Sunday, July 8, 2012

Are Precious Metals The Only Way To Go?

Will there be anything safe other than metals and art as the mess becomes further known?

I can’t comment on art as an asset class since I own nothing of value in that category.  Metals however can purchased by someone of any means.  That said, I regularly buy precious metals for physical possession and storage elsewhere.  I also advise my clients on doing so for at least a small portion of their overall assets.  Some will, some won’t.  There, however, is no arguing that silver and gold have maintained their purchasing power for thousands of years while currencies of every monarchy and government have been purposely diluted to the point of revolution and/or worthlessness.

Ultimately, nothing will preserve value like metals.  But there are two problems with owning metals.  First, knowing when to sell.  The only people who think they know have something to sell and at best, it’s only a guess.  Prices will fluctuate wildly, more so for silver, so it takes a strong stomach to ride the ups and downs of this very manipulated market.  Secondly, metals produces no income.  Regarding the 2nd issue, I’ve found that the best way to purchase metals is through a Bank on Yourself policy.  This is because a policy loan, no matter how it is used, will continue to earn interest and dividends.  If used to buy metals, the full cash value of the policy continues to grow as if never touched.  It allows you to own and control two assets with the same dollar. A true win-win.

There is a monthly metals programs I utilize for small purchases each month that I’m happy with.  When I purchase in larger amounts for physical delivery, I use one of my policies to borrow from and payback.  I have no crystal ball on how long the government can continue to kick the can down the road.  It could be a few years, or it could be a couple decades.  I am certain, though, that 1) the dollar will continue to lose value (so I hedge my assets by purchasing metals) and 2) that there will always be need to control the flow of money (privatized banking aka the Infinite Banking Concept).  

Private contracts for money held domestically is a must because life insurance companies (compared to traditional banks and Wall Street) are the most financially solvent of all finance institutions.  Owning metals is also must in my opinion.  If you can combine both, you have the opportunity to ride the ups and downs of the metals market while knowing you’re continuing to earn interest and dividends on your gold/silver holdings.  If the dollar crashes hard, you’ll be able to pay back your policy loans with the proceeds of your heavily appreciated metals portfolio.  Think of it as insurance for your insurance. 

Eventually, my gut feeling is that the western financial system will fail, but banking won’t go away.  Money allows the exchange of goods and services and, ultimately, money must be warehoused somewhere. The process and business of banking will survive even as other businesses come and go because every business and household must decide where to keep their money.  My best advice, practice privatized banking and use the banking process to purchase metals with a portion of your money you want to protect against the loss of purchasing power. 

Worst case scenario, depending on how deep the dollar crash is, it’s not going to take a lot of precious metals to be instantly better off than most who don’t own even an ounce of silver and face the prospects of being completely wiped out.  Compare that to a household that perhaps has any % of their net worth in metals.  The household with any % of metals is infinitely wealthier compared to the household that has none.

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