Objectivism Metablog Entries
Powered by FireStatsI just sent my family the following email:
Hi folks,
If you’ve been following the news, you may have heard that:
- The Federal Reserve just cut the overnight loan rate to .25 percent. Gold prices immediately jumped to $847/oz. (Last week, I bought gold at $775). We haven’t seen rates this low for over 50 years.
- The government has given away over 8,000,000,000,000 dollars of “free” money in the last three months.
- In the last 5 years, the dollar has lost more than half its value relative to gold.
All evidence points towards the fact that the U.S. government is rapidly devaluing your savings, and a currency collapse followed by hyperinflation like we recently saw in Iceland is all but inevitable. If you don’t want to lose your savings and investments in the coming economic collapse, you need to take action NOW.
Here is what you should be doing:
- Buy some gold and keep it in a safe place. I suggest http://www.kitco.com/ or eBay - you can get a good deal on 1oz gold bars. (Buy plain gold bullion, not the “collectible” stuff.)
- Don’t pay anything above the minimum payment on any loans or mortgages you have.
- It’s a good time to get a new loan. I would not suggest taking on new mortgages, as I expect housing prices to collapse further.
- The stock market may lose up to 50% of its value in the next year. Still, investing in the S&P 500 is a good hedge against inflation. You can also invest in metal & mining index funds.
- Stock up on supplies, especially durable goods.
- Minimize your holdings of inflation-prone assets, like cash, bonds, and government securities.
When you’re done, you should have a minimum of cash and cash-like investments, and plenty of material assets you can sell or barter in an emergency. Also, consider getting a firearm for self-defense – expect crime to rise dramatically when the economy collapses.
You’ve been warned.
on December 18th, 2008
on December 18th, 2008
on January 2nd, 2009
Without a time sequence, some recommendations are confusing. E.g., if housing prices and stock prices drop greatly on the short-term, then cash will be worth a lot more, in terms of what it can buy. So, wouldn’t it be better to have a substantial cash reserve?
Further, if housing and stock prices are going to decline, how does that square with hyperinflation?
Predicting the timing, even in very general terms, would help clarify the suggestions made. E.g., something like this:
- Year 1: continued decline in housing and stock markets.
- Year 2: rise in inflation to c. 10%, accompanied by rising housing and stock markets.
- Year 3: rise in inflation to c. 20%, accompanied by probable price controls.
- Year 4: government seizure of gold.
These are not what I am predicting, only an example of the kind of predictions that might be necessary to those who try to micromanage their investments. (I don’t; I use a balanced portfolio and let it rip.)
Left by Burgess Laughlin
on December 17th, 2008