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:
In preparation for this, investors will want to focus on the following investment themes:
- Inflation hedges based on continued spending and money printing.
- Gold and Silver as an alternate currency based on the U.S. Dollar falling further.
- Productive assets (foreign real estate, apartments in specific markets, businesses, essentially anything that produces cash).
- Preparing for an eventual US Debt Default.
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
As far as precious metals go, you need to:
- Own Bullion
- Store it yourself (not in a bank)
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).
In terms of actual gold coins, there are three coins that comprise the bulk of the bullion market. They are:
- Canadian Maple Leafs, and
- 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.
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.
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).
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.
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.
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|
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%|
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.
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.
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.
At the end of the day the gold price is not a mystery – it’s a proxy for dollar weakness. After spending the previous fall and winter testing new nominal highs above $1,800, future investors may come to view…2012 as the opportunity of the decade. Gold has shown its strength and retreated. While most investors will take that as a signal that the market has topped, some will take advantage of the general trepidation to add to their positions at hundreds of dollars off the highs. Words: 700
I believe it is important to mitigate the risk of loss with your physical bullion by diversifying the locations where you hold it. To this end, I think it is wise to have some bullion on your property, some in secure storage off site, a portion stored with an ETF like CEF and ideally at some stored at a location overseas. In order to obtain the overseas diversification, I [recommend BullionVault because, while their 43,000 customers have already done business with them at some of the lowest costs available, they have just reduced their initial commission fee by 37.5% – from 0.8% to just 0.5%! Let me explain further some of the advantages of doing business with Bullionvault.] Words: 796
There has been a persistent fear among…owners of gold that…their gold will be confiscated by their governments, as was the case in 1933. For very different reasons, we believe that that danger persists and is growing by the day. We feel that because gold is rapidly returning to an active role in the global monetary system…investors should be aware of the conditions in which this would happen. We also indicate what we feel to be a solid solution for protecting yourself against a gold confiscation. (Words: 1581: Charts: 2)
Worldwide economic uncertainty has created a growing interest in precious metals as a way to…protect one’s wealth from impending economic Armageddon…Unfortunately, many today don’t know how to purchase or store bullion, and consequently may find themselves as vulnerable to financial collapse as those who didn’t purchase any bullion at all. [This article outlines what rigorous due diligence is absolutely required when entering into an agreement to buy gold bullion and how it should be stored and why. Don’t buy any gold product without reading this article first.]
Savers will not stand idly by and watch their savings get wiped out by taxes and inflation….[which] is good news for investors who buy and hold commodity assets today – and it’s also a stark reminder to not be fooled by the short-term head fakes that might make it look like the commodity bull is over. Stay the course – the biggest profits are yet to come. [Here’s why.] Words: 405
I like gold because it’s a risk-reducing, portfolio-diversifying asset. It’s also been a strong-performing asset over the past decade – up nearly 400%. What’s more, it’s been reliable. In 2008, when the major U.S. indices plummeted 37% (and more into early 2009), gold returned nearly 6%. In addition to being an exceptional investment, however, gold has also been an exceptional investment within a portfolio context. That is, it has provided return while reducing portfolio risk. Gold has, in essence, been a free lunch. Words: 490
NOone is expecting rampant inflation. After all, the CPI is low with nothing happening in spite of all this money printing. While there has been no fallout I think that is the critical point. You cannot do these kinds of things we are doing forever and not experience any consequences. Sooner or later there are going to be consequences to what we are doing, and my fear is that it is going to be nasty, catch a lot of people off guard, and really hurt our society. That is the bottom line and why I am buying gold and silver, still, to this day. Words: 795
Our subscription service provides detailed technical analysis of where the price of gold, silver and precious metal stocks are going short term (in the next week or two), intermediate term (within the next 3-6 months) and long term (the ultimate top) in each stage of their respective bull runs. This service comes with detailed charting based on conventional technical analysis and our proprietary fractal analysis based on the ’70s. Below are some of our latest comments and rationale for expected price movements in gold without illustative charts which are only available to subscribers. Words: 1000
The price of silver is going to go much, much higher – much higher – over the next decade [relative to gold according to Jim Rogers and I concur. Below are 5 solid reasons why I believe that is the case.] Words: 767
I have long recommended that investors keep 5-10% of their portfolio in physical gold so, in light of Obama’s re-election, it is that much more important if you have no gold or silver in your portfolio, that you to buy some. If you already own gold or silver, you may want to consider adding to your position. Let me explain why that is the case.
There are many predictions for the price of silver. Some say it will crash to nearly $20, and others proclaim $100 by the end of 2012. The problem is that some predictions are only wishful thinking, others are obvious disinformation designed to scare investors away from silver, and many are not grounded in hard data and clear analysis. Other analyses are excellent, but both the processes and analyses are difficult to understand. Is there an objective and rational method to project a future silver price that will make sense to most people? Yes, there is! [And here it is!] Words: 1071
I am not predicting a future price of gold or the date that gold will trade at $4,000, but I am making a projection based on rational analysis that indicates a likely time period for gold to trade at $4,000 per troy ounce. Yes, $4,000 gold is completely plausible if you assume the following:
The biggest danger to our society will be food prices and food costs….Productivity of grains has fallen to 1.2% per year which matches population growth exactly leaving society with no safety margin. [In addition,] there is a coming shortage of two fertilizers which occur exclusively in nature…so once the supply is gone, it’s gone forever – and this can only mean that commodity prices are going higher – much higher. Words: 585
We are undergoing a Paradigm Shift in the price trend of virtually all commodities – perhaps the most important economic event since the Industrial Revolution. [Let me explain why that is the case.] Words: 765
[In spite of all that is seemingly wrong with the U.S. economy] I think we are on the verge of entering the euphoria stage of this cyclical bull market where traders become convinced that QE3 is a magic elexir with no unintended consequesnces. [As such,] I see a strong acceleration and a significant and sustained breakout above the S&P 500 September high of 1475. (Words: 264 + 3 charts)
The S&P 500 formed a three-peak pattern inside the trading range from September to October and is now at the beginning of a “Three Peaks and a Domed House” formation. The current swift advance of the SPX could reach the level of 1460 to re-test the previous high. Let’s take a look at some charts. Words: 255