Since, in my opinion, the evidence seems to suggest that an inflationary depression is more likely than a deflationary depression in our current circumstances I am going to go through some assets that I think would help us navigate through rapidly rising prices. I should say that I believe that this is more likely because it buys those “in charge” time. In a deflationary collapse it is likely that most assets would implode- though likely not all- and those “in charge” would likely get the blame. If they keep “printing” they have the cover of pandemics, supply chain issues, wars, etc. to lay the blame elsewhere.
While many are quick to believe what they see on the financial game shows and the propaganda stations when they are spewing out “fact” after “fact” that gets debunked a while later I have noticed that by doing your own research you can get a better handle on what is actually taking place. It amazes me that so many people believe what they hear but don’t believe their own eyes. The picture is FAR more dire than is being painted by our “leaders”.
I think the first thing that is important is to have is extra cash if you are able to do so. I believe that you should have it in a fireproof safe and hidden from all except your closest family. I am sure many will ask why I would want to do this if I am expecting a CBDC and the dollar to lose massive value. The reason is actually very simple. For the CBDCs to get rolled out I believe they KNOW there will have to be a massive economic problem created so they can ride to the rescue with the CBDC. I can’t possibly say what form this will take but I can say that in looking at history I see that most times during a financial crisis the banks get shut down and markets get closed in emergencies. Having cash on hand- even if it is devalued will allow me to buy things that I need short-term and I won’t have to worry about ATM machines and credit cards not working. This would also come in handy if there was a situation where our electrical grid was down for any meaningful amount of time. We can’t count that out either.
I will also say that anyone who has ever started a financial plan- the first step is usually to put away 6 months of living expenses for emergency use.
Next, I would have as large of a surplus of the things I use all of the time as I could. This would include food, water, and if possible, an alternative energy source. Again, I believe we should hope for the best but plan for the worst. Canned goods are important but so are seasonings, seeds, medicines, first aid kits, toilet paper, tissues, detergent, soaps, shavers, etc. If we somehow avoid all of this, we are still well-stocked with things we need and are prepared for major storms or power outages anyway.
Included in this I would also have, if possible, items I can barter with. Not only food but coffee, booze, cigarettes, toothpaste, etc. Just about anything that people will have a hard time getting a hold of.
A few years ago I bought a Berkey water filter that can turn contaminated water into crystal clear water- up to 60 gallons per day. They have many sizes, but water is the most essential thing that we need. Clean water is a huge deal, particularly if you are in an area with a well and the power is out for any period of time. Not only may it save your life but you also may be able to barter clean water for other things you need.
Unfortunately, next on my list is something that makes me uncomfortable, but I believe it is necessary to discuss it here. In a financial implosion, which I believe they are manufacturing right now, and I also believe we are seeing in our major cities the beginning of it, it is likely that there will be MAJOR civil unrest. I believe it is imperative that you have a way to protect yourself from looters and thieves. I believe it is important to be armed with whatever you may be comfortable with. I never owned a gun until about 5 years ago but now I have three and one is always near. It is also important to know local laws and how to actually use whatever it is that you purchase.
A big dog, security cameras and alarms can all be helpful in deterring criminals. If they see a weaker target, it is likely that they will take it. I believe another MAJOR point is that all of the preparations you make should NOT be broadcasted to anyone but your most trusted friends and family. If people think you have nothing it is likely they will look elsewhere for whatever it is they need.
In speaking with a client a few years ago we were speaking about how we were preparing for what we are seeing today. He told me that he approached a neighbor and they had a discussion about preparations and what they were doing. The neighbor, a supposed friend told him “I don’t need to prepare I will just come and get stuff from you!” Now, that could have just been the neighbor being funny or it could have been a joke but I told him that it could also be the neighbor giving him a warning. I told him to take that statement seriously and plan for that also.
I have seen first hand just how important a deterrent is. My sister in law lives in New York where guns are criminalized instead of the criminals. I live in Pennsylvania where the majority not only carries guns but most are adept at using them. Every week you read stories about a band of thieves that break into a NY home, brutalize the family, and rob them blind. Now, as everyone knows there is PLENTY of crime everywhere these days, but it is EXTREMELY rare to have an event like that take place here. These things happen when a thug or gang has no fear of retribution. Here, with so many people armed a criminal is playing Russian Roulette. The thieves are still out there, but they will make darned sure nobody is home if they want to break in. If people where I live have any warning a thief is coming, the thief is likely in more danger than the intended target- and they know it.
As much as I hope that I NEVER have to ever use any of my guns I would rather know that I am not helpless if attacked. I am sure that there are MANY experts out there that are FAR more knowledgeable about self-defense than I am so seeking out that type of advice would also be prudent in my opinion.
