Thursday, September 26, 2013

Be ready

If you have followed the Emergency Preparedness and Disaster Survival Readiness Pyramid starting from the bottom with water storage and 72 hour emergency kits, and you have progressed through each level making sure your preparation is as tight as a pyramid at Giza (with no space to slip even a thin postcard through the cracks), you have made it all the way to storing a sufficient supply of personal hygiene items. You are now ready to extend your efforts into the financial area of preparedness. This category includes accumulating a three to six month supply of cash flow for living expenses, and should lean more toward the six than the three.

But, you are all about setting goals and moving up levels, and three months is nothing to shake a stick at. Most Americans are one paycheck from disaster (economist Howard Ruff points out that as many as 24 out of 25 households in your neighborhood are living in quiet desperation)! Once you have momentum on your side, you have won half the battle, and the three months becomes six in short order. Especially if it is done automatically by direct deposit from your paycheck into a savings account.

Having accumulated all of your cash reserves, the rest of the capstone on the readiness pyramid is gold and silver bullion. Most if not all of this should be either stored yourself or stored safely for you by a company with a good reputation that has been in business for half a century or more. You should have all the serial numbers of the bars in your possession, and have access to the bullion to audit it whenever you please.

Economist Marc Faber has made the bold statement: "I am 100 percent sure that the U.S. will go into hyperinflation." Others have not been as vocal in their warnings, but point out the exponential growth in the money supply, and that inflation is the inevitable result of quantitative easing. They further reason that no civilization's fiat currency has ever stood the test of time. The former Comptroller General (the nation's chief accountant) has made comparisons between the fall of Rome and the current path America is on-- namely the breakup of the family, the basic unit of society, the overextension and spreading too thinly the military, and the debasement of the currency.

Numerous economists are emphasizing the ballooning deficits and anywhere between $50 to $70 plus trillion in unfunded liabilities (Social Security, Medicare, etc.). Additionally there is more than $600 trillion in financial derivatives worldwide, the likes of which arguably the greatest investor of all time, Warren Buffet, has referred to as WFD's (Weapons of Financial Destruction). More telling is the response of Chinese university students recently to a question posed to Timothy Geithner about Chinese assets to which he made the remark, "Chinese assets are very safe." He went on to explain how the U.S. supports a strong dollar. He was laughed at loudly by the students in attendance of the event.

All of this may paint a pretty grim picture of the future, but it doesn't have to be grim for the preparedness-minded individual. Your insurance against a financial meltdown, greater than anything that has happened thus far is bullion. It follows that the tiniest market in bullion with only approximately 330 million oz. for trading will be the best protection/most lucrative as well.

This metal is both industrial and monetary in nature. When inflation causes gold bullion to accelerate and appreciate, silver outperforms by a wide margin (percentage wise) in the long run. Besides, it is the most affordable of the precious metals, making it more suitable for the common person. But, gold bullion may be the choice of some, as you get less of it for your money, thus creating less of a need for large storage space should you choose to store it on your own. Still others may want some combination of gold and silver bullion. This is understandable, as gold has ingrained itself in the psyche of the public, and silver is seen as a close second. Few realize that above ground there is less verifiable silver than gold. Yes, silver is rarer than gold (above earth)! Whichever tickles your fancy, get started! Remember the new GM has nothing to do with general or motors, rather Gold Money.

Marc Faber News

Nouriel Roubini Blog

Jim Rogers News

Bob Janjuah News

Gary Shilling News

Warren Buffett News

Dennis Gartman

Doug Kass News

Suze Orman News