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Guest Post: How to Position Yourself for the Future: Step 1 - Financial Security

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Submitted by ChrisMartenson.com

How to Position Yourself for the Future: Step 1 - Financial Security

What we care about most here is helping people adjust and adapt -- happily, profitably, and safely -- to what is likely to be a very different future.

Our framework centers on the idea that humanity is facing a set of predicaments quite unlike anything else in the history books. Because this time there are no borders to cross in search of safety; the entire world is involved. On a global basis, we've never experienced collective debt loads of this magnitude. Never before has an entire set of intertwined currency systems -- all debt-based money -- collectively been backed by nothing more than the hope of a larger future, and never before have this many people had to figure out how to move from more-concentrated to less-concentrated energy sources (from fossil fuels to sun- and wind-based alternatives). 

The convergence of exponential trends in population, energy depletion, debt accumulation, and an economic model that is hooked on growth will combine to produce quite an interesting, if not challenging and disruptive, future. The funny thing about complex systems is that they are unpredictable, and therefore preparing for what may come is a non-trivial (yet absolutely essential) task.

All of this is spelled out in the Crash Course and more recently in a succinct presentation that I gave at the Madrid Gold Conference in November.

The immediate question for most people is What should I do?  We break down the intelligent responses into three big buckets: financial, physical, and emotional. In this report, I detail the financial steps that everyone should undertake right now to manage future risks using the framework that I use to assess and understand the financial world and markets. 

My approach is founded as faithfully as possible on facts and data. But my views on how the markets operate are formed from personal experience, observation, and connecting a few dots that rely on opinions and sometimes beliefs. Therefore, this financial and investing framework is something that you should only accept if it works for you -- and reject if it does not.

The Basics

I am of the opinion that we are in a gigantic structural bear market. The role of any bear market is to get the most people to lose the most wealth. And so our first goal is to help you be among those who lose the least, as they are the ones who win the most.

This bear market, however, has more to it than the usual bust the follows a typical period of irrational exuberance. Where past bear markets could always count on the natural world helping to induce a recovery by providing more natural resources (especially energy) in whatever quantities and qualities that were necessary, it seems that this time oil will be playing a spoiler role. 

Because this bear market has the additional complicating factor of being global in nature, mauling a global financial edifice saddled with the most debt and liabilities ever recorded in addition to stubbornly high oil prices, it is my view that the economy will not respond in the same ways as it has in the past. Further, we need to be mindful of the idea that the risks are large (derivatives, anyone?), they are actively and collusively hidden from view (what are banks really holding?), and where they are concentrated is mostly unknown -- something I spell out in greater detail in Part II of this report.

Even more troubling, it is no longer unthinkable that one or more major currencies will lose some or all of their value over the next few years.

The conclusion I draw from all of this is that this is a period of time to be concerned with return OF capital instead of return ON capital. Maximum safety has its own rewards these days, not least of which is the value of having a good night’s sleep.

Our basic advice has changed little over the years.

Gold (and Silver)

The first step is to have physical gold in your possession. By this we mean bullion coins or bars stored somewhere very secure that does not place you at risk. I keep mine in vaults and safe deposit boxes, mainly because I lead a very public life and find it too risky to store it in my home. You may wish to protect yourself similarly.

Gold remains a very attractive store of wealth to me at this point because of the main tailwind factors that remain in place today, as they have for years:

  1. Negative real interest rates. Whenever the price of money set by the Federal Reserve is below the rate of inflation, you have what are called ‘negative real interest rates.’ Such periods of time are historically quite favorable to the price of gold. To understand why, just consider how much harder your choice to hold gold would be if you could get a 10% return on Treasury bonds today. When interest rates are positive, there’s a choice to be made about whether or not to hold gold. Plenty of people will decide the answer is ‘not,’ and this lack of buying pressure will keep the price of gold down.
  2. Reckless monetary policy. Since 2009, the world’s central banks have eased more than they ever have in history. They’ve done a lot of it in public and even more of it in secret, to the tune of tens of trillions of dollars. All of this money has been printed out of thin air, and there are no credible plans for how it is all going to be reeled back in someday. That’s just reckless.
  3. Reckless fiscal policy. The world’s reserve currency belongs to a government that spends 40% more than it takes in and runs a deficit in the vicinity of 10% of GDP with no end in sight -- a government that also carries enormous off-balance sheet liabilities in the tens of trillions of dollars and an effectively broken political machine that assures paralysis through at least the next election cycle. Note that I didn’t put a date on that election cycle; I am confident that this statement will be true for many an election cycle to come. 

There’s a fourth reason that I really like gold, centering on the idea that there’s a possibility that gold may be remonetized someday. Not because it’s a perfect system, but because in times of crisis, the solutions that get adopted tend to be the ones that are lying around. 

We don’t have any other tried-and-true monetary systems to dust off and reuse that can do all of the things that we know gold can do, such as assure a balance of international trade and monetary flows and impose a non-evadable limit to what any given country can do in terms of overspending and consumption. 

Perhaps there are other ideas sitting on shelves somewhere in the IMF or World Bank libraries, but none have been tested, and so they will not be selected in a moment of crisis.

Like any good call option, gold remonetization will pay off for the holders of gold quite handsomely, assuming that confiscation without adequate compensation is not also part of that future scenario. My personal target for the price of remonetized gold is somewhere between $10k and $30k per ounce.

Silver is an entirely different metal to me, and I love it because of its industrial utility more than its potential monetary role. It is the most conductive and reflective element with other magical properties as a microbicide for which no substitutes currently exist. Further, it tends to be used in trace quantities, so if it goes up significantly in price, its demand does not ratchet down by an equivalent degree. 

One final thought is that a lot of silver is produced as a by-product of other base metal production, and I am of the view that as energy costs continue to rise, fewer and fewer mile-deep mining pits will be dug into the earth in pursuit of vanishing ore yields. So scarcity becomes a factor, combining nicely with the observation that a whole pile of silver is simply lost, one smidgen at a time, into the environment every year, never to be economically recovered. Once mining slows down, people will suddenly realize that there’s a lot less silver left above-ground than is perhaps commonly assumed.

I happen to hold silver as my generational play: If I ever have grandchildren, I plan to pass my silver along to them. This exposes my personal belief that we will go through a dark period economically, but that recovery from some lower level will occur, and silver will be both scarce and in demand for industrial processes in that future.

For more information on the specifics of where to buy gold and silver bullion and in what proportions, please read my free guide on buying gold and silver.

Cash

Given the instability in Europe and elsewhere, the possibility of a banking holiday that would prevent credit and debit cards from functioning normally is no longer too remote to consider.

