to growing your finances?
Looking at the level of manipulation that exists in the markets, you could be forgiven for thinking that. It is always the same game, with insiders flogging stocks and other paper assets to the public when the market is raging (a bull market). Then just before the market peaks, they go short. That’s to say the price is going to fall, which enables them to buy it back at lower prices. This endless wash and rinse cycle, aided and abetted with HFT (high-frequency trading) which use algorithms to make rapid purchasing and cancellations, helps skim an unsuspecting public of their wealth.
But this does not have to happen to YOU. Remember it is YOUR Life Savings or Rainy Day fund we are talking about here. So why not be prudent and take control? Many paper assets are a gamble, and the dealer will always be a step ahead of you. So, as fiat currencies continue their collapse, I am reminded of the of 5 recommendations Jim Rickards mentions in his book The Death of Money. All are proven asset allocations which have stood the test of time during the highs and lows of inflation and deflation. He refers to them as “an optimal combination of wealth preservation under conditions of inflation, deflation, and social unrest… while providing high risk-adjusted returns…” and here they are:
10% fine art
20% alternative funds
• Fine art. Here he is talking about ‘museum-quality’ art, where “a $10 million painting that weighs two pounds is worth $312,500 per ounce, over two hundred times gold’s value by weight, and will not set off metal detectors.”
• Land un-developed he says: “can be developed cheaply at the bottom of a deflationary phase, and provide large returns in the inflation that is likely to follow.”
• Gold is a great form of protection when there is extreme inflation and deflation. Like Mr. Rickards I would advocate physical gold over exchanged-traded funds (ETF) or any paper derivatives of.
In addition to gold, I would add silver. As a waning commodity with ‘industrial’ and ‘investment’ demand going through the roof, silver is sitting pretty with a potentially massive shortage in supply. An example of this is the plastics industry, which on an annual basis uses 700 tonnes of silver in the production of ethylene oxide and formaldehyde. That is just one of hundreds of uses in industry — you get the picture! This dwindling resource gives us a huge “window of opportunity”. Remember wealth is never lost, it is merely transferred! Since the financial crash of 2008 the banks have been unloading silver. There has also been a huge ETF (exchange traded fund) sell-off. As a result, a lot of investors look upon silver as poor man’s gold. Not being popular makes it hugely undervalued, with a massive upside at some point. I believe holding physical silver outside the financial system is one of the best hedges against a falling financial system.
• Alternative funds; Jim Rickards is not referring to stock market investments here but a game plan to embrace “long-short equity, global macro, and hard-asset strategies that target natural resources, precious metals, water, or energy.” As with all investments, do the necessary leg work and understand what you are getting into.
• And finally cash; “Cash might not be the best investment AFTER a calamity, but it can serve the investor well UNTIL the calamity emerges.” He beats the drum for holding “the Singapore dollar, the Canadian dollar, the U.S. dollar, and the euro.”
So there are steps you can take before the inevitable. But don’t wait for the crash and be part of the rush for gold and silver. Trying to maintain your wealth at that point, when everyone has no confidence in the central banks, will be next to impossible. You have to act now, because when everyone stampedes to buy gold and silver you can count on two things. Firstly, there will be problems with supply and secondly, as a direct consequence of this, the price will rise. So why not make your move into precious metals now rather than later and take a long-position* in gold and/or silver. Unlike other commodities they will always be worth something!
(A long position: The buying of a security such as a stock, commodity or currency, with the expectation that the asset will rise in value).
Source: for the definition of long-position http://www.investopedia.com/terms/l/long.asp
If this has been of any interest or help please share. As always your comments are most welcome!