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The Two Things Every Investor Needs to Know About The Fed's War on Cash

Phoenix Capital Research's picture




 

For six years straight, the Fed has been trying to “trash” cash.

 

First it cut interest rates to zero… making it so that savings deposits produced almost nothing in the way of interest income. Consider that at current rates, a retiree with $1 million in savings earns a measly $2,500 per year in interest income.

 

The Fed’s hope was that by making it painful for savers to sit in cash, said savers would move into risk assets such as bonds and stocks. This has worked in that stocks are now in one of, if not THE biggest bubbles in history… while bonds are trading at yields never before seen outside of wartime.

 

However, the Fed overlooked two outlets for investors who didn’t want to be forced into risk. They are: Gold bullion and physical cash.

 

Bullion and Cash represent two of the best means of “getting your money” out of the system. They are a way of saying “no” to Central Banking madness (at least unless hyperinflation sets in).

 

How is this?

 

Warren Buffett once noted, Gold doesn’t do anything “but look at you.” It doesn’t pay a dividend or produce cash flow.  However, the fact of the matter is that Gold has dramatically outperformed the stock market for the better part of 40 years.

 

I say 40 years because there is no point comparing Gold to stocks during periods in which Gold was pegged to world currencies. Most of the analysis I see comparing the benefits of owning Gold to stocks goes back to the early 20th century.

 

However Gold was pegged to global currencies up until 1967. Stocks weren’t. Comparing the two during this time period is just bad analysis. And once the Gold peg officially ended with France dropping it in 1967, the precious metal has outperformed both the Dow and the S&P 500 by a massive margin.

 

See for yourself… the below chart is in normalized terms courtesy of Bill King’s The King Report.

 

 

According to King, Gold has risen 37.43 fold since 1967. That is more than twice the performance of the Dow over the same time period (18.45 fold). So much for the claim that stocks are a better investment than Gold long-term.

 

Indeed, once Gold was no longer pegged to world currencies there was only a single period in which stocks outperformed the precious metal. That period was from 1997-2000 during the height of the Tech Bubble (the single biggest stock market bubble in over 100 years).

 

In simple terms, as a long-term investment, Gold has been better than stocks.

 

As for physical Cash…

 

The US Dollar actually returned the same amount as stocks in 2014. Those investors who simply put their money in cash saw their wealth increase the same amount on a relative basis as those who stomached the stock market roller coaster.

 

 

 

This is not changing. In fact, those sitting in cash have made even MORE money this year than those who own stocks. Even with the correction in the US Dollar, it’s massively outperforming the stock market.

 

 

This has infuriated the Fed and is forcing it to take more and more aggressive measures to trash cash.

 

Indeed, we've uncovered a secret document outlining how the Feds plan to take hold of savings during the next round of the crisis to stop individuals from getting their money out.

 

We detail this paper and outline three investment strategies you can implement right now to protect your capital from this sinister plan in our Special Report

Survive the Fed's War on Cash.

 

We are making 1,000 copies available for FREE the general public.

 

To pick up yours, swing by….

http://www.phoenixcapitalmarketing.com/cash.html

 

Best Regards

Phoenix Capital Research

 

 

 

 

 

 

 

 

 

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Thu, 06/11/2015 - 17:09 | 6187786 Md4
Md4's picture

This has infuriated the Fed and is forcing it to take more and more aggressive measures to trash cash."

This very statement contradicts the intimated advice: own gold...and be risk free in maintaining the value of your wealth.

Sure, 5000+ years ago, gold had value. Today it has value. It will surely have value tomorrow, too.

The problem is (and always has been) that those values are NOT the same. NONE of us, has any way of predicting what that value will be.

What's critically important to understand is the point of view of any currency's utility. IT IS NOT THAT SOMETHING HAS VALUE, AND THAT IT CAN BE USED TO OBTAIN SOMETHING ELSE OF VALUE; of course it does. THAT'S NOT THE POINT.

The point is, NO ONE can tell you what your "stash" will actually obtain tommorow...because NO one can tell you what things you need tomorrow will COST. THAT'S the only real value of something else, no matter what it is...UNLESS it is ALSO useful to produce something else, and YOU OWN it.

ONLY THEN do you have a reliable means of preserving real wealth during hard, let alone catastrophic, times. Owning things of REAL useful value can save your life. It can also keep others working, and fed too.

Remember "The Waltons" of the seventies?

Anybody see any gold laying around preserving that multi-generational family's "wealth"?

