For the last several years we’ve been providing our readers with news, commentary, strategies and tips for weathering the economic and political storms sweeping the world.
As the economy continues to sputter, even two years after the great financial collapse of 2008, many state sponsored media analysts and talking heads would have you believe that we’ve managed to get through the worst of it, and that bright and sunny days are ahead of us.
While our views have been considered to be pessimistic by some, many others understand that we’re not making these things up, and that our recommended SHTF planning strategies have been grounded in the reality on main street, not the scripted quasi-realities depicted on television.
Last year, we opined that the current economic and political climates in the United States and abroad demanded a different perspective for those wishing to protect wealth, preserve individual liberty and maintain peace of mind. In Wealth Preservation, Investing, and Prepping For Hard Times (January 2010) we put forth the notion that traditional stock investments, 401K’s and other asset classes recommended by university or workshop trained financial advisers were inadequate for preparing you and your family for the crisis in which we find ourselves today. Among other things, we advised our readers to look seriously at non-traditional, non-mainstream assets like precious metals, food, clothing, and other commodity-tied assets that would sky rocket in price as the dollar lost value and uncertainty in government’s ability to mitigate economic collapse reached a boiling point.
For those just joining us, the same strategies that applied in the first quarter of 2010 should be closely considered today.
Jim Sinclair, a precious metals specialist, foreign currency trader and publisher of Jim Sinclair’s Mineset, also agrees with our sentiment, urging his readers to take action immediately if they have the means to do so:
Truth be told, the major theme of JSMineset has been one of self reliance in a monetary, physical and Emersonian sense. Our focus has been on your assets, your debt positions, legal matters and investment.
Has Trader Dan not moved from Houston to an undisclosed location in Idaho? I am writing to you from a farm in North Western Connecticut, a rural part of the state. We provide our own water, can provide our own power, have a radio system fallback for communication, satellite phones, furnaces that burn coal or oil, an indoor pistol range that can take up to .50 calibre cartridges into a Detroit bullet trap, perimeter lighting, 16 camera day and night camera security and much more.
We have focused on conservative financial structures which were in truth taking you into the position of being your own central bank.
There is one more step that you really need to consider. The housing market is in a black hole from which it very well might not recover for generations. Land is cheap. When homes or small farms have been foreclosed on, resulting in bank owned property, they are sold in a fire sale to buyers with cash in hand.
Do as I have done. Do as Trader Dan has done.
I strongly suggest that if you have benefited from JSMineset, as many of you have, consider buying yourself a hobby farm and seriously go for the exercise of self reliance. I am certain that if even to cut costs you are going to need it.
The financial system is screwed up beyond any repair. On top of that there is no desire to repair anything because the wise guys know it is impossible. It is the world that the flushing of Lehman Bros. has created. It is not a brave new world. It is more like an audition for a world of Mad Max and the Day After.
It does not matter whether or not there is more QE. The damage is done and there is no solution.
We want to believe that the corruption in the White House, Wall Street, the Federal Reserve and the halls of our federal and state legislatures will cease, that our leaders and those in control of our policies realize where we’re headed and put a stop to it.
But given that absolutely nothing has been done to curb the status quo that brought our country to the brink in 2008, we reluctantly remain pessimistic about the state of our union today and for years to come.
Jim Sinclair describes our sentiment in the most simplest terms possible: “The damage is done and there is no solution.”
For those who have come to the same conclusion, now is the time to take action.
While we can’t predict exactly what will happen – slow and drawn out depression, hyperinflation, economic collapse, stagflation, riots – we feel confident suggesting that life in America as we have known it for the last three decades is about to change drastically – in fact, it’s clear that we’re in the process of transformation right now.
Prices for essential goods will rise. Wages, in terms of real purchasing power, will go down. Taxes will increase across the board in an attempt to counter out of control spending. Government interference in our personal lives, on every level, will expand. Politicians and media will turn the people against each other. Food riots and violence may become commonplace.