Because we have no idea if or when the banking system might enter a protracted shutdown due to some form of systemic failure, we recommend that everyone have some cash out of the bank equaling at least three months of living expenses. Similarly to gold, the fact that bank balances are earning close to zero percent makes the decision to hold cash in hand a pretty easy one.

During our most recent natural calamity here in New England, which resulted, once again, in the power being off for days on end, people discovered that cash was king, especially for the local purchase of needed goods. 

One final note to anybody reading this in one of the PIIGS countries: There’s not much reason to keep your money in either cash or deposit form in the banks there. In fact, there are plenty of reasons to remove your money from those banks and place it elsewhere, and you’d be joining tens of thousands of other former depositors who have already moved their money to safer locales.

In fact, when it comes to pulling your money from a failing banking system, you either get it out in time or you don't. It's a binary event.

Anxious Greeks Emptying Their Bank Accounts

Georgios Provopoulos, the governor of the central bank of Greece, is a man of statistics, and they speak a clear language. "In September and October, savings and time deposits fell by a further 13 to 14 billion euros. In the first 10 days of November the decline continued on a large scale," he recently told the economic affairs committee of the Greek parliament.

With disarming honesty, the central banker explained to the lawmakers why the Greek economy isn't managing to recover from a recession that has gone on for three years now: "Our banking system lacks the scope to finance growth." He means that the outflow of funds from Greek bank accounts has been accelerating rapidly.

At the start of 2010, savings and time deposits held by private households in Greece totalled €237.7 billion -- by the end of 2011, they had fallen by €49 billion. Since then, the decline has been gaining momentum. Savings fell by a further €5.4 billion in September and by an estimated €8.5 billion in October -- the biggest monthly outflow of funds since the start of the debt crisis in late 2009.

(Source)

There are still more people with their savings in Greek banks than there are people who have removed their funds, and this reflects the inertia that is typically found at key moments like these. I would submit that the rational response for anyone looking at the actual data would be to get their money out of Greek banks as soon as possible, even though I know that everyone cannot do this at once because fractional reserve banking assures that those funds are not really there. It's a conundrum, but enlightened self-interest may trump civic altruism here.

Bank and Trading Accounts

Most of us need to have money in both bank and trading/brokerage accounts. Not all institutions are run equally well. Because of this, I keep my money spread across three banks and three brokerage accounts, which I regularly monitor to ensure that those monies and funds are safe.

The banks are all highly rated, are well-run by my standards, and have never appeared on any of the Federal Reserve bailout lists. While this is no guarantee of anything, I prefer to avoid companies that have already demonstrated that they cannot manage to survive without being bailed out from time to time. 

Further, the MF Global fiasco, where segregated client accounts were raided and drained to support the failed bets of John Corzine, was an enormous wake up call, or should have been to those with money in a brokerage account(s). 

What it told us was that major violations of normal operating practices and agreements will not only be tolerated by the authorities, but helpfully covered up after the fact. More on that below.

My general rule is that I only keep as much money in any one account that I could lose without being overly harmed. Sure, it would hurt, but I wouldn’t be wiped out; far from it. I keep less than 10% of my liquid net worth in any one institution precisely because I have no faith that the rule of law will protect me or that the bailouts will continue indefinitely. 

Editorially, the loss of investor faith in US institutions and the erosion of the rule of law is an incredibly important process, yet it seems to be almost entirely out of mind for US authorities -- as if US dominance in something as simple as running lucrative paper-trading and banking schemes was somehow a permanent birthright.

Having the Right Investments

Listen, if we were at the endgame stage and the situation was clear, we could just toss all of our money into gold (and silver) while we wait out the emergence of the next monetary system and that would be simple enough. We'd drain all of our accounts, buy tangible assets, and patiently wait.

But we’re not there yet, and a lot of time may yet pass before anything too dramatic happens. Life goes on, bills must be paid, savings must be stored somewhere, and cash flows must be managed. 

Here we are adamant that you need to be working with a financial advisor whom you trust to safely navigate the most perilous speculative environment that anyone has lived through. If you must have your money at work in the markets, then you must have someone you can trust managing it for you.

It is our view that the days of simply tossing your money into a diversified universe of stock and bond funds is over and that over the coming years, returns from these vehicles will be lackluster at best and destructive at worst.

You deserve to work with someone who understands the true predicament we are in, knows the risks, and can adjust your holdings to match your life stage and preferences. I have listened to hundreds of stories from people who tell me that their broker openly scoffs at the idea of holding gold and actively tries to dissuade ownership for a variety of reasons (“it’s in a bubble” being one). Or their broker just tilts their head and stares quizzically when the subject of currency risk on the portfolio, especially dollar devaluation or euro destruction, is raised.

You deserve to work with people who not only appreciate the risks, but know how to manage them, and even have a plan for profiting from some of the larger and more obvious trends -- in energy, for example.

Most importantly, you should be able to sleep well at night knowing that your money will not be absconded by some former Goldman Sachs alum, nor tossed faithfully but blindly into a failing investment strategy because that’s what worked in the past. 

To this end, we are slowly accumulating a list of firms and investments that we think offer appropriate solutions for these troubling times (contact us if you're interested in learning about them). But do not skimp on doing your own due diligence to identify wealth managers that provide you with the insights and conscientious stewardship most fitting for your needs. At the end of the day, you have to be able to trust yourself and the decisions you make with your assets -- or anxiety will keep you awake at night and likely lead to poorer decisionmaking when volatility really hits.

Putting Safety First

The basic theme here is safety. Managing risk is everything in these times when official policy is opaque, risks are actively hidden from view, and true losses on bank balance sheets are still being masked by fantasy accounting gimmicks.

For example, Bloomberg went through an exhaustive FOIA battle to get at Federal Reserve documents that would show the true extent to which banks were bailed out during the crisis. 

Secret Fed Loans Gave Banks $13 Billion 

The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.

The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy.

And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.

Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse.

(Source)

As speculated about here during the crisis, there was plenty going on behind the scenes that was never publicly disclosed about the true nature of the risks that had been discovered or the scope of the efforts to contain the damage.

How can anyone assume that we know anything about the actual condition of the banks or the true risk of a systemic crisis now? Personally, I am hopeful that the risks are low, but hope alone is a terrible strategy, especially when it comes to money and investing.

Most gallingly, even as the banks were receiving money at 0% and lending it back to the US government at 3% for the ultimate free lunch in risk-free profits (with special emphasis on the word “free”), they were doing two things: paying themselves record bonuses and continuing to make larger and larger bets on derivatives.

