Wealth Preservation, Investing, and Prepping in 2010

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The trend going
forward during this economic depression is getting back to basics.
We often discuss, "prepping," as a way to protect your
family in the event of an unforeseen catastrophe (natural or man-made).
Recently, we’ve seen more financial analysts and advisers recommend
shifting from traditional investments like stocks, bonds, CD’s
and money market accounts, to tangible assets that will gain value
regardless of what stock and bond markets do.

Of course,
we’re not saying you should go out and spend your entire 401k
retirement account on 5 gallon buckets of rice, but diversifying
into hard assets on a variety of levels could be a great investment.
As the US Dollar continues its decline over the coming years, the
price of essential consumer goods is likely to rise. Certain goods,
however, like real estate, cars and anything that is driven primarily
by credit expansion, may experience a deflationary impact in real
dollar terms, while others, like food and energy may see explosive
price increases.

Paul Mladjenovic
of SuperMoneyLinks.com
discusses 3
Things Everyone Needs to Do with Money in 2010
:

"OUR
GOVERNMENT CAN NOT SPEND OUR COUNTRY INTO TRILLIONS OF DOLLARS
OF DEBT WITHOUT CONSEQUENCE.

I am working
on my next set of forecasts and seminars but before they are out,
I want everyone (and I mean EVERYONE) to consider 3 simple things
to gain greater financial peace of mind:

  • Diversify
    away from paper assets.
  • Accumulate
    essentials.
  • Re-focus
    your portfolio with emphasis on "human need."

[Read
the full, expanded article
]

In Buy
Commodities at Today’s Lower Prices, Consume at Tomorrow’s
Higher Prices
we offered some ideas about how to be a "prepper,"
and "investor," simultaneously.

"If
you are a prepper, for example, who is already stocking essentials
foods and goods, you’re way ahead of the game. As commodity
prices continue to rise for a variety of reasons, your "investment"
is paying off in real terms. Buy 10 pounds of rice today for $10,
and when that same bag of rice goes to $20 a year or two from
now, you can say you earned a 100% return on your investment!
And the great thing about your investment, is you don’t have
any counter-party risk, for the most part, meaning that you own
the physical good and it is in your possession – you take
delivery at any time!"

For those interested
in investing some of their wealth into real, tangible assets, consider
the following as food for thought:

  • Precious
    metals

    Though gold and silver are no longer considered money by most
    "mainstream" economists, the fact is that central banks
    in China, India and Russia have been continuing to stockpile precious
    metals over the last decade, and they will likely continue to
    do so going forward. Why? Because as all or most of the paper
    currencies around the globe are debased, gold and silver will
    become the de facto monetary unit against which other currencies
    are valued. As Dr.
    Marc Faber
    has said on several occasions, "Own gold and
    become your own central bank." Many contrarian financial
    advisers who lean towards the Austrian school of economics recommend
    allocating 10% to 20% of your current investment/retirement portfolio
    to gold. If you are banking on having that money when you retire,
    consider speaking with your financial adviser about purchasing
    precious
    metals
    in the form of mining companies or ETFs. If possible,
    a portion of your holdings should be in physical bullion like
    bars and coins, which will provide added security as you will
    have no counter-party risk because you have it in your possession.

  • Food
    As the US Dollar loses value and other countries become hesitant
    about funding our trillion dollar debts, the cost of food will
    continue to rise. Combine the dollar’s monetary issues with
    the fact the many farmers around the world are unable to gain
    access to loans to continue or expand operations, and you have
    the potential for price increases not just because of dollar debasement,
    but supply problems. The other threat for food is that we may
    very well experience a perfect storm event, such as that experienced
    in the dust bowl of the 1930’s, meaning that heavy rains,
    or heat or cold, may affect agricultural output, further straining
    supplies and pushing prices higher. Foods like rice, legumes,
    pastas, wheat, oats, and canned goods could be purchased today
    and stored, in some cases, for up to five years or longer. Consider
    the price increases that can happen in these food stuffs over
    the next five years and this investment may see significant gains.
    And again, you eliminate counter-party risk because you are holding
    the tangible assets yourself. (This
    video shows how The Survival Mom
    has dedicated a room in her
    home for just this purpose.)

