Recently by Anthony Wile: As America Continues to Tank, What Will YouDo?
Last week I discussed the nature of the "time taxers" and how easy it is for people to blindly be lulled into living their life in service of the State – or those who control it. And in that editorial I suggested that time, being the most precious commodity of all, is ours and ours alone to spend as we individually see fit – but that it takes knowledge of the world around us to separate the wheat from the chaff, so to speak.
Having said that, this week’s editorial will deal with some personal ideas and beliefs with respect to how people can protect their wealth amidst a global decline in confidence in fiat currencies – one that is justly going to propel the downward trajectory of them all and none more rapidly than the US dollar.
Now it has been said many times before that knowledge is power. And certainly that is true. However, I would argue that it is a certain type of knowledge – free-market thinking in its purest form – that enables one to perform a macro assessment of the world around them and to adequately predict the likely impact of major geopolitical actions and events on the overall business cycle. It involves assessing the dominant social themes being spun by the parasites who desire to siphon off the productivity of others by promoting the masses on an array of solutions to their manufactured fear-based problems. It involves a realistic assessment as to whether the larger segment of the population that tend to "dream" rather "think" will hand over their wealth and savings to the "dream weavers."
Yet far too often I find people getting lost in that assessement process as they get stuck looking at individual trees in the hope of making a quick trade and they forget about the big forest. And the key to making good life decisions is to gauge the likely impact of the rhetoric that filters through the mainstream media airwaves and the likely emotional responses of the non-thinkers.
Now, I know that there are many people who "trade the market" and fashion themselves as market timers. And some, purportedly, are quite good at it. But protecting one’s wealth and investing in front of major trends is what this article is about – not identifying short term market swings. I’ll leave that up to the vast number of commentators and newsletter writers who are apparently much better at that than I.
Let’s take a look at some larger impacting issues of the past week and how they may affect the greatest financial trend of the past 100 years – the demise of the US dollar.
First, the debt ceiling was raised by $2.1 trillion with NO meaningful spending cuts at all.
Did anyone really think this wouldn’t happen? We have said all along that the US dollar itself is the root of the US debt problem, along with public complacency. Until the cancer is addressed you can expect the disease to spread. The people of the United States have sold short their liberties and freedoms by allowing Money Power to take control of their currency (via the Federal Reserve), their government (ever since the American Civil War), their public schools, their mainstream media, and even their entertainment needs. Americans are addicted to a caretaker society – one that sounds nice on paper, but in reality is incapable of honoring all of its debt-based obligations.
This issue has been commented on extensively over the course of this past week by myself and several other commentators here at the DB. So suffice to say, the US dollar was not saved from a default. The process of ongoing devaluation has just been continued and there is no desire by the elected representatives (go figure) of the American people to address the currency/central banking problem. The dollar’s purchasing power will continue to trend down, ushering in an era of inevitable social chaos.
Next, we have sovereign debt concerns spiking in Europe. Many mainstream commentators refer to it as a "contagion that has spread" from the fallout of the US debt ceiling debates. Really? Is that what happens? Hmm, well we have a slightly different take on that and believe and wonder what exactly it is that has "spread."
To simply say that the concern has spread is to ignore the real underlying causes for concern. And it all comes down to truth and understanding.
A lie is a lie. Fraud is fraud. And a PONZI scheme is just a combination of lies and fraud that is somehow believed by enough people to maintain the illusion of its credibility. The euro is just another fiat currency that only maintains its purchasing power as long as the true nature of money is not understood by the population who are expected to slave away their time.
The reason the soverign debt issues in Europe will not go away is the same reason that the US economy’s woes cannot be fixed – because alternative media is opening people’s eyes to the nature of the world’s central bank controlled money game – and they do not like what they see. People are losing confidence as the Internet Reformation rolls onward and, as their confidence wanes, they are starting to panic.
The success of Money Power in maintaining the fiat-money game is predicated on maintaining people’s confidence. It simply must be maintained in order to support an ever-increasing demand for debt.
The US dollar debt-ceiling debate, as I stated in an RT interview on Monday (You can watch it here), hopefully has opened more people’s eyes to the nature of the problem. From there it is up to each person to employ human action and take the necessary steps to get out of harm’s way. We’ll look at how in a moment.
Lastly, late Friday afternoon, S&P downgraded US debt from a AAA rating to AA+. Big surprise? Not here folks. I will repeat what I said in that same RT interview I referred to above when questioned about the possibility of a downgrade of US debt.