What can we deduce from the extra $100+ trillion in derivatives taken on over the past two years? The key thing would be that the lesson was not learned.

Making Better Decisions With Your Money

So my conclusion is simple enough: Where the chance exists to take money/wealth out of the banking system and store it elsewhere for a while until the situation clarifies a bit, it is a prudent thing to do. Gold and cash represent two obvious ways to play that game, with gold sporting the larger role in that story.  For money that remains in the system, be sure to rely on trusted institutions and advisors as much as possible. 

In Part II: The Framework for Predicting Our Financial Future, I share in detail a framework that has taken me years to refine, which I use to forecast what to expect from the financial markets, how things will most probably unfold, where the risks lie, and otherwise demystify and enable investment and wealth management decisions. The intent here is to provide a hard-won set of rules that can increase your odds of making sound decisions when facing tough choices in the increasingly volatile future we're entering.

Click here to access Part II of this report (free executive summary, enrollment required for full access).

 

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Wed, 12/07/2011 - 12:29 | 1955038 Taint Boil
Taint Boil's picture

I'm long Iran's War Kitty

Wed, 12/07/2011 - 12:32 | 1955047 I Eat Your Dingos
I Eat Your Dingos's picture

Where can I purchase or produce this new weapon?

Wed, 12/07/2011 - 12:42 | 1955097 Oh regional Indian
Oh regional Indian's picture

Great advice. I can say it even more simply.

Long reality, short fiction. If you can feel it, see it, touch it, do it, make it, break it, push it...and that is true for most of what goes for your reality, you are doing all right.

ORI

/the-plan/

Wed, 12/07/2011 - 12:46 | 1955120 SHEEPFUKKER
SHEEPFUKKER's picture

Step 2? See step 1. 

Wed, 12/07/2011 - 13:34 | 1955354 Hard1
Hard1's picture

Why does an article that talks about financial security has a picture of fiat paper with a key on it?

Wed, 12/07/2011 - 13:43 | 1955388 A Lunatic
A Lunatic's picture

Because just as Ben Franklin discovered electricity and was rewarded with a spot on the fiat 100, there will (soon) be a Ben Franklin equivalent (perhaps even a reincarnation) who will lead us down the glorious path of deriving zero point energy from unicorn shit. Did you even look at the picture??

Wed, 12/07/2011 - 16:29 | 1955959 FEDbuster
FEDbuster's picture

Better take care of the real basics first; food, water, shelter, first aid, guns and ammo to defend it.  Then get your silver and gold.  This won't be your great grandfather's Depression.

Wed, 12/07/2011 - 13:44 | 1955393 flacon
flacon's picture

Read the section calld "Cash" and you will find out why:

 

Cash

Given the instability in Europe and elsewhere, the possibility of a banking holiday that would prevent credit and debit cards from functioning normally is no longer too remote to consider.

Because we have no idea if or when the banking system might enter a protracted shutdown due to some form of systemic failure, we recommend that everyone have some cash out of the bank equaling at least three months of living expenses.

Wed, 12/07/2011 - 13:48 | 1955401 Hard1
Hard1's picture

Touché!

Wed, 12/07/2011 - 23:34 | 1957156 Money Squid
Money Squid's picture

There is an inter net rumor that Chris Martenson has a lot of cash and supplies on hand. If you need some........ ;)

Thu, 12/08/2011 - 01:15 | 1957378 FEDbuster
FEDbuster's picture

I prefer two ply to cash, but both can be used for the same purpose.

Wed, 12/07/2011 - 13:56 | 1955430 sgorem
sgorem's picture

IT'S A GOLD KEY. The "Key to Survival= GOLD"

Wed, 12/07/2011 - 13:07 | 1955226 Henry Chinaski
Henry Chinaski's picture

and short truth, long consequences.

Wed, 12/07/2011 - 13:34 | 1955361 Troll Magnet
Troll Magnet's picture

I can't stress this enough but you all need to stock up on some strong weed to keep you entertained through these times.  Keep your pantry well-stocked with some munchies and you're good to go!  Oh yeah.  Clean your bong regularly. 

Wed, 12/07/2011 - 15:19 | 1955715 Flocking swans
Flocking swans's picture

Thanks for the reminder about the cleaning...it was due. Also, considering this article is about 'financial security' don't forget to take advantage of the artificial black market..... whoever said money don't grow on trees....was growing the wrong trees!

Wed, 12/07/2011 - 17:45 | 1956381 ugmug
ugmug's picture

I expect two kinds of riots. One mob going after anyone with money (and/or gold) and another mob going after anyone with 'weed'....

 

Fri, 12/09/2011 - 09:20 | 1962449 shanelee
shanelee's picture

I really appreciate this wonderful post that you have provided for us. I assure this would be beneficial for most of the people.

non surgical facelift Adelaide

Wed, 12/07/2011 - 12:59 | 1955184 Ted K
Ted K's picture

The weapon is in the back of the kitchen where Martenson comps free lunches to Durden for allowing Martenson posting this crap on ZH. Go to the chef and whisper the PASS phrase "cooky one likes Glen Beck, End of world is near".

Wed, 12/07/2011 - 13:15 | 1955265 Henry Chinaski
Henry Chinaski's picture

I appreciate your sentiment, but the kooks have been mostly right lately.  The article acknowledges that you don't go all in on doomsday.

Wed, 12/07/2011 - 14:08 | 1955469 Taint Boil
Taint Boil's picture

 

 

Martenson is good - notwithstanding a little bit of a nerdy flavor to his site. But that said the Crash Course is excellent and is free; the course should be a must view to everyone.

Wed, 12/07/2011 - 12:36 | 1955043 DormRoom
DormRoom's picture

exponential growth in most natural phenomoena are course corrected by Nature, whether it be viruses, flora, fauna, and even debt.

 

Malthussian debt end point.  The Faustian hubris of modern man is to believe he had been able to control Nature.

Nature will course correct like she has since the Neolithic Age.  The Great Reset will this period be known.

Wed, 12/07/2011 - 12:50 | 1955140 CORNGUY
CORNGUY's picture

Well put DormRoom, Well put.

Wed, 12/07/2011 - 13:07 | 1955229 A Lunatic
A Lunatic's picture

Nothing starts a reset faster than a man-made super virus "accidentally" unleashed upon the unsuspecting masses.

Wed, 12/07/2011 - 14:23 | 1955507 Smiddywesson
Smiddywesson's picture

exponential growth in most natural phenomoena are course corrected by Nature, whether it be viruses, flora, fauna, and even debt.

Exponential growth is like cancer, and nature corrects it by killing the host.

