FunnyMoney
3rd January 2011, 12:17 AM
Physical metals will provide protection while everything else will greatly lag or will become nearly worthless.
I don't believe that 2011 is the year when hyperinflation arrives or when TSHTF events become catastrophic. But those events will come and the clock is ticking toward them at a faster than ever pace. Still, it's most likely that there will be no sudden destruction of the status quo and TSHTF events will simply play out over time just as they always have.
Regardless the exact nature of progress, if you can call it that (that which is more likely progress for the elite) but regardless, there will be winners and there will be losers - the only thing different this time around is that there's going to be a lot more losers and their losses are going to be a lot larger than most believe.
To explain why is easy. Fiat money, is nothing but worthless pieces of paper. A medium of exchange created and backed using a system based upon some level of faith that more wealth and some future prosperity will somehow be found and will be then somehow delivered, done so in order to pay back fiat's instruments, like bonds, the interest payments on the bonds, the loans, their interest payments, other liabilities or promises and of course the onging govt and public sector operations. All of these things revolving around and denominated using fiat money are IOUs, IOUs which have no true stop gap beyond the point of a gun or some future slave labor system. The money itself can not pay these things back, it only claims to be able to do so. Once a claim as good as gold is now just a claim.
Mediums of exchange make for interesting vehicles and there's no doubting their potential for power. The USD fiat, considered to be historically stable as fiats go, has actually gone through some powerful and interesting transitions. Once it was considered, "In God We Trust". But then when that didn't allow central banks and central govts to steal enough wealth from the rest of the society, things changed to, "Backed by the Full Faith and Credit of a Nation". Credit being the key term here, and we can now see how this supposed backing is actually a very negative force - an attribute which is now seen the same in most all fiat money.
From "Backed by the Full Faith and Credit of a Nation", the fiat currencies of the globe are today backed by the "Debts of Nations". This is essentialy the same as, "Backed by the Full Faith that Future Workers Will Somehow Pay Up". The markets and investors of the world have begun to realize, that's not going to happen.
The house of cards will fall, there is no doubt about it, it just won't happen quite yet. But it will happen and prior to the end of this decade it will become entirely clear to everyone that this recent attempt to push a corrupt, dishonest, addictive and dangerous product to the world's workers and investors is going to turn out bad, very bad, just as it has in the past, always. When that happens corruption will seek that which can not be corroded. Dishonesty will run toward honesty. Addicts of credit will go cold turkey by either free will or by force and those aware of the dangers will flee toward safe havens. For wealth, just as it has always throughout history, wealth will search the well protected, off the radar, most valuable, least corrosive and most honest forms possible. Precious metals have always been where wealth has run to in the past, it was the only true portable wealth the planet ever had and in this latest cycle of excess insanity, it will be the ONLY thing left standing.
As the house of cards collapse one card at time, or several together, the super rich will flee and find safe havens wherever a market in precious metals will remain mostly unregulated and these super rich will collect into communities surrounded by young and hard working migrants brought in along with massive amounts of valuable imports to serve and protect them. Don't try to join one of these safe haven locations as if you actually have enough wealth and power to do so then you already would have by now. Don't rely on becoming a servant or worker at one of these locations either as a loss of freedom and perpetual slavery awaits for you and your family if you do.
For the majority of the world, even those who saw the writing on the wall and prepared a well thought out plan B, land mines await... Mainstream pundits will tell you to be ready for the storm clouds ahead; they tout diversification. Diversification - in a way I agree; it will be important, but not in the way you might think of it.
Here is what you can expect for the rest of this decade and into the next:
Select stocks, ETFs and other inflation hedge sector paper products will soar in market price, but when it comes time to sell them there will be a variety of pitfalls including counter-party defaults, confiscations, theft, new fees and new taxes. After that, especially the taxes part, gains for those holding too long will take at least a 70% decline in terms of actual purchasing power. For most investors I expect them to lose their shirt in the stock markets.