Basically, the US debt system is a PONZI scheme that should have been downgraded long ago. The use of the term "risk-free" to brand US debt is a complete misuse of the term and for most free-market thinkers, the need to hear a mainstream rating agency say so is irrelevant.
I mean think about it for a second. If you are making sensible adjustments in your life to protect your wealth from a process of devaluation that steals your life’s productivity from you, do you really care what a mainstream rating agency that’s designed to protect the system’s integrity has to say?
The bottom line is this – S&P, Moody’s, Fitch et al., are all going to lag the real market – the one that has gold up some 50% in purchasing power in the last three ears alone against the US dollar. Their prognostications will always lag because they are not in the business of telling the truth. If they were, where were they right up until the 11th hour of the Enron collapse? How about the CDS market collapse… where were they in advance of that one?
Personally, I believe their pronouncement is far too little and far too late. If they want to give people some real indication of the worthiness of US debt, they should just come out and call it like it is: a rapidly devaluing debt system that is built on an unrestrained currency unit – the US dollar – whose purchasing power will be inflated/eroded into oblivion, along with the wealth and savings of America’s middle class. It is a system that is built on false hope and empty promises. It is a PONZI scheme that cannot sustain the headwinds of truth that are preceding the worst financial hurricane to ever hit the world’s population – we’ll name it "Hurricane Reality."
There are things people can do to protect themselves from this inevitabilty and position themselves for the fallout phase of this catastrophe. Here I am referring to individual steps a person can take, not collective action.
The first thing is to transfer out of US dollars and into gold and silver. Both I believe are essential. The value of gold, historically, has proven to be an ideal way of protecting wealth and facilitating large investments and purchases, while silver has often played the role of the people’s money – better suited to facilitating smaller purchases.
Either way, it is important that people hold as much of their wealth and savings in these instruments, in my opinion. Having said that, daily commerce is still transacted in fiat money, although alternatives such as James Turk’s GoldMoney are gaining in popularity. But a realistic balance needs to be struck between savings that can be comfortably transferred out of harm’s way and that which is needed to meet life’s current and short-term needs in the greater mainstream market place – something GoldMoney has yet to replace (although we wish it luck!).
The trend for both gold and silver is higher, in terms of purchasing power measured against ALL fiat currencies. So converting into any other currency at this time is not seeking asset protection and is more in tune with speculation. Euros, Swiss francs, Japanese yen, Canadian dollars – they are all leveraged to the US dollar and none of them offer the kind of purchasing power protection afforded by gold.
If you decide to transfer into honest money, consider only buying physical metal and taking delivery. By taking delivery I do not necessarily mean you need to bring all of it to your home and shove it under your mattress. Clearly, when Hurricane Reality lands there will be a lot of social chaos and crime. This will undoubtedly make markers of those known to hold precious metals. Therefore, keeping quiet about your holdings is prudent, but also diversifying the storage of the metals is, too.
When I refer to "make markers" of those holding gold and silver, I am not necessarily referring to your neighbors, although that is a consideration too, but I am mostly referring to your government’s ability to use propaganda and force in an attempt to nationalize gold as a monetary instrument – history repeats? The last time that happened was in 1933, and it stayed that way for four decades. Do you really think the US government wouldn’t try this again in the midst of a collapse in confidence?
The truth is, who knows? But better to be prepared than not. I suggest people maintain a balance of gold and silver bullion that’s locally accessible and another holding of gold that is secured outside of America’s shores. Here I recommend my friend Frank Suess and his team at BFI Capital Group. Their Global Gold Program is the best offshore alternative I know of at this time for the simple acquisition and storage of gold.
Now I know there are many who are quick to draw their guns on this one and suggest that gold away is no different than gold at home. I disagree on that. Force is much easier applied to the seizure of your wealth domestically than if held abroad. For one thing, assuming you own physical gold and stored it in a private Swiss vault, the US authorities will have a very difficult time getting their hands on that gold – unless you cave in to domestic pressure and request its repatriation. Remember, there is nothing illegal about buying and storing physical gold abroad. If you want to know more about Frank’s program, click here.
This leads into another life-planning idea that we believe makes sense – and not just for Americans. Consider that when Hurricane Reality hits America’s shores, that the area in which you live may not look quite the same for an extended period of time. Consider that irrationality will rule, as Gustave Le Bon’s adequately described "Crowd Mentality" takes hold of the disgruntled masses. Think about that for a moment and you may decide that, to whatever degree you can afford it, you may want to consider getting a "hip pocket" residency.