Wed, 12/07/2011 - 12:34 | 1955061 SheepDog-One
SheepDog-One's picture

Watch zombie movies and TV shows like AMC's The Walking Dead, not to be confused with 'The Walken Dead'. Take notes of what they need and use most, machettes, axes, rifles, shotguns, plenty of ammo, food. Forget cash, thats only useful for starting fires.

Wed, 12/07/2011 - 12:37 | 1955066 DormRoom
DormRoom's picture

Cormac McCarthy's 'The Road'   essential reading for the Great Reset.

Wed, 12/07/2011 - 12:38 | 1955077 SheepDog-One
SheepDog-One's picture

Less helpful is AMC's 'The Walken Dead' but its pretty funny The Walken Dead - YouTube

Wed, 12/07/2011 - 12:40 | 1955087 DormRoom
DormRoom's picture

"Once there were brook trout in the streams in the mountains. You could see them standing in the amber current where the white edges of their fins wimpled softly in the flow. They smelled of moss in your hand. Polished and muscular and torsional. On their backs were vermiculate patterns that were maps of the world in its becoming. Maps and mazes. Of a thing which could not be put back. Not be made right again. In the deep glens where they lived all things were older than man and they hummed of mystery."

 

--Cormac McCarthy, The Road.

 

The Zombie Survival Guide is also a fun read.

Wed, 12/07/2011 - 12:44 | 1955110 Oh regional Indian
Oh regional Indian's picture

I'd say Dimitri Orlov is a must read also. Funny and true. A great combination.

ORI

Wed, 12/07/2011 - 12:50 | 1955139 tmosley
tmosley's picture

No, those are both stupid.  People aren't stupid like zombies, and "The Road" assumes total and permanent shutdown of al productive capacity, which is ludicrous. 

Real essential reading is Ferfal's account of the collapse of Argentina as well as the less well known Selco and his account of surviving the war in Bosnia: http://www.shtfplan.com/emergency-preparedness/a-survival-q-a-living-thr...

Wed, 12/07/2011 - 12:58 | 1955180 SheepDog-One
SheepDog-One's picture

'People arent stupid like zombies'....I disagree people ARE stupid, and let systems fail and theyll turn into the murderous panicky pack animals that they are.

Review any 'Black Friday' video of people going bananas, pepper spraying and beating each other, and thats only over discounted towels and video games.

Let the banks and ATM's fail, and stores 2 day supply of food run out, and just see what really happens.

Wed, 12/07/2011 - 13:07 | 1955230 LawsofPhysics
LawsofPhysics's picture

The people you are refering to will be cut down immediately and/or incarcerated indefinitely.  Already been planned for.

Wed, 12/07/2011 - 13:16 | 1955271 SheepDog-One
SheepDog-One's picture

So theyve already planned for those 250 million or so people and how theyll be 'cut down immediately'....how?

Wed, 12/07/2011 - 14:23 | 1955508 LFMayor
LFMayor's picture

They'll stop feeding and watering them.  Then it becomes self-correcting.

Wed, 12/07/2011 - 13:14 | 1955261 ZackAttack
ZackAttack's picture

A good reason to live a little bit more than a tankful of gas away from a large population center.

Food supply chain is heavily dependent on credit.

Outside the cities, I think a lot of people will make the mistake of thinking they're just going to be able to grow everything they need to be self-sufficient on their very first try. It might behoove them to try growing a good-sized garden, learn what the pitfalls are.

 

Wed, 12/07/2011 - 13:48 | 1955403 flacon
flacon's picture

Good point about growing your own food. The past two summers I grew my own vegetables. Had to research some stuff like what soil to use, how/if to fertilize, etc. Here's a thought I had. Plant ONE seed, reap an ABUNDANCE (more than a hundred fold for some). Where do you get returns like that in the stock market? Home vegetable gardens are a lot of fun. 

Wed, 12/07/2011 - 13:58 | 1955438 Calmyourself
Calmyourself's picture

Yes indeed start growing now or you will suck at it and die.  Most importatnly forget the holistic natural crap for a few years and pile up fertilizer, insecticides and herbicides, maximize yields and minimize effort.  You will survive the chemicals for a few years you will not survive low yields.. 

Wed, 12/07/2011 - 13:25 | 1955311 tmosley
tmosley's picture

I see, so you think people will be milling about in the streets, and too stupid to use a doorknob?

No, a real person might knock on your door and ask for some food, or he might shoot you in the back while you are changing the tire that he slashed before hiding in some bushes.

Keep thinking people are stupid and you'll die.

Wed, 12/07/2011 - 13:51 | 1955412 ZippyDooDah
ZippyDooDah's picture

People are stupid about preparing for the long run, but damned clever in a pinch when they are hungry.  If you have a stash of supplies, good.  Then watch your back like a hawk.

Wed, 12/07/2011 - 17:42 | 1956372 trav7777
trav7777's picture

Huh?  Did you even LOOK at those "Black" Friday videos and actually SEE who is on them?

The vast majority of them feature ONE type of person.  You won't like the FACTS, so stay away from your mental 3rd rail and just keep spouting bullshit.

Every flood was not Katrina; there's a reason for that.

Morons like you continue to say stupid things like our schools are a failure, our people are incarcerated, our crime rate is high...who the hell is this "OUR" you keep babbling about?

I've said over and over again there is no "OUR" and you cannot just comingle everyone like you do, but for SOME REASON, you REFUSE to face the facts!

Wed, 12/07/2011 - 13:49 | 1955407 blunderdog
blunderdog's picture

"The Road" assumes total and permanent shutdown of al productive capacity...

No, it just assumed plant life would no longer grow.  With Monsanto and their suicide seeds, and/or nuclear disasters and/or chemical or biological agent "escape"....how can you be sure the scenario is so ludicrous?

As it was in the book, it could take years, unlike the disaster in Vonnegut's Cat's Cradle, but it doesn't seem like it should be dismissed as impossible.

Wed, 12/07/2011 - 13:56 | 1955428 tmosley
tmosley's picture

It IS ludicrous.  Sure, you might have crop failures, but not everyone uses the same seeds.  The Road assumed that everything was dead forever.  Cannibalism might happen in some extreme circumstances, but it NEVER becomes a regular source of food.  The energy economics just don't make sense.

Even if all the seeds in the world suddenly became sterile, there are plenty of edible plants that don't reproduce that way.  Think "potatoes".

The end of the world only happens once, and by definition you can't live through it.  But governments and currencies collapse ALL THE TIME.  Get ready for things that make sense, not for zombies and cannibals.