The next most important holding for me is silver. I know central banks are buying gold in record amounts and gold has been money for 5000 years and I am a HUGE believer in having that too. The reason I believe silver may be more important is that:
- #1 I believe it is one of the most undervalued assets on the planet.
- #2 It is not as expensive as gold and I believe that if it comes down to bartering it is FAR superior to green paper and more efficient for this use than gold which has a far greater value.
- #3 It is used in almost all modern appliances as well as in solar panels, etc. It appears that supply is decreasing fast and that could lead to massive spikes in the price. A massive price spike would allow me to either keep up with inflation or buy undervalued assets whichever makes most sense at the time or as necessity facilitates.
My next purchase would be gold. Personally, I have bought gold not to barter with but to purchase assets that I believe will crash in price and allow me to pick up assets at fire-sale prices- kind of what it appears the central banks are up to today. Central bankers are the ultimate insiders and can easily see that all other central banks- including ours are deliberately destroying the value of their currencies. This is likely why those “in the know” are purchasing gold in record amounts year after year and it is increasing as we go. While many think gold is “risky” because they see the massively fluctuating prices (being managed by banks and central banks) it is the least risky asset on the planet. As a matter of fact, it is one of two assets that central banks consider “riskless” US Treasuries and GOLD. While they would like us to believe gold is risky, they themselves BUY and consider it “riskless”.
While most of this book is dedicated to raising awareness about our precarious financial position it is easy to lose sight of the fact that, at some time, there will be a recovery. For those positioned correctly this could lead to life-changing wealth. Just don’t think it will happen the way it did for the last 50 years because the paradigm has changed drastically.
In the past 50 years those who went deeper into debt and took chances got the best returns. As the debt dies those who OWN ASSETS are the ones that will get the best returns. For those who think that they “own” assets when they have loans and mortgages on those assets let me assure you that the bank owns that asset until you pay off that loan. If that loan can’t be serviced you will find out the hard way who actually owns that asset.
The scenario for me is to have purchasing power, which gold has held for over 5000 years, when most people will not because they were in the assets that fell apart. (Most debt-based assets). Let’s say a nice house at the beach is selling for a million dollars today but, as the economy collapses, the price falls to $500,000.00 because of a lack of demand for second homes or the loss of income. Let’s also say that gold reveals its true value after all of the financial shenanigans and rises to $25,000.00 per ounce. (My opinion is that this is not only likely but likely FAR too low). This would mean I would own a hard asset (beach house) for 20 ounces of gold with no mortgage, no renters and I would only have to worry about taxes and upkeep. I would also look for income producing stocks that could provide me with income going forward.
I have suggested this to a few people and there are a few who have taken this idea to a new level- amassing large amounts of silver and gold with the idea of doing the same type of transactions but on an industrial scale where they would buy income producing real estate in large amounts. Just think of the cash flow if you could do this with little to no debt. In my opinion, at my age I don’t need the hassles of repairs, complaints and tenants that can’t or won’t pay but for someone younger or handy they could amass life-changing wealth that could last for generations. In looking at history’s richest families they have passed wealth from generation to generation with art, real estate and gold. Notice all of these are ASSETS and not liabilities or paper promises which can and often do -go to ZERO.
During the Weimar hyperinflation many companies- some now household names were sold for a mere few ounces of gold. This seems to me to suggest that sometimes times of crisis become times of great opportunity- but only for those who are prepared correctly!
I also believe that there are companies that could do VERY well in an inflationary environment. These would include companies that produce food, energy, metals, raw materials and even some hard commodities like grains, coal, oil, uranium, natural gas, etc. If you are sure about an inflationary outcome I would still be cautious here and buy only companies with strong balance sheets and I would not go all-in with energy just yet. Timing is important!
The main obstacle here is that most people buy stocks based upon stories they hear, podcasts they see and from pump and dumpers. It is EXTREMELY important to do your homework- RIGHT NOW. With interest rates rising there are MANY zombie companies (can’t even service their debt with their income without more debt) that are going to fail. That company’s shareholders will suffer a 100% loss from which there is NO RECOVERY. If you are holding a related stock, you may take a beating just because the crowd may fear that your company is next. If you have the right information (income, cash flow, forward guidance, dividends, industry, PE, etc.) you will likely be able to hold on to a solid company that may be experiencing a short-term pullback and ride it back up (and collect the dividends) while those who bought because of a story will likely become disillusioned and sell low. All of the metrics that USED to matter will matter again. Knowledge is power!
