Sunday , 25 June 2017


Here's Some Quality Advice on How to Navigate the Markets & Protect Your Wealth During the Next 4 Years

 

The U.S. has reached a Debt to GDP ratio of over 100%. Indeed, at no point in history has the U.S. had this much debt during peacetime – and the fact that we’re overspending by this amount at the exact time that other countries are showing signs of shunning US Treasuries is a formula for disaster. With that in mind, it is highly likely that the U.S. will enter at the very minimum a debt crisis and quite possibly a currency crisis during the Obama administration’s second term. [Such being the case,] now, more than ever, investors need to get access to high quality guidance and insights [and this article does just that] to help you navigate the markets and protect your wealth. Words: 964

So says Graham Summers (http://gainspainscapital.com) in edited excerpts from his original article* entitled The Investment Classes That Will Most Benefit From Obama’s Second Term.

Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!) and www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) may have edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement. 

Summers goes on to say, in part:

Investment Themes

In preparation for this, investors will want to focus on the following investment themes:

  1. Inflation hedges based on continued spending and money printing.
  2. Gold and Silver as an alternate currency based on the U.S. Dollar falling further.
  3. Productive assets (foreign real estate, apartments in specific markets, businesses, essentially anything that produces cash).
  4. Preparing for an eventual US Debt Default.

Inflation Hedges

Regarding #1, there are several areas to consider. They are:

  • Precious metals (bullion)
  • Natural resources, particularly timber
  • (last and least) Blue chip businesses or companies with pricing power that can maintain profits during periods of inflation

Precious Metals

As far as precious metals go, you need to:

  1. Own Bullion
  2. Store it yourself (not in a bank)

Gold ETFs

I do not recommend owning a paper gold-based ETF because, frankly, the custodial risk is high (that is, there’s no telling if the Gold is even there or who would get it if the ETF is liquidated). In comparison, physical bullion, stored outside a bank, is literally money in hand. You know where it is and you can find out what it’s worth. Compare that to a Gold ETF in which you’re hoping that the bank actually has the Gold and that it could actually send it to you if you requested (fat chance).

Gold Coins

In terms of actual gold coins, there are three coins that comprise the bulk of the bullion market. They are:

  1. Kruggerands,
  2. Canadian Maple Leafs, and
  3. American Gold Eagles.

I’ve been told to avoid Maple Leafs by both a trader and a bullion dealer as they can easily be scratched [due to their higher level of gold content which makes them slightly softer] which damages the gold and reduces the coin’s value.

Silver

In terms of silver, the easiest way to get it is via:

  • pre-1965 coins (often termed “junk” silver),
  • silver one-ounce rounds (coin-like medallions),
  • 10-ounce bars,
  • Silver Eagles coins.

Dealers

I cannot tell you which dealer to go with, but look for someone who’s been dealing for years (not a newbie).  You should always ask for references from the dealer (former clients you can talk to about their purchases/ experiences).

Storage

Some warning signs to avoid are dealers who try to store your bullion. Never, I repeat, never store your bullion with someone else. Always store it yourself. Also, be sure to talk to the dealer for some time and ask him or her numerous questions about the industry, the coins, etc. (feel free to test him or her on the information I’ve provided you with e.g. the three most liquid Gold coins, etc.). If they can answer everything you ask in a knowledgeable fashion, their references check out, and you verify everything they say with a third party, you should be OK.

Natural Resources

In terms of other natural resources, the best assets to own are the actual resources themselves. However, not everyone can go out and buy timberland or a lead mine so this means looking at various commodity and natural resource ETFs.

Stocks

As far as stocks go, I suggest looking at large cap blue chips stocks that are able to pass on rising costs to consumers (at least in part). I’m talking about well-defined brands that offer goods and services which consumers are willing to pay more for as prices rise due to increase operational costs and commodity prices.

This inevitably leads to defensive non-cyclical industries: tobacco, beverages, medicine, energy, etc. In the large-cap space, the following are worth consideration.

Company Symbol Industry Price to Cash Flow Dividend Yield
Kraft Foods KRFT Food 10 N/A
Nestle NSRGY Food 15 2.6%
Coke KO Beverage 17 2.6%
McDonalds MCD Fast Food 13 2.9%
Exxon Mobil XOM Oil 8 2.2%
Clorox CLX Cleaning Supplies 16 3.2%
Colgate-Palmolive CL Oral Health 18 2.2%

Smaller companies I would consider if you need to remain long in the stock market are:

Company Symbol Industry Price to Cash Flow Dividend Yield
Smith and Wesson SWHC Guns 10 N/A
Sturm, Ruger & Company RGR Guns 14 2.3%
WD 40 WDFC Lubricant 22 2.2%
Hormel HRL Spam 17 1.9%

I want to stress that even though these companies all have considerable pricing power, during an inflationary collapse all companies will be hit as costs rise. This is why stocks are listed as the last inflation hedges from our list at the beginning of this issue: they do not offer the same protection against inflation as bullion, and natural resources assets/ companies do.

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I am not recommending any of these companies here but if you need to have exposure to stocks to the long side, these are some of the companies I would consider. As always be sure to do your own diligence before investing in anything.

Guidance

Now, more than ever, investors need to get access to high quality guidance and insights. The sheer magnitude of the issues the global financial system is facing is enormous! [Therefore,] if you’re looking for someone to help you navigate the markets and protect your wealth from Obama’s various fiscal nightmare policies, I can help with my bi-weekly investment service, Private Wealth Advisory.

*http://gainspainscapital.com/2012/12/04/the-investment-classes-that-will-most-benefit-from-obamas-second-term/

Editor’s Note: The above posts may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

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