Wed, 12/07/2011 - 14:04 | 1955459 blunderdog
blunderdog's picture

Oh, right--yes, The Road is not a source for tips on planning survival.  It was a metaphor. 

I don't think you're right about the premise being so ridiculous.  I think we probably possess the ability to kill the planet if someone were motivated.  But agreed that in the book, the world was obviously ending, which is not the kind of problem a rational person should worry about.

Wed, 12/07/2011 - 15:03 | 1955652 trav7777
trav7777's picture

ok, I am going to chime in to set things straight.  Let mosely-claven take note- I am on his side on this one

The premise is LUDICROUS.

Fucking asteroids and precambrian rises in surface temperature DID NOT KILL THE PLANET.

We could not even SCRATCH it.  You simply do not understand how natural selection makes such a thing impossible.

We couldn't even extinct ourselves.  I have said this a dozen times- mammals' survival adaptation to disaster, plague, disease, famine, is to OUTBREED IT.  This is precisely why birth rates spike after disasters.  Women are PROGRAMMED to get horny, take sexual risks, be promiscuous in the face of danger (which is why putting them in a fast car or on back of a motorcycle is good for getting laid).  The females who whistled past the catastrophe did NOT HAVE offspring with as high a survival rate.  Those that bred like rabbits did and their genetic tendencies (behavior) predominated.  This is true of all mammals.

If you pull the head out the ass and even look at Chernobyl Dead Zone, you see the exact OPPOSITE of what you expect.  It's NOT DEAD.  In fact, it is one of the HEALTHIEST environmental regions on the planet.  It's because all the humans left.  Mutated offspring die quickly and do not reproduce and are outcompeted by better specimens.  This is what natural selection is.  All other animals besides humans and their pets die LONG before they get cancer or other old-age maladies.

We cannot kill anything.  Humans' estimation of our own abilities GREATLY exceeds what is real.

Wed, 12/07/2011 - 15:14 | 1955686 A Lunatic
A Lunatic's picture

We cannot kill anything.

Take Osama Bin Laden for instance........I for one am looking forward to installment 4 of the 'We got the bastard this time' series.

Wed, 12/07/2011 - 16:03 | 1955856 blunderdog
blunderdog's picture

Trav (you asshole)--

Just because everything didn't die where Chernobyl melted down, it does not follow logically that NOTHING COULD EVER HAPPEN that would kill everything.

It's just a matter of opinion.  The reason I hold the opinion I do is because we've seen many sweeping and great changes grow out of what originally appeared to be small events.

I do hope you're right, though.  It'd be far better if we never develop the capability to turn the Earth into the Moon.  Heh.

Wed, 12/07/2011 - 17:47 | 1956388 trav7777
trav7777's picture

The reason you hold your opinion is because you are less intelligent and less informed of the facts than you would be if you held the CORRECT opinion.

Everything did not die when a gigantic asteroid hit the Yucatan.  You really ought to acquaint yourself with the causes of the mass extinction events on earth.  Some killed 90% of surface life (not even SCRATCHING where 90% of biomass on the planet is- underground).  These types of events are fucking cosmic in scale.

Like the sun exploding or the earth's magnetic field ceasing.  We cannot even REMOTELY compare to that.

we can't even fucking kill common farm pests.  Within a few generations, they adapt.  This is what natural selection MEANS.

Nevermind plant life.

Humans sit atop the food chain and most suffer from chronic Downing Effect. 

Wed, 12/07/2011 - 17:58 | 1956421 blunderdog
blunderdog's picture

Gee, you're like some kind of super-genius who doesn't know that you can't prove a negative?

Fuck you, again.  I did used to think you were pretty smart, but these kinds of errors make me think you're just crazy.

Wed, 12/07/2011 - 14:59 | 1955644 Ag1761
Ag1761's picture

Another good practical account from someone from Argentina.

http://www.survival-spot.com/survival-blog/argentina-collapse/

I especially like the tip for shunting abandoned vehicles off the road..most uncivilised bahavior but unless you're presented with it, next best thing is to read up as much as you can so that one day when SHTF a little light may switch on in your heid just when you may need it.

 

I like Chris's articles, pretty much common sense in these times but good to see it laid out for all to see. Something to build on and by the looks of it, quickly.....

 

Wed, 12/07/2011 - 13:08 | 1955238 Ted K
Ted K's picture

That movie never explains what vagabonds should do with their poo.

Wed, 12/07/2011 - 14:49 | 1955612 Chicken_Little
Chicken_Little's picture

I lived in a dorm room in the middle 70's at  an unnamed college prep school . If  I got a C in any course, I had to sit on those awful seats downstairs each evening in Study Hall with an old professor watching us. So I made mostly A's to be able to study in my dorm room.  I also set up a ham radio station in my room with 2 Heathkits and the dorm manager shut me down because I  got  caught on the dorm roof laying out an 80 meter half wave antenna.  So Mr. Dorm Room, where are you you now?

Wed, 12/07/2011 - 13:29 | 1955335 jonan
jonan's picture

don't forget suppressors...

Wed, 12/07/2011 - 15:25 | 1955734 Smiddywesson
Smiddywesson's picture

Went to a gun show this weekend (second time ever) and one vendor was selling 12 gadge buck packaged as "zombie loads" complete with a picture of a zombie on the box.  I asked him if they were real zombie loads or not, and he responded that each box is guaranteed or your money back in apocalypse equivalent dollars.  I responded that it was unlikely a shooter would be around to ask for a refund, and he laughed and said buyer beware.

Now he was only joking, but it was an interesting selling angle you wouldn't have seen only a few years ago.  Sturm Ruger stock has been skyrocketing and sales of guns and ammo are through the roof.  Collapse is in the air if anyone chooses to notice it.

Thu, 12/08/2011 - 15:44 | 1960072 krispkritter
krispkritter's picture

Hornady came out with a full line of 'Zombie Max' ammo.  Guess it was a slow year in their marketing department...http://www.natchezss.com/product.cfm?contentID=productDetail&prodID=HO90262&src=tpSlrHm

Wed, 12/07/2011 - 12:37 | 1955067 Robslob
Robslob's picture

 

 

"we recommend that everyone have some cash out of the bank equaling at least three months of living expenses"

Rent / mortgage will not count as living expenses as the bank will be in a scamble for survival...right?

Wed, 12/07/2011 - 12:41 | 1955085 Deo vindice
Deo vindice's picture

"we recommend that everyone have some cash out of the bank equaling at least three months of living expenses"

3 months should be the absolute minimum.  A year's expenses should be the goal.

And don't use a big bank.  I prefer to use my local Credit Union.