Having said that, I am a subscriber to Weiss Ratings. Unlike the other ratings agencies I pay for the subscription rather than the companies being rated paying for the ratings. While I am not a fan of the Weiss marketing tactics, I have not found a better source for information on companies than this resource. I can find out almost any information I want, and it is unbiased in this format. I remember getting an alert in the early to mid-1990’s touting a GREAT company called Enron. It was suggested that it be bought for $2.57 per share. Over the next few years, the stock rose to around $65.00 and became a darling of Wall Street. Later in the 90’s I got another note from Martin Weiss that said something like, while we believe Enron is an amazing company, my job is to look at a company’s books and determine if it is a solid company or not. Something is not right here, and I suggest you sell it. A few years later, after the stock rose some more to over $100.00 per share the company collapsed, and fraud was discovered in their books. Those that didn’t listen suffered a 100% LOSS. There are other examples of Weiss calling out bankrupt companies- and being threatened by them- only to have them go bankrupt and any litigation they had planned- to die.
Many will argue that as the economy falls- which it has been doing for the past 15 years, demand will crater, and prices will fall. I believe they have it half right. I believe all of the gadgets and gizmos that have been being bought up for decades will likely see their prices collapse as people will have to focus on things that are necessary and shun unnecessary expenses. I can see that clothes, bags, shoes and things of that nature would likely suffer in an inflationary environment, but I am pretty sure that the things people need will not see a significant decline in demand. Everyone expects to eat every day. Everyone will need electricity and gas- maybe even more if movie date night becomes TV night because of economic necessity.
We always have to keep in mind that there are many factors that move the price of assets. Just as an example, there are many people who have shunned traditional energy producing companies because they keep hearing that the Western governments are going to legislate them out of business. Of course, since that was the propaganda of the day many people sold major oil companies in particular, and the prices DID fall- temporarily. The part that our “leaders” don’t tell you is that the technology they are trying to use to replace those fossil fuels are spotty, more expensive, and actually use MORE energy to produce energy than almost any traditional source. Of course, now because of a lack of exploration, a lack of refining capacity- mainly because of regulatory hurdles we are FAR less energy independent, and our costs are rising rapidly. I would also add that prices would likely be a LOT higher if the developed nations weren’t tapping their strategic reserves to keep the price capped. As I write this those “shunned” companies are reporting record profits.
While “going green” may or may not be a noble idea there has to be a better plan to get there rather than blackouts, brownouts and energy insecurity. Another MAJOR factor that many did not think of is that the developing world is increasing the use of oil, gas and uranium to grow their economies. This is one of the main reasons that the sanctions on Russia were toothless- too many people NEED what they produce- energy, materials, and FOOD. It is obvious that the developing world is more interested in feeding themselves and growing their economies than they are in worrying about a war that has nothing to do with them. It is becoming increasingly obvious that those “in charge” today are in major danger as the population of the world is voting with their feet for REAL THINGS rather than paper promises that appear cannot be kept.
It appears we are entering a period where there will be major competition for the available goods we all need. Where supply is limited and demand is robust the goods go to the highest bidder. It is likely that, as we go forward, it won’t matter who has the most dollars, euros or yen but who can provide the most VALUE. This is a bad time to be losing our reserve currency status!
I also have to wonder if the electric car scenario is not meant as a means of control also. Isn’t it funny that the places mandating electric conversion by 2030 and 2035 are already telling people not to charge at certain times because of a lack of electricity? Isn’t it convenient that they could ration your driving by rationing your electricity? To me, I like the freedom of filling my tank and going wherever I need or want to go. Food for thought!
I was speaking to my son who owns a Tesla and his car just happened to be in the shop the day I was writing this. He told me he drove a loaner to a meeting many miles away and while he was in the meeting someone from somewhere re-programmed his loaner car to go no more than 10 Miles Per Hour. He had to get an Uber to get another loaner. While it may be convenient to be able to fix problems with technology you can also see a sinister side if those “in charge” deem you to be non-compliant.
Any opinions are those of Mike Savage and not necessarily of those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information in this report does not purport to be a complete description of securities, markets or developments referred to in this material. The information has been obtained from sources deemed to be reliable but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.
Commodities are generally considered speculative because of the significant potential for investment loss. Commodities are volatile investments and should only be a small part of a diversified portfolio. There may be sharp price fluctuations even during periods when prices are overall rising.
Precious Metals, including gold, are subject to special risks including but not limited to: price may be subject to wide fluctuation, the market is relatively limited, the sources are concentrated in countries that have the potential for instability and the market is unregulated.
Diversification does not ensure gains nor protect against loss. Companies mentioned are being provided for information purposes only and is not a complete description, nor is it a recommendation. Investing involves risk regardless of strategy.