They mostly fed themselves--and others--with tools and work from HOME.

Remember their saw mill?

How about their sewing for others?

THAT'S how you survive very difficult times; purchasing stuff (whatever it is) while cash still has value TODAY. No one knows what things will be available tomorrow, or how many of your gold coins they'll cost to buy. And unless you're Fort Knox (which itself may be empty), once your painstakingly stacked stash of whatever is gone...it's gone, regardless of your continued needs.

Then what?

Phoenix is miffed at what seems to be happening with cash, and rightly so. It's "owned" by the Fed who can change its meaning, and to a degree, it's value, almost immediately.

And the government can confiscate your gold, too. They've done it before.

BUT...confiscating clearly-owned property or productive capacity outside times of war...is rare, and very unlikely. Indeed, the government would've been grateful to have locals able to produce food to feed many near-starving communities during the Great Depression. Especially, during Hoover's time in office. Google it, and see for yourself.

Saw a bumper sticker in traffic today, that read simply: "No Farms, No Food".

Saw nothing about "preserving wealth" with PM's on it...

m

Thu, 06/11/2015 - 14:38 | 6187229 gmak
gmak's picture

"Indeed, we've uncovered a secret document outlining how the Feds plan to take hold of savings during the next round of the crisis to stop individuals from getting their money out."

 

Right. Secret. On the Internet. Nudge, nudge. Wink, wink. Don't tell anyone. 

Thu, 06/11/2015 - 13:12 | 6186884 Jungle Jim
Jungle Jim's picture

I wish I *had* just hoarded physical cash, instead of going out and  buying an ungodly amount of PMs! Cash sure would not have lost anywhere near the purchasing power that metals did in the last four years and change.

And before someone chimes in with "You haven't lost anything until you sell," um, I was *forced* to sell nearly all my PMs, at a HUGE loss, just to take care of my disabled Dad (have you priced nursing home care lately?), and to keep a roof over my own head and the lights on. But of course, "phony paper prices don't matter." Yeah, right.

P.S. No, Dad could *not* be cared for at home. He's a complete invalid, requiring 24/7 professional care and proper facilities.

Thu, 06/11/2015 - 12:39 | 6186713 The Delicate Genius
The Delicate Genius's picture

The Chinese are selling treasuries to pay well over spot for *physical*.

Really, that says it all, and people who are still talking treasuries and bonds for more than short term positions simply haven't processed that the FRN is reaching the end of its life cycle and the end of its RC status.

Hedge accordions.

Thu, 06/11/2015 - 12:34 | 6186685 lasvegaspersona
lasvegaspersona's picture

News Flash!!!

Gold is still pegged to national currencies.

The paper gold market allows the system to keep gold prices low. 

It will be the moment this process fails (as it did after the London Gold Pool failed) that gold will SUDDENLY find it's real value.

The gold price went up 2400% after 1971. If will increase more than that this time.

shocking eh? Don't believe it?

POG 1971 $35 POG 1980 $850

Thu, 06/11/2015 - 12:23 | 6186646 Fun Facts
Fun Facts's picture

Gold/silver/cash are basically the only thing between the people and complete, total ZWO financial tyranny.

A mix of gold and cash provides liquidity as well as protection from a loss of purchasing power.

Thu, 06/11/2015 - 12:30 | 6186676 Leopold B. Scotch
Leopold B. Scotch's picture

And Guns...

Thu, 06/11/2015 - 11:33 | 6186464 KnuckleDragger-X
KnuckleDragger-X's picture

I've been buying PM's for a long time, not as an investment to make a profit on, but as the ultimate hedge against human stupidity. A cash stash has also been created to prevent any bank run panics. If I'm wrong I've really not lost anything, but if I'm right it'll likely help greatly. Also beans and cornbread and ammo, along with the help of other mean old barbarians to keep it.....

Thu, 06/11/2015 - 15:53 | 6187510 NoWayJose
NoWayJose's picture

Well done! My beans, cornbread and ammo are to survive the chaos. The PMs are for the 'other side', when there is some type of recovery and introduction of a sound currency. Very few things will carry value over to the 'other side', as any paper promise, entitlement, bond, or anything that doesn't hurt when it falls in your foot is not going to be worth anything!

Thu, 06/11/2015 - 11:27 | 6186441 Blythes Master
Blythes Master's picture

GOTS, Get Out of The System NOW!

Do NOT follow this link or you will be banned from the site!