Wed, 12/07/2011 - 13:28 | 1955329 CapitalistRock
CapitalistRock's picture

When he says "cash out of the bank" he isn't referring to the subtle differences between a bank and a credit union. He is talking about negotiable paper cash to get you through a period where financial institutions have closed their doors against a bank run. That includes credit unions.

Your cash won't always have value so make sure your long term savings are in real assets. The cash is simply for liquidity.

Wed, 12/07/2011 - 12:53 | 1955152 SilverIsKing
SilverIsKing's picture

That's how I'm thinking.  If the bank holding the mortgage wants payment, I'll point them to the bank holding the funds and let them work it out.

Wed, 12/07/2011 - 13:10 | 1955241 Captain Kink
Captain Kink's picture

Does the bank take silver? 

Wed, 12/07/2011 - 14:59 | 1955638 Jendrzejczyk
Jendrzejczyk's picture

The banks will take everything.

Wed, 12/07/2011 - 13:10 | 1955244 A Lunatic
A Lunatic's picture

"we recommend that everyone have some cash out of the bank equaling at least three months of living expenses"

This sounds like "Terrorist" activity to me.

Wed, 12/07/2011 - 13:25 | 1955312 CapitalistRock
CapitalistRock's picture

Wrong. Do not live under the fantasy that someone will give you a free place to live at a time when everyone is desperate. That sort of stupidity will be a quick ticket to a cardboard box as living quarters.

Be self sufficient. The time of being a parasite is coming to an end.

Wed, 12/07/2011 - 14:03 | 1955455 Calmyourself
Calmyourself's picture

Bank or no bank you pay my rent or you do not live there, teotwawki or not..

Wed, 12/07/2011 - 17:50 | 1956398 trav7777
trav7777's picture

you are human and relatively easy to kill

or maybe i burn it down for spite.  GFL collecting.

you people REALLY ought to think things through.  You presuppose TEOTWAWKI and who the FUCK is going to evict me from what USED to be your house?  YOU?  YOU are gonna invade MY home?  Good fuckin luck.

Who's gonna do it, you're gonna file an eviction notice and the cops are?  HAHAHAHAHAHA...WHAT COPS?

You have what is in your physical possession and what you can defend in such a scenario.  Nothing more, nothing less.

Thu, 12/08/2011 - 09:34 | 1957971 Bob
Bob's picture

The Boss a'comin' to collect his rent would, from a rational perspective, be better advised to stay home and hope the tenants don't come looking for him.  And his last worry in that event will be making change.

Folks with money will stay put . . . just going out in the street would bring exposure that cannot be defended with any kind of weaponry.  The Zombies will have all their normal faculties about them . . . and be remarkably more motivated and less passive than we've come to think "sheeple" to be. 

Fri, 12/09/2011 - 10:50 | 1962702 Calmyourself
Calmyourself's picture

Ha, you and Trav presuppose my property rights become null because there are no po po to enforce my rights ha..  You better both be serious bad asses and have some folks with ya..  My property rights do not end because you think they do..

Wed, 12/07/2011 - 12:37 | 1955069 RobotTrader
RobotTrader's picture

I wonder where Mr. Martenson lives?

San Diego?

Check out the gasoline prices:

http://66.70.86.64/ChartServer/ch.gaschart?Country=Canada&Crude=f&Period...$/G

Pretty much a "mini-crash" this month, now at 9 mo. lows.

Wed, 12/07/2011 - 12:39 | 1955079 SheepDog-One
SheepDog-One's picture

What do you care about gas prices, did your bus pass expire?

Wed, 12/07/2011 - 12:41 | 1955095 RobotTrader
RobotTrader's picture

Hey Sheepdog, VR Racing gas is about 75 cents cheaper now than it was this summer.

If we are lucky, it will be $1 cheaper by next summer.

Wed, 12/07/2011 - 12:56 | 1955164 tmosley
tmosley's picture

Gas jumped 25 cents a gllon overnight here last night.

Funny how you compare summer and winter prices and extrapolate a trend from that.  How could anyone be as stupid as you?

Wed, 12/07/2011 - 14:10 | 1955464 hedgeless_horseman
hedgeless_horseman's picture

 

 

Crude is up about 20% over the last year. 

http://www.bloomberg.com/quote/USCRLLSS:IND

 

Printing $2,000,000,000 for bank bailouts was in no way inflationary?

http://www.bloomberg.com/news/2011-08-21/wall-street-aristocracy-got-1-2-trillion-in-fed-s-secret-loans.html

 

There is no inflation?

Wed, 12/07/2011 - 16:02 | 1955850 clymer
clymer's picture

Yeah - and the straits of hormuz are still open, last I checked. Let's hope it stays that way

Wed, 12/07/2011 - 16:07 | 1955876 hedgeless_horseman
hedgeless_horseman's picture

 

 

the straits of hormuz are still open

Did someone create some much needed redundancy?

Wed, 12/07/2011 - 16:53 | 1956109 clymer
clymer's picture

haha, you fucking grammar nazi 

Allow me to respectfully retract the the 's' and the the word 'are' that you astutely identified as lending a false plurality to this statement and replace the word 'are' with 'is'.

My deepest apologies. I am kind of a redneck.

 

Wed, 12/07/2011 - 21:14 | 1956885 Taint Boil
Taint Boil's picture

Aint nothing wrong wit ur grammar

Wed, 12/07/2011 - 14:18 | 1955496 ZippyDooDah
ZippyDooDah's picture

Lucky.  That's it, that's what you're hoping.  Great, good to know.

Wed, 12/07/2011 - 23:32 | 1957152 Money Squid
Money Squid's picture

I seen you ride, you too slow to need race gas.

Wed, 12/07/2011 - 12:42 | 1955100 Spastica Rex
Spastica Rex's picture

The gas price in San Diego obviates all observations made in the article.

Wed, 12/07/2011 - 12:43 | 1955104 SheepDog-One
SheepDog-One's picture

Exactly.

Wed, 12/07/2011 - 14:04 | 1955456 baserunr
baserunr's picture

I can't say exactly where, but in general,  from the article..."During our most recent natural calamity here in New England..."

Wed, 12/07/2011 - 16:05 | 1955869 Badabing
Badabing's picture

You talking about eggcorns?

Wed, 12/07/2011 - 14:56 | 1955631 New_Meat
New_Meat's picture

RT:

"I wonder where Mr. Martenson lives?"

He says in his article: "During our most recent natural calamity here in New England,..." (this was a snowstorm just before Halloween, leaves on trees plus snow trump power lines).