Thing will get worse, much worse, before they get better. Thus far, the effects of the economic paradigm shift taking place have been, for the most part, muted. But this will change. And when it does, you will want to be as far removed as possible.
While owning stocks, bonds, and other traditional financial investments may remain a part of any growth or retirement portfolio, we urge those concerned with the coming changes to make the necessary changes in their lifestyles to insulate themselves, as much as possible, from the coming storms.
Today’s savvy investors are planning not just for retirement, but for living in a system that will undoubtedly fail to provide for the millions who have become dependent on easy credit, cheap food and gas, and a government safety net in case things don’t go as planned.
We believe in maintaining a diversified portfolio, but our definition of diversification, and that of your financial adviser may differ. Here’s where we’re putting our money, time and energy:
- Invest in precious metals. Yes, we know, you can’t eat them. But so long as gold and silver hold value by central banks in China, India and pretty much everywhere in the world except the USA, there will be a buyer for this asset. As things get worse, prices will go higher, which means that if you need to buy other hard assets, youÂ may be able to do so by trading in your metals.
- A farm, ranch. Like Mr. Sinclair and his friends, the Slavo family is getting out of the burbs. While we have come to love the suburban lifestyle in which we all grew up, including the ease of patronizing name brand retail outlets, we prefer to exchange our quarter-acre lot for a larger, more self-reliant compliant property. Larger scale food growth, micro farming and open space, available at cheaper prices when compared to suburban living, is our next destination. While hyperinflation, economic collapse, and city-wide riots are low probability events, being outside of a major metroplex is much better than being smack-dab in the middle of it all. Plus, did we mention the nice, open views of country side or mountain living? For those unable to buy, consider renting. With a three year backlog of inventory, homeowners are willing to work deals. They’ll rent for cheap, lease-to-own, sell without a down payment, and jump through hoops to put you into their property – so getting into the country on a low budget is certainly feasible right now. For those who have made huge gains in gold or silver, maybe trading some of that in for a tax sale property or foreclosure would be a good barter. The point is, there are very cost-effective ways available right now to get out of the city and into a safer, more productive property today.
- Bulk Food. There’s a reason that the largest freeze dried food manufacturer in the world is unable to keep up with demand. Now, imagine for a second that the even a small percentage of the general population realizes that costs are hyperinflating. Prices will go up that much more, and your local retail outlet may put a limit on how much rice or beans you can buy. This happened in late 2008 at major retailers like Target. And it can certainly happen again. We hear professional traders talk about investing in commodities, and we agree that buying wheat, beans, rice, and other essential goods is a good investment. But where we differ, is that we prefer to hold the physical asset. Using the proper storage techniques, dry grains, milk and other foods can be stored for 20 – 30 years. We’re not suggesting you just buy buckets of rice and throw them in a closet, though. Buy several hundred pounds of food, package them correctly, and rotate them into your food consumption on a regular basis. Rinse and repeat. For those who followed our advice in 2010, you would have saved 40%Â – 75% on today’s prices. For those with animals, consider stocking up on feed as well. This strategy will help to not only preserve wealth, but provide an emergency supply of goods in case of a food supply interruption. But something like that can’t happen right? Ask the people in Japan, and you’ll get a starkly different opinion on the matter.
- Micro farming and Micro Livestock – Animals, Veggies and Fruit. Wifey Slavo is getting a Dexter cow. While we love our organic milk, we’d prefer to have the ability to produce our own on demand. The same goes for chickens, rabbits and goats. You’d be surprised how easily you can establish a small-scale bartering system in your local community or neighborhood. Brother Slavo, who is already setting up the infrastructure at our new homestead, regularly interacts with neighbors, friends and community members, trading everything from tomatoes to fresh eggs. In return, he builds personal relationships with those in the surrounding area, gets fresh produce that we have yet to grow ourselves, and assistance with building out our homesteading infrastructure. You’d be amazed how valuable fresh, organically produced food is and what people are willing to trade for it. Also consider storing some seeds, heirloom variety, just in case. Even if you don’t have the ability to get out to a farm, do what you can at your suburban home or apartment dwelling – there are lots of options available.