Bonds and Certificates of Deposit will start to pay much higher interest but that interest will greatly lag true inflation by double digit percentages and the principal will likely either default or take years in delays to redeem, at which time it won't be even worth redeeming. Bond are today backed entirely by fiat money which is backed by nothing and these bonds claim to pay interest also in this fiat money backed by nothing at some future date which really means nothing but whatever some judge or govt official decides it will mean. In the end times, expect an 80 to 90% decline in real wealth for those instruments with luck, otherwise expect nothing of real value back.
Real Estate will remain flat until it's clear that hyperinflation is out of control, then real estate will see increases but with the economy quickly turning into a basket case, homes and land will never make money or turn into the ATM for thier owners that they once were. Expect repair costs, taxes, protection of them, and carrying costs to eat into their value. Most real estate investors will wish they had moved in with their parents (living or not) prior to the end of this global transition from illusionary value to fair value.
Agriculturual lands will continue to be good investments for those that produce something in the early stages, but eventually taxes and regulations will hinder all but the most savy land manager. Theft of product will also become a major concern for farmers as masses of hungry city folk may eventually flood into agricultural areas looking for food and work. While in theory small farms would be a very good hedge for what's coming this decade, in practice this will become in the end a giant struggle for most and few will believe it to have been worth it when the next decade comes. Food for most of the world will be entirely controlled by govts and big industry by then. Small players will be at the mercy of food tranportation and middle-men as those will be the areas that take on the major risk and will want major profit. The wholesale market will be very difficult for the small farms and they will face great hardships. They will be lucky to even meet their own needs, or survive at all depending upon how govt agencies decide to deal with them.
Small business is a wild card and depends on the kind of business. Gun shops, pawn shops, food distribution, select health care industries and other important sectors that cater to society's most basic needs may tend to produce good revenue and retain good margins throughout the period. However, this will greatly depend upon the region and what regulations and taxes govts inflict upon these businesses. Similar to small farms, small and medium sized businesses are likely to be a losing proposition for most who trust their wealth, time and hard work toward those endeavors.
Base metals will explode in price along with energy. How to actually invest in these things and protect them through a govt price-controlled hyperinflation or a SHTF scenario (slow or otherwise) is something that only the most creative will figure out. Then selling them will require connections and a black market may not be big enough or safe enough to rely on depending upon the region of the world. A small amount of pre-1982 pennies and nickels is probably a good idea for the average person who plans to sit tight and ride out the storms in the same location, but for most people larger amounts of base metals for the protection of their wealth could become very problamatic.
Gold, Silver, Platinum, and Palladium, especially in well recognized coin form will receive victory by default, and victory by outright first place, both. The metals won't just win by a distance but they will be the only thing left standing. They will be the "last man standing" when this decade and next is done destroying the wealth of the world.
Metals are useful, recognized and historic forms of wealth and will be rewarded as anyone attempting to hold onto whatever wealth they have remaining stops at nothing to obtain them. Selling them in the black market, to a family memeber, a close friend, a trusted co-worker or community resident will be simple and quick. Metal will become money. A great sucking sound will gather over the globe as these metals are pulled into a vacuum created by the destruction of trust in all other mediums of exchange.
The economies of the world and the marketplaces of the world, from the smallest swap-meet to the largest exchange will demand metal for collateral. The market itself will become the demand for physical metal reserves and coins for use in transactions. Industry and investors in precious metals will take a back seat to the actual marketplace itself. The marketplace will drive the value of these metals to amazing values. Buying a large amount of precious metals will become very difficult as huge players will park huge sums of paper and then even tangible assets into dealers' accounts with the standing orders, "buy everything that comes in." Selling will be easy.
Finally when the market has transitioned to the use of an honest backing, a backing no longer of faith, but of hard currency coinage representing work, sweat and trust, will the fair valuation for these metals be arrived at. A one ounce silver coin will likely buy a year's worth of high quality food for a large family. A one ounce gold coin will probably buy half a city block. A one ounce platinum coin will likely buy a very safe and producing farm. But I could be wrong and so diversification is a very good thing: those metals might switch places - so definately, diversify, just make sure it's in something left standing.