Gas prices near Boston trending down, not as much.

- Ned

Wed, 12/07/2011 - 12:37 | 1955071 vegas
vegas's picture

Bullshit.

Get a job with Government; especially an AFSCME union job. Retire with everything.

WTF, it's simple. You people should pay me for advice like this.

 

http://vegasxau.blogspot.com

Wed, 12/07/2011 - 13:03 | 1955202 Messianic
Messianic's picture

Rent seeking, bitchez!

Wed, 12/07/2011 - 13:46 | 1955398 RKDS
RKDS's picture

Let's see your dumb ass apply for one of these fantasy jobs.  Come on, the bar's already pretty low, even you should be pass on your 2nd or 3rd try.

Wed, 12/07/2011 - 15:11 | 1955690 oldschool
oldschool's picture

That has to be sarcasm, and as such it's pretty good.

Wed, 12/07/2011 - 15:12 | 1955694 Ag1761
Ag1761's picture

Acually, whilst it pains me to admit it, you may well have a point. If/when we ever arrive at the hyperinflation door, then professional services will be one of the first things to suffer, aka lawyers, surveyors, architects, etc. Those skills at inflated prices will not be required. Like bankers they will be on the streets. Now if my plumbing is fucked then what little I have will go to fix that so I want the guy with the skills to fix that.

Gov workers will need to have their wages inflated to a certain degree in line with inflation in order for the government to keep delivering basic services and avoid total anarchy and that includes the army.

So, yeah, go get a gov job for the next 3 years and hedge possible hyperinflation.

 

On the other hand, stock up on Gold, Guns, Spam and ride it out.

 

Wed, 12/07/2011 - 12:37 | 1955072 Deo vindice
Deo vindice's picture

Wealth preservation is now the name of the game.

The challenge is trying to keep what you have already earned and is rightfully yours.

Few things will match holding Gold/Silver for that.

It doesn't matter how far you turn the tap on to fill the tub if you haven't put the plug in to stop the water draining out at the same time.

Wed, 12/07/2011 - 12:40 | 1955090 SheepDog-One
SheepDog-One's picture

True, as long as people realize you may have to hold onto that gold and silver for many years before it can be redeemed for 'wealth'...and may not happen ever.

Wed, 12/07/2011 - 12:44 | 1955105 Deo vindice
Deo vindice's picture

Good point.  PM's are not a short-term, get rich quick move. They are for the long term. (for me, in lieu of retirement funds, or to leave to family)

Wed, 12/07/2011 - 15:42 | 1955782 Smiddywesson
Smiddywesson's picture

Usually, but that doesn't mean PM prices cannt move pretty quick.  The late 70s were pretty sweet, as were the last ten years.  If you want to talk about really quick price appreciation, revaluation of gold in the 30s made for a nice profit.  However, this move back into gold by central banks is likely to require an historic expansion in gold prices, something I am guessing they won't oppose and will probably encourage because they hold such large reserves.

Wed, 12/07/2011 - 14:59 | 1955637 New_Meat
New_Meat's picture

"Wealth preservation is now the name of the game."

But ya gotta' get there first, second, third ...

- Ned

Wed, 12/07/2011 - 12:38 | 1955076 Henry Chinaski
Henry Chinaski's picture

PM's in hand - check

Extra spare cash - check

Multiple bank accounts - check

good article

Wed, 12/07/2011 - 12:54 | 1955158 SilverIsKing
SilverIsKing's picture

Guns?

Ammo?

Food supply?

Wed, 12/07/2011 - 13:20 | 1955286 Henry Chinaski
Henry Chinaski's picture

You're jumping ahead to the next step. 

And, yes, check check check.

Wed, 12/07/2011 - 16:42 | 1956014 s2man
s2man's picture

All checked off here, too.  Feels good.

Wed, 12/07/2011 - 12:41 | 1955092 falak pema
falak pema's picture

I loved your Madrid presentation. TY CM. I do believe that your approach is novel. But we have no solution to the debt machine that is the US crony capitalistic, broken down, financialzed system. Until we tackle that dragon, its political implications world wide, we will never leave debt slavery in first world, or elsewhere. Much I appreciate your insight into taking corrective "palliative" measures in interim period until major paradigm change occurs, based on the reality of physical constraints, both energy and ecologywise. So once again TYVVM.

Wed, 12/07/2011 - 12:41 | 1955093 sabra1
sabra1's picture

as for me, i gave my portfolio to RobotTrader to handle! the guys never wrong! my account has doubled to $2.00 in the last 15 years!

Wed, 12/07/2011 - 14:31 | 1955540 OliverTwist
OliverTwist's picture

LOL! I gave mine to Bob! He made 20000% return in just one year! (at least on the screenshot of his photoshop-account)

 

Wed, 12/07/2011 - 15:47 | 1955792 Smiddywesson
Smiddywesson's picture

LOL, Robo tripled my account, but we gave it all back, but don't worry, he says if I hold on those losses won't be realized and don't really matter.

Wed, 12/07/2011 - 12:45 | 1955098 Hmm...
Hmm...'s picture

somewhat off topic my apologies:

Many here dislike me because I challenge some of the pro-Gold threads, and I definitely challenge the "gold bitchez" sentiment and the  "gold has never lost value" stupidity.  when I challenge these ideas I'm often called troll.

I want full disclosure here:  I just bought gold through Tulving

20 American Eagles, 2011.  (dates our choice was out of stock).  Spot $1731.50/oz plus $66.95/oz.

Total $35,954.

I know this may not be a lot to many of you... but let me just say it is a SHITLOAD of money for me.

my assets now:

tiny plot of arable land, house, cars, stuff in house, too much cash in 3 separate credit union bank accounts, my 401k (in Treasuries), my IRA (entire IRA is in CEF), a small amount of physical, plus 20 new oz of physical.

I wanted this out there for the next time someone says I'm just a PM "hater" or pro-fiat.  each time it's said I can just refer them here.

my assets are heavily tilted towards gold, and have shifted TOWARDS gold the last 6 months.

edit: I have no liabilities.  No mortgage, car or student loan, cc debt, etc).

Wed, 12/07/2011 - 12:58 | 1955163 tgatliff
tgatliff's picture

I noticed that you did not assign any % allocation.   If a "SHITLOAD" means 50%, then yes I personally think you are making a risky bet.  I like Ron Paul, but simply saying that the FED is destroying the USD because they are expanding their balance sheet ignores how money is introduced into the system.

