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Business/Finance See other Business/Finance Articles Title: Loading Up on Cash and Gold Is the Only Way Out of This Loading Up on Cash and Gold Is the Only Way Out of This Image: Loading Up on Cash and Gold Is the Only Way Out of This (Dollar Photo Club) By John Mauldin Friday, 01 Jul 2016 11:17 AM Looking at the global economy today, you can’t help but notice several worrying developments. On the one hand, we have currency devaluations and negative interest rate policies: on the other, slow-to-no economic growth in both developed and developing economies. Even experienced investors don’t know what to make of today’s financial markets. Given the ongoing turmoil and the potential fallout, where is your money safe? Here's what investment legends James Grant and Grant Williams had to say at John Mauldin's Strategic Investment Conference last month. Cash Is Still King, but Gold Is a Timely Investment Today In an interview at the 2016 Mauldin Economics Strategic Investment Conference, legendary investor Jim Grant noted, "Cash simply enables one to retain wealth, with an eye towards being opportunistic." Raising cash and reducing your exposure to volatile financial markets in turbulent times obviously make sense. The key, of course, is finding a safe, profitable investment opportunity to deploy your cash. The founder of Grant's Interest Rate Observer believes gold may be that investment. In the interview, he went on to say, “Gold isn't so much a hedge against Armageddon… as it is against monetary shenanigans.” He also noted he expects gold to continue moving up: "When the economic establishment encourages the idea that gold is ‘good for nothing,’ it’s almost always a good time to buy [gold].” Keep in mind that holding onto cash itself will not make you wealthy. That’s because central banks can devalue a currency by simply printing more money. Cash, however, is an opportunistic asset class, which gives you much-needed flexibility during volatile times. Crises bring many once-in-a-lifetime investment opportunities that you can seize… but only if you have enough cash or other liquid assets at your disposal. Why Gold Is the Best Hedge History says that paper-based currencies will eventually fail. The clock is clearly ticking on the dollar. It has now been 45 years since the US dollar became a completely paper-based currency. Gold, on the other hand, has been a preferred medium of global exchange for over 5,000 years. That makes gold the ultimate hedge against monetary collapse. Despite its long-term record of stability, gold as an asset class still makes up less than 1% of the average investment portfolio. Negative sentiment from the public and media is a key reason why gold continues to be under owned and mispriced. As Grant Williams explained in a recent interview with Mauldin Economics' Jonathan Roth, "Every day, the picture is becoming more and more discernible It is not quite clear as yet, but it is getting there. The credibility of central bankers is slowly fading away." Things will go bad when the general public finally realizes that global central bankers have lost control. When this happens, we will end up with either a sharp breakdown in financial markets or a slow-rolling panic. Either way, the price of gold will soar. The Second-Most Overvalued Stock Market in History You have to be concerned about stock market valuations today. For example, the Wilshire 5000 Total Market Index — which is a composite of all the public companies currently listed on major US exchanges — is now greater than the country's overall GDP by over 20%. The total market cap to GDP ratio is now at the second-highest point ever (only the dot-com bubble of 2000 saw a higher total market cap to GDP ratio). The Fed’s balance sheet has never been bigger… at $4.5 trillion and counting. And interest rates have never been this low for this length of time. Something has to give, and relatively soon. Grant and Williams suggest that now is the time to raise cash. They also note that gold is the best hedge for turbulent economic times. This metal will certainly soar in value when the global central banks can no longer hide the fact that “the emperor has no clothes.” John Mauldin is the chairman of Mauldin Economics, which publishes a growing number of investing resources, including both free and paid publications aimed at helping investors do better in today's challenging economy. Mauldin uncovers the truth behind, and beyond, the financial headlines. Poster Comment: But you can't eat gold. Better to stockpile emergency food supplies. Enough for a month for every member of your family. And plenty of bottled water since if the power grid goes down, they will not be able to pump water into the water towers. I also hear that China is stockpiling gold so it can release a gold backed Yuan in the near future. This after eliminating all its short term U.S. debt. Trouble is brewing for the Dollar. ;) Post Comment Private Reply Ignore Thread Top • Page Up • Full Thread • Page Down • Bottom/Latest
#1. To: BTP Holdings (#0)
This is an extreme worst-case scenario. Not that it can't happen, but it's more likely a Venezuela type situation would be the reality where infrastructure remains intact, but with many businesses closing and the economy slowly degrades over the course of a year or two. In such a situation, I think gold *will* be an excellent asset to have. A more likely worst case scenario would see the best course as moving away from where you are and going some place where basic necessities can be met, so having that transport available an destination ID'd is the more likely best plan. If no tap water is available, bottled water will disappear very quickly so if you can't replace it somehow, it really will not do much good beyond a few days time.
Jim Rickards says the yellow metal could reach $10,000/oz. I find that hard to believe since I've heard they can now make it in the lab. Anyway, all of the easy gold (alluvial deposits) has been mined long ago. Now gold must be obtained in deep mining operations. This is a very costly operation. If prices continue to climb it will make this very profitable to mining companies. ;) "When bad men combine, the good must associate; else they will fall, one by one." Edmund Burke
There is a little known secret about the high country of Central America. In CR it is 70% pure and dangerous as heck to mine. Exporting it is illegal I believe. Har har.
It sounds a bit like the movie, "Treasure of the Sierra Madre". They dug a fortune in gold out of that mountain. But it was all blown away back to where they found it. ;) "When bad men combine, the good must associate; else they will fall, one by one." Edmund Burke
Jim Rickards says the yellow metal could reach $10,000/oz. I find that hard to believe since I've heard they can now make it in the lab. But can they do it for less than the current price, and can they do it in any significant quantity? I'd venture no on both counts.
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