  • Sustainable
    Living

    Well-known trend forecaster Gerald
    Celente
    has suggested that one of the mega-trends of this
    decade will be living
    on less and becoming more self-sustaining
    . Individuality will
    return to America, and a push to distance oneself from the "grid"
    will take off for a variety of reasons. Rising food and energy
    costs are likely to be two of the major catalysts for this trend.
    How can you invest for yourself? First, consider investing your
    time and money into skills development like gardening, farming,
    sewing, woodworking, or hunting, as these skills can certainly
    be an investment that will pay off in the future. While it may
    not be feasible for most to become farmers in terms of commercial
    enterprise, it can be accomplished on a personal level by those
    who have a bit of desire and choose to expand their skills base.
    Urban gardens are already popping up all over America as the micro-farming
    trend continues to gain acceptance. Even in the suburbs, on a
    fifth of an acre of land, those with the ability to think outside
    the office cube can grow
    enough food to support their entire family for a year
    .

    For those
    concerned with rising energy costs, your options are basically
    limited to investing in energy stocks and ETFs, or, investing
    in yourself and create your own supply of energy. Learning how
    to develop and implement a power grid in the comfort of your
    own home will not only give you the skills to earn a living
    in the future, but to provide nearly unlimited energy for your
    household through use of solar, wind and hydro power. Investments
    into alternative energies for your home may seem costly, but
    not if you consider the rising cost of your electric and gas
    bills over the next couple of decades. Sustainable living investments
    are not one-off investments, say, like storing a bucket of beans,
    but rather, pay dividends forever.

  • Clothing/Footwear
    Though not often considered as investments, extra clothing,
    especially things like socks, underwear, house shirts, shoes,
    sweat shirts and sweat pants, will likely move up in price as
    well. While adults may be able to stretch their clothes for
    several years without replenishing their closets, children are
    a whole different story. If you’ve got kids, this is one
    investment that can really pay off. Purchasing graduated sizes
    of clothing for your kids with a time horizon of 3–5 years
    can really save you money down the road. It is true that in
    America today, these items are readily available and imagining
    a scenario where these items will not be on store shelves is
    hard to do. But consider the East Block circa 1985, and you’ll
    have a different perspective. Because of isolationist policies,
    closed currency and price controls, these items were very difficult
    to come by. If the US experiences a currency crisis, it will
    have an immediate and significant impact on the USA’s ability
    to acquire goods from manufacturers around the world, as the
    price for goods will be difficult to determine because of the
    potential for massive currency fluctuations. If not for yourself,
    consider stocking some reserve clothing for your kids.

  • Hard
    Assets in General

    Recently,
    President Chavez of Venezuela devalued the Bolivar, Venezuela’s
    currency, and within a few hours residents
    of the country flocked to stores to spend any physical cash

    they had on hand or in their bank accounts. When a currency
    is devalued, either overnight or over a period of months and
    years, the purchasing power is destroyed. What you could buy
    today for $50 will cost $100 later. We’re not suggesting
    you spend all of the cash you have, but take into consideration
    some of the things you regularly spend money on daily, monthly
    or yearly. Can you purchase those items now and save them for
    later use? If so, wouldn’t you rather pay 10% or 20% or
    even 40% less now than three years from now?

It is important
to be prudent with where one might invest their money, as it is
impossible to say for certain that an inflationary environment is
in our future, and which goods will be affected by increased prices.
But all signs point to an eventual devaluation, officially or unofficially,
of the US dollar. While the aforementioned "investments"
are not traditionally accepted and your financial adviser might
think you’ve gone off the deep end, they are worth considering
and provide you with another option for protecting your wealth.

January
27, 2010

Mac
Slavo [send him mail] is a
small business owner and independent investor.

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