I’ve decided to broaden Agapy, this blog, and our publications, primarily because we’re entering a period of global change, at peak stupidity, where living wisely will be more valuable than making money. Along these lines, I’ll be posting on simple ways to live smart. Our publishing division will consider creative manuscripts with the same approach.
Today’s topic is on protecting your wealth. I’ll start by saying while the stock market is very appealing, it is now one of the riskiest times in the history of the world to be invested. While the Dow has gained more than 25 percent since Election Day (just a year ago), and continues to hit historic highs, sign after sign point to a crash. Fact is, highly educated mainstream economists are often wrong. If you want to succeed, then you must know the facts and use them in your financial planning. If you don’t pay attention to what’s going on under the surface, and you let other people manage your money, then you risk losing everything.
This market is dangerous for lots of reasons. According to a recent report, Volatility and the Alchemy of Risk, published by Artemis Capital Management, the stock market cannot decline; it can only crash. If you’re planning to get out at the last minute, think again, because everyone and their mother’s uncle is going to be doing the same thing and there will be nobody to buy your stock which is tumbling down. You’ll be left holding the bag for a very long way, and you’ll be forced to sit there for a very long time until it recovers. In my humble opinion, it’s better to be years early than one minute too late.
We are in a massive credit bubble and the U.S. dollar is essentially worthless, encumbered by upwards of 100 trillion in debt if you use honest accounting (GAAP). What’s more? It’s hanging on the world’s willingness to continue using the U.S. dollar as its reserve currency as well as continuing to fund the profligacy of spending beyond its means. This will be ending soon as the BRIC nations move their agenda forward. China and Russia are setting up a system that will price oil in yuan and enable yuan holders to obtain physical gold for these yuan on demand, effectively making the yuan gold-backed. This presents serious and ongoing competition for the U.S. dollar as a global reserve currency.
Keep in mind, the United States achieved world currency supremacy seventy years ago, when it agreed to make its paper money backed and exchangeable into physical gold. This promise was broken in 1971, opening the floodgates to massive debasement of said currency and an explosion of debt which has now reached proportions that can never be repaid. The world hungers for a new stable currency even grasping at straws like Bitcoin. The oldest and truest store of value, which is physical gold, is rapidly being reintroduced onto the world monetary stage, via the BRIC nations led by China and Russia, whose ongoing acquisition of physical gold remains unprecedented.
It’s simple–the U.S. dollar will not continue to be the global currency winner. This will usher in significant change for the global economic order and for the United States in particular. Note, the U.S. Fed is not owned by the U.S. government. It’s a private corporation 100% owned by the commercial banks, those same banks that did very bad things that led to the 2008 crash, and has only been slapped on the hand and assisted by more money printing. It’s basic economics—the more you print money, the less value it holds. Commercial banks in the U.S. own non-voting non-dividend paying stock in the U.S. Federal Reserve Bank. The U.S. government appoints the directs, so they control it without owning it. Clever strategy, eh?
It’s all very tricky and there’s a lot of trickery holding everything up and making society appear like it’s growing. It’s not. Employment data is skewed. Lots of data is manipulated. Just look around and see all the retail shops closing, and you’ll get a very different story. Printing gobs of money, and allowing central banks to dominate the stock market (an ethical dilemma in itself), is not fixing the problem. It’s making everything a lot worse in the long run. Venezuela was printing money out of thin air too. It’s stock market went up and up and up, all the while, its currency plummeted until it was worthless. The only reason this hasn’t happened to the U.S. dollar is our world reserve currency status. Removing this status will bring us to our knees.
Smart investors store their wealth in something that holds value and buy what’s undervalued; they don’t chase returns. It is my opinion, based on facts and not hype, to avoid the bubble assets, stocks and bitcoins and anything else that has been distorted by central bank connivance. Either hold a true and tested store of value (see gold’s 5000 year record) or buy what you think is undervalued and will do well in the event of a plausible very big crash. If you don’t, you will be sorry at some point in time, but I can’t tell you when. I can say with certainty, it will be sudden, sharp, and fast, and there will be little or no possibility to sell when everyone who “chases” fads is also running for the exit. The market is full of amateur investors, like the dot.com era and we all know what happened to them.