I don't believe that 2011 is the year when hyperinflation arrives or when TSHTF events become catastrophic. But those events will come and the clock is ticking toward them at a faster than ever pace. Still, it's most likely that there will be no sudden destruction of the status quo and TSHTF events will simply play out over time just as they always have.
Regardless the exact nature of progress, if you can call it that (that which is more likely progress for the elite) but regardless, there will be winners and there will be losers - the only thing different this time around is that there's going to be a lot more losers and their losses are going to be a lot larger than most believe.
To explain why is easy. Fiat money, is nothing but worthless pieces of paper. A medium of exchange created and backed using a system based upon some level of faith that more wealth and some future prosperity will somehow be found and will be then somehow delivered, done so in order to pay back fiat's instruments, like bonds, the interest payments on the bonds, the loans, their interest payments, other liabilities or promises and of course the onging govt and public sector operations. All of these things revolving around and denominated using fiat money are IOUs, IOUs which have no true stop gap beyond the point of a gun or some future slave labor system. The money itself can not pay these things back, it only claims to be able to do so. Once a claim as good as gold is now just a claim.
Mediums of exchange make for interesting vehicles and there's no doubting their potential for power. The USD fiat, considered to be historically stable as fiats go, has actually gone through some powerful and interesting transitions. Once it was considered, "In God We Trust". But then when that didn't allow central banks and central govts to steal enough wealth from the rest of the society, things changed to, "Backed by the Full Faith and Credit of a Nation". Credit being the key term here, and we can now see how this supposed backing is actually a very negative force - an attribute which is now seen the same in most all fiat money.
From "Backed by the Full Faith and Credit of a Nation", the fiat currencies of the globe are today backed by the "Debts of Nations". This is essentialy the same as, "Backed by the Full Faith that Future Workers Will Somehow Pay Up". The markets and investors of the world have begun to realize, that's not going to happen.
The house of cards will fall, there is no doubt about it, it just won't happen quite yet. But it will happen and prior to the end of this decade it will become entirely clear to everyone that this recent attempt to push a corrupt, dishonest, addictive and dangerous product to the world's workers and investors is going to turn out bad, very bad, just as it has in the past, always. When that happens corruption will seek that which can not be corroded. Dishonesty will run toward honesty. Addicts of credit will go cold turkey by either free will or by force and those aware of the dangers will flee toward safe havens. For wealth, just as it has always throughout history, wealth will search the well protected, off the radar, most valuable, least corrosive and most honest forms possible. Precious metals have always been where wealth has run to in the past, it was the only true portable wealth the planet ever had and in this latest cycle of excess insanity, it will be the ONLY thing left standing.
As the house of cards collapse one card at time, or several together, the super rich will flee and find safe havens wherever a market in precious metals will remain mostly unregulated and these super rich will collect into communities surrounded by young and hard working migrants brought in along with massive amounts of valuable imports to serve and protect them. Don't try to join one of these safe haven locations as if you actually have enough wealth and power to do so then you already would have by now. Don't rely on becoming a servant or worker at one of these locations either as a loss of freedom and perpetual slavery awaits for you and your family if you do.
For the majority of the world, even those who saw the writing on the wall and prepared a well thought out plan B, land mines await... Mainstream pundits will tell you to be ready for the storm clouds ahead; they tout diversification. Diversification - in a way I agree; it will be important, but not in the way you might think of it.
Here is what you can expect for the rest of this decade and into the next:
Select stocks, ETFs and other inflation hedge sector paper products will soar in market price, but when it comes time to sell them there will be a variety of pitfalls including counter-party defaults, confiscations, theft, new fees and new taxes. After that, especially the taxes part, gains for those holding too long will take at least a 70% decline in terms of actual purchasing power. For most investors I expect them to lose their shirt in the stock markets.
