Protect Your Assets Through Wise Investments

Tatiana Hart/ September 9, 2018/ MONEY/ 2 comments

Who Wants to Be a Millionaire?

Would you like to have $1,000,000? Most people respond “Yes!”. But what does it mean?

They would like to have a million dollars  but what if a million dollars buys you just a loaf of bread?

The problem with having an x amount of currency nowadays lies in the purchasing power of most currencies in the world.

The purchasing power of world currencies has been  exponentially declining by design posing a new question: Does having a million of an x currency make you wealthy?

The Historical Context of Fiat Currency

Paper money eventually returns to its intrinsic value – zero.

Voltaire

By design, fiat currency inflates and hyper-inflates to lose its purchasing power and to become worthless overtime.

This occurs because money is created by way of opening new lines of credit, or by creating debt, in other words.

Debt exponentially accrues interest which has to be paid by…. opening new lines of credit which in turn accrues more interest. Do you follow?

It is impossible to repay the debt  principal alone if the credit line is unlimited, forget the interest.

Before 1971 the dollar was backed by gold which limited the amount of money created.

Each dollar translated into an ounce of gold and the total supply of money could not be more that the amount of gold available to back up the currency.

After the gold standard was repealed, the total possible money supply became unlimited. Overtime, it caused the problem we are facing now: what one dollar can buy. It surely cannot buy an ounce of gold (or silver).

A Financial Reset

In the event of hyperinflation the debt-based system deems itself unsustainable and requires a rest to wipe out the enormous amount of debt.

In order to reset a currency and wipe out the associated debt an independent datum must be selected.

Historically such a datum has been gold. Gold has a limited quantity and vast utility. The new currency has to be backed up by gold such that each currency unit equals an ounce of gold.

The outstanding debt is wiped out by the amount of reserved gold. For individuals the reset will be conducted by way of paying off their debts by precious metals.

Cash will be become worthless due to its diminishing purchasing power. Remember a 500,000 Deutsche mark loaf of bread during the collapse of the Weimar Republic (present Germany).

Precious metals will protect your purchasing power in the event of an economic collapse or a financial reset.

It is wise to have them to pay off outstanding personal debt a lot easier than with cash. I will prove my point below in the next segment.

How Can I Preserve My Purchasing Power?

If you are asking the above question while reading this, I have accomplished my goal of making you think of money in terms of purchasing power, not an ephemeral number.

In order to protect your purchasing power, you need to have tangible assets that can appreciate overtime.

We know that  we can profit from our investments and to protect your wealth by  investing in undervalued assets.

The only undervalued asset class in the present economy is precious metals, in particular silver. Take a look at the snippet below showing the true price relationship of silver to the US dollar.

That’s right, silver should be valued at least 40 times higher than that of the current spot price.

According to US Debt Clock, the true silver price in US dollars is $599, not $14.20 as set by Comex, Commodity Mercantile Exchange.

The problem with silver valuation stems from the nature of trading at commodity exchanges: they are all based on paper (or digital) contracts.

None of them take neither the intrinsic value of a commodity nor its physical supply into consideration.

You need to have tangible assets in your possession to have control of your money and wealth.

To my earlier point about debt payoffs in eh event of the currency collapse, to settle $10,000 in debt  you’ll need 16 ounces of silver or 2.1 ounces of gold.

To buy 16 ounces of silver now, you will spend approximately $250. You get the idea.

However, I am not suggesting in any way that you should hope for an economic collapse to repay your debt.

I do encourage you to stay out of debt and to build wealth instead.

Furthermore, you should have gold and silver as a protective measure to buy food, water, energy and assets at highly discounted prices during recession.

What About Other Assets?

Another tangible asset you may use to preserve your purchasing power is rental real estate, only and only if you can afford to pay cash for it.

What about mortgage? Most real estate is presently overpriced, therefore, using financing to obtain a cash producing asset may be unwise. In the event of  an impending financial reset, the value of your investment will go down.

However, the loan principal you would owe will stay the same plus the interest you would owe on the principal.

Under more favorable circumstances, you may be able to invest with leverage (or by obtaining financing) in real estate and to preserve the purchasing power.

However, that time is over, at least for now until the market resets.

Unique Skills as Assets

If you have unique skills, an ability to create and think creatively, for instance, you will always win by selling that skill and by getting a higher price for it in any economy and in any crisis.

Programming (or website development and graphic design) is a commodity now but twenty years ago it was a unique skill and an asset.

Commodity skills do not cost much: the higher supply, the higher competition is, and therefore, the lower the price you can get for the skill. In the advent of artificial intelligence, having a unique skill that cannot be replaced by robots will determine whether you win or lose, whether that skill is  an asset or a commodity.

You can still turn the aptitude for programming and logic in this environment into an asset by creating a unique application for it. Better yet, build a business on it.

Become Your Own Bank

When you own precious metals you are able to protect yourself from financial upheavals such as nationalization. Money in the bank belongs to the bank, not to you.

This is why a bank can privatize any funds of their patrons at their own discretion without prior notice.

I experienced it myself growing up when my parents money was privatized. If it is all you have, it can be devastating.

Remember, the goal is not only to survive but to thrive.

When you can protect yourself by having undervalued assets (precious metals) and unique skills, you can thrive during any crises imposed by your environment.

The only reason crises happen is because people do not anticipate the. Be strong, be intelligent, and be proactive.

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2 Comments

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