Chief Market Analyst, ITM Trading