Bonds and Certificates of Deposit will start to pay much higher interest but that interest will greatly lag true inflation by double digit percentages and the principal will likely either default or take years in delays to redeem, at which time it won't be even worth redeeming. Bond are today backed entirely by fiat money which is backed by nothing and these bonds claim to pay interest also in this fiat money backed by nothing at some future date which really means nothing but whatever some judge or govt official decides it will mean. In the end times, expect an 80 to 90% decline in real wealth for those instruments with luck, otherwise expect nothing of real value back.
Real Estate will remain flat until it's clear that hyperinflation is out of control, then real estate will see increases but with the economy quickly turning into a basket case, homes and land will never make money or turn into the ATM for thier owners that they once were. Expect repair costs, taxes, protection of them, and carrying costs to eat into their value. Most real estate investors will wish they had moved in with their parents (living or not) prior to the end of this global transition from illusionary value to fair value.
Agriculturual lands will continue to be good investments for those that produce something in the early stages, but eventually taxes and regulations will hinder all but the most savy land manager. Theft of product will also become a major concern for farmers as masses of hungry city folk may eventually flood into agricultural areas looking for food and work. While in theory small farms would be a very good hedge for what's coming this decade, in practice this will become in the end a giant struggle for most and few will believe it to have been worth it when the next decade comes. Food for most of the world will be entirely controlled by govts and big industry by then. Small players will be at the mercy of food tranportation and middle-men as those will be the areas that take on the major risk and will want major profit. The wholesale market will be very difficult for the small farms and they will face great hardships. They will be lucky to even meet their own needs, or survive at all depending upon how govt agencies decide to deal with them.
Small business is a wild card and depends on the kind of business. Gun shops, pawn shops, food distribution, select health care industries and other important sectors that cater to society's most basic needs may tend to produce good revenue and retain good margins throughout the period. However, this will greatly depend upon the region and what regulations and taxes govts inflict upon these businesses. Similar to small farms, small and medium sized businesses are likely to be a losing proposition for most who trust their wealth, time and hard work toward those endeavors.
Base metals will explode in price along with energy. How to actually invest in these things and protect them through a govt price-controlled hyperinflation or a SHTF scenario (slow or otherwise) is something that only the most creative will figure out. Then selling them will require connections and a black market may not be big enough or safe enough to rely on depending upon the region of the world. A small amount of pre-1982 pennies and nickels is probably a good idea for the average person who plans to sit tight and ride out the storms in the same location, but for most people larger amounts of base metals for the protection of their wealth could become very problamatic.
Gold, Silver, Platinum, and Palladium, especially in well recognized coin form will receive victory by default, and victory by outright first place, both. The metals won't just win by a distance but they will be the only thing left standing. They will be the "last man standing" when this decade and next is done destroying the wealth of the world.
Metals are useful, recognized and historic forms of wealth and will be rewarded as anyone attempting to hold onto whatever wealth they have remaining stops at nothing to obtain them. Selling them in the black market, to a family memeber, a close friend, a trusted co-worker or community resident will be simple and quick. Metal will become money. A great sucking sound will gather over the globe as these metals are pulled into a vacuum created by the destruction of trust in all other mediums of exchange.
The economies of the world and the marketplaces of the world, from the smallest swap-meet to the largest exchange will demand metal for collateral. The market itself will become the demand for physical metal reserves and coins for use in transactions. Industry and investors in precious metals will take a back seat to the actual marketplace itself. The marketplace will drive the value of these metals to amazing values. Buying a large amount of precious metals will become very difficult as huge players will park huge sums of paper and then even tangible assets into dealers' accounts with the standing orders, "buy everything that comes in." Selling will be easy.
Finally when the market has transitioned to the use of an honest backing, a backing no longer of faith, but of hard currency coinage representing work, sweat and trust, will the fair valuation for these metals be arrived at. A one ounce silver coin will likely buy a year's worth of high quality food for a large family. A one ounce gold coin will probably buy half a city block. A one ounce platinum coin will likely buy a very safe and producing farm. But I could be wrong and so diversification is a very good thing: those metals might switch places - so definately, diversify, just make sure it's in something left standing.