- Alternative Energy. We’re all about alternative energy, just not when it’s mandated on us by government. That’s why our position is that alternative energy should start from the needs of the individual, not the carbon exchange credit system set to make billions when costly laws, taxes and fees are passed by our Congressional representatives. If there’s one thing that will continue to rise in price and lead to economic despair, it’s energy. Oil, coal, electricity – it’s all going to be expensive. That’s why we recommend finding ways to create your own. There’s solar, of course, as well as wind or micro-wind, and hydro if you have running water. Even if you were to take yourself partially off the grid, it’s worth it. Start small, and build from there. Solar systems, especially do-it-yourself systems with the help of neighbors and friends who have already built there own, can be quite cheap and often pay themselves off in a matter of a few years. In addition, building for yourself and continuing to expand may actually put money in your own pocket when you feed power back to the grid. If you don’t have the up front cash to buy a system outright, financing is available – and since we’re talking about an essential good, energy, taking a small loan for such an asset may not be a horrible idea if you can get good terms.
- Get Skilled. The days of working in cubes (for the most part) are numbered. In the future, if you don’t produce a necessary product or service, you will be obsolete. These jobs, like it or not, are migrating to countries where workers are willing to do the labor for 80% less than Americans. We recommend investing time and energy to acquiring new skills. Physical skills. Welding, machining, carpentry, sewing, installation of alternative energy platforms, farming, raising animals, alcohol distillation, etc. Skills like alternative medicine will be useful as health care becomes rationed. Look to the past, as in the 1800′s and early 1900′s, and you’ll get a good idea of jobs and skills that may pay well in the future.
- Guns and Ammo. It might sound a little excessive, but the fact of the matter is that guns retain their value for the most part. Ammunition, as we saw in 2008, is subject to supply and demand crunches as well. As metal prices continue to rise, and uncertainty pervades the American psyche, people will continue to stock up. You may very well be able to trade ammunition for cash, silver or other items. The system doesn’t even have to collapse for this. A host of ‘gun trader’ type web sites already have bartering systems in place. Plus, if the worst does happen, and the system goes catatonic, wouldn’t you rather have a few thousand rounds of 7.62×39 than none?
- Clothes. The CEO of Walmart recently said that inflation is going to affect prices in months to come. If you’ve got kids, purchasing clothes in advance, especially things like socks, underwear, pajamas, jackets, jeans, shoes and shirts may save you money down the road. And again, if the worst were to happen, you’d have apparel for the kids (or for trade) for years ahead. For those who know how to sew, buying fabric now can save hundreds of dollars later.
- Tools. You can never have too many nails or screws or too much equipment. If you can, start investing in tools that you’ll be using around the house/farm. Everything from standard toolbelt accessories to quality farming equipment like shovels or even a tractor. A close friend recently built his own alcohol still for production of drinking alcohol and ethanol fuel. Like everything else, prices for these types of assets will continue to rise – and in a SHTF scenario, they will become invaluable and highly sought after. If you can, buy two of everything, especially when it comes to food production or raising animals.
These may not be the investments vehicles of the baby boom generation, but, we’re not living in the boom times of the 20th century anymore.
There are a host of other investment opportunities out there. Take the time to think about where we’re headed, or might be headed, and make your investment decisions accordingly.
It’s impossible to predict exactly what to expect. We certainly can’t do it, and neither can your financial adviser or an investment pundit on television. But we can try and plan a strategy that covers most of our bases. While we don’t recommend investing your entire retirement portfolio into the above assets, some diversification is certainly prudent.
The assets recommended above will come in handy, whether or not a complete and total economic collapse is in our future. If you invest properly, and with forethought, most of the items will not be locked away in a closet for 15 years waiting for disaster. They are investments that can go to work for you right now.
By Mac Slavo