Here again I expect swords of patriotism to be drawn. Understandably so. Who wants to leave their home unnecessarily and all because the money magicians have raped the country of its wealth? The answer is no one. But there are times throughout history when prudence overrules pride in the name of safely securing you and your family. And a second residency can also serve as a form of asset diversification.
When the chips are down and the world around you becomes inhospitable, as the Internet Reformation and the resulting financial hurricane are wiping out the fallacious pillars on which Western economies and societies have been constructed, you may wish you had another option.
Is there any perfect place? No. But there are low-cost alternatives that may provide a more secure place to hang one’s hat during a chaotic period that’s probably best avoided. The key is to find a place that suits your living standards and needs. It may not be perfect, but it may sure feel that way if you need it in the future while the grim reality of authoritarianism morphing into totalitarianism takes hold.
Personally, I have yet to find that place, but I am searching and have narrowed it down to a few locations. For me and my family, I seek a location that is relatively self-sufficient with respect to providing the basic needs of life. I seek locations that are off the beaten track but have good schools and infrastructure. Places that, once explored, reveal themselves to be enjoyable locations to vacation and spend occasional time – so that if it is never needed for protection purposes, it is not a total waste of money.
Having a portion of one’s wealth stored overseas enables a person to make a personal move – assuming a secondary residence has been established – so that if unfair pressure is brought to bear domestically, action can be taken. Without preparation in advance, such action may not be a possibility when a person needs it most.
Many will argue that this type of planning is only for the wealthy. And yes, one must have some degree of wealth. But it is surprising how far a buck can go in some of the locations I have visited and am considering for such secondary residency purposes. So this type of planning is not only for the ultra wealthy by any stretch of the imagination.
On another note, I am often asked by people what they can do to profit from gold and silver’s "rising trend." Usually they wonder about owning mining stocks as a means of owning gold.
Transferring out of paper money and into gold and silver should be viewed as asset protection. Buying shares of mining companies is nothing of the sort – especially exploration companies.
Over the past several years we have seen impressive gains in the purchasing power of gold. Yet, mining companies, and here I am referring to those that actually produce gold, have seen relatively little impact on their shares when viewed on a comparative basis with the price move of gold. Why is that you may ask?
I believe that, just as the Internet exposes the truth about the dishonest and fraudulent nature of our monetary systems, the ‘Net is also exposing the fallacy of "corporations" and their "individual nature." People are waking up to the reality that a corporate structure is a facilitating vehicle for the transference of wealth more so than the creation of it. And they do not like what they see.
Corporations are not individuals and as long as they shield the liability of those who control them from their actions, we will have stock markets riddled with fraud and corruption. Mining companies are no different than any other corporations. It is very hard to find quality people who are truly concerned about building value for their shareholders. But to harp on about this would require another editorial specifically devoted to the dissection of the corporate fallacy.
Having said that, there are discoveries that are made. And when they are, the share prices of junior explorers can really take off. That is what keeps people hunting for gold deposits and the explorers best positioned to find them. My advice is that if you are going to invest in junior explorers, you are better waiting until a discovery has been made and then buying. You’ll pay more but face somewhat lower risks – unless the whole thing is a fraud, like Bre-X was in the 1990s. Just recognize that buying shares of exploration companies is not the same as owning gold and is pure speculation.
In summary, buying high-risk gold and silver stocks is not the same as buying physical gold and silver and has nothing to do with asset protection. Even the big producers aren’t keeping pace and there are many risks that threaten to erode the value in the gold they produce too – most notably their tendency to sell their production for devaluing paper dollars. Why they don’t anchor their shares in the value they produce rather than sell it is beyond me. Anyway, do not be fooled into thinking buying shares in mining companies is the same as buying gold. If you want to speculate in mining stocks, go ahead… but be fast on your feet. Recognize it for what it is – high risk speculation. Try to separate the wheat from the chaff.
Remember that in the dying days of the "Age of Promotion," everything as it used to be… may not be so tomorrow. When Hurricane Reality hits, all paper based "assets" will likely be illiquid and, as such, virtually worthless.
Anthony Wile is an author, columnist, media commentator and entrepreneur focused on developing projects that promote the general advancement of free-market thinking concepts. He is the chief editor of the popular free-market oriented news site, TheDailyBell.com. Mr. Wile is the Executive Director of The Foundation for the Advancement of Free-Market Thinking — a non-profit Liechtenstein-based foundation. His most popular book, High Alert, is now in its third edition and available in several languages. Other notable books written by Mr. Wile include The Liberation of Flockhead (2002) and The Value of Gold (2002).