For example, when people say that "1 dollar is only worth xx cents today" ignores the fact that the vast majority of the dilution is a side effect of fractional reserve banking, and not too much high power actions by the FED.   Yes, a standard of some sort needs to be put in place, but I think it is very unlikely at this point that the powers that be will pick gold.   My assumption would be that they will eventually use some sort of calculation based on population growth as well as immigration patterns.

Wed, 12/07/2011 - 13:16 | 1955274 Hmm...
Hmm...'s picture

I left out percentages on purpose, as they are evolving. 

For me $40k is a SHITLOAD of money no matter what percentage it is of my overeall assets.  I very rarely buy $40k worth of anything at one time.  In fact, to my knowledge I've only written a check for $40k twice in my life before... once when I bought my house and once with small plot of land. 

that said: in terms of percentages... my Gold and CEF holdings are just barely less than half the worth of my house.  Hopefully that will qualify as a "shitload" in your opinion.  as of now the PhysGold:CEF ratio is about 1:2.

as example: (made up numbers but you get the point)

house worth $480k

CEF in IRA: $160k

PhysGold: $80k.

 

Wed, 12/07/2011 - 13:49 | 1955408 RKDS
RKDS's picture

It's almost surreal to see people panic and throw "only" $30K into gold here and there while for nearly everyone I know that's an entire year's take-home pay.

Wed, 12/07/2011 - 14:07 | 1955471 HellFish
HellFish's picture

How are you set for guns, food, ammo and water?  If those aren't taken care of maybe some of that money should have gone to other preps as well.

Wed, 12/07/2011 - 14:40 | 1955577 Hmm...
Hmm...'s picture

First of all, as I said 40k is a shitload of money to me too.  I spent that much because it's the minimum order of Gold you can do from Tulving, and it seems to be the cheapest place I can find.

water: secure.  I live in Minnesota, we have more potable water than almost anywhere else on Earth. 

Food: 3 month supply stored.  plus arable land (although out of commission from Nov-early March).

guns/ammo: I don't have or want a gun in my house.  My family (me/bros/sisters)  is very close though, and my family owns around 100 guns.  If it ever comes to that my brothers are all the muscle I need.  Yes, I trust them with my life.  I'm the brains, and the cash, they're the muscle.  We've been through near starvation before, and we can do it again.

I've hemmed and hawed for some time about today's gold purchase.  I was going to buy last week wed and the price jumped like $40/oz on wed morning... I was ridiculed because to me THAT MATTERS.

My next big purchase might be more land.  But one problem is that I'm not a farmer (although my BIL is), and the other is that midwest farm land also ramped up significantly during the boom and is at nosebleed levels and also one must understand the affect of commodity markets on land price valuations.  Also: need to be careful with those Monsanto assholes who let their shit blow into your land and then sue you to oblivion.

Wed, 12/07/2011 - 16:30 | 1955955 clymer
clymer's picture

 

Dude, you're better off than 99%.

Shit, you're probably better off than most ZH readers. I am in the greater Boston area. I can find NO ONE (outside of a small few) that even own PM's, have any concern about currency collapse or channels of food / fuel distribution being disrupted, or are prepping in any general sense.

I see clueless yupsters, soccer-moms and the like. Some employed, some not, all to me appear to be thinking the same thing; "obama is not what we hoped, but it must be the republicans fault (this is MA..). Good thing economic cycles are cyclical and we can all look foward to another 96 - 2000 or 2004 - 2007 upswing soon." or something similar.

Most don't even look at the 10 year chart for PM's and let this visual proof of inflation register in their thickened skulls. They ignore wars that don't seem to affect them. They are ignorant of the growing, shocking percentage of people on food stamps. They see gas at 3.30 a gallon and think, "hey - it's better than 3.89 like back in 2008!" They believe MSM, telling them that spontaneous organic uprisings throughout the middle east are the result of freedom-loving residents taking back the levers of government from corrupt dictators. They watch American idol and believe office fires can cause instantaneous, symmetrical implosion of 47 story buildings.

Look around you America, and take a good long and desperately lonely look at the dumbest people on earth.

 

 

 

 

Wed, 12/07/2011 - 17:36 | 1956348 Smiddywesson
Smiddywesson's picture

Everybody forgets one of the best hedges for collapse.  Get into local politics/administration.  When this sucker blows, all politics are local, and being on the town council, or some obscure board, can be the difference between being protected/fed/informed/first in line, or not.  Time to start donating your time.

Wed, 12/07/2011 - 18:17 | 1956502 blunderdog
blunderdog's picture

It can also put a bullseye on your forehead.

Wed, 12/07/2011 - 17:09 | 1956235 augmister
augmister's picture

What did you say your address was?

Wed, 12/07/2011 - 16:02 | 1955846 Smiddywesson
Smiddywesson's picture

Yes, a standard of some sort needs to be put in place, but I think it is very unlikely at this point that the powers that be will pick gold.   My assumption would be that they will eventually use some sort of calculation based on population growth as well as immigration patterns.

Maybe migration patterns of birds?  Actually, there is a whole lot of room here to agree to disagree.  If you are saying the gold window will stay closed and circulating paper won't be backed, I can agree with that.  However, if you are saying that trade imbalances will continue to be settled in fiat and not gold, and central banks, who have always held gold as assest are now stocking up on it for no reason at all, I have to disagree.

Central banks are stocking up on gold at a time when liquidity is precious.  The mysterious rise in gold prices over the last ten years is not due to the debasement of the dollar, that's been going on for a long time.  Central banks were purchasing apocalypse repellant on the lay away plan.  The manipulation of PM prices, combined with the secrecy of central bank purchases and outright propaganda is enough to tell any good trader that a major market scam is underweigh. 

This crisis is boiling over and the only thing that can stop a crisis is confidence.  Printing new fiat with new pictures isn't going to cut it.  They need a system they have some experience in, something they know will work and will instill confidence.  That system is gold.  There's plenty of opportunity under a gold referrenced system for central bankers to steal from us.  They will leave themselves some sort of wiggle room. 

All we know for sure is the current system is dead and is too interconnected and fragile to leave everyone solvent when this thing blows.  We also know the only people on the planet who are guiding this thing and have the inside truth are buying gold.  That's good enough for me.   Anyone without gold when this blows will join the masses in the soup lines.  It's that simple. 

Wed, 12/07/2011 - 12:43 | 1955102 RobotTrader
RobotTrader's picture

INTC now trading at 3-year highs.

Why all the survival talk?

Wed, 12/07/2011 - 12:45 | 1955114 SheepDog-One
SheepDog-One's picture

You just keep pretending you own INTC and everything will be O'TAY Buckwheat!

Wed, 12/07/2011 - 13:04 | 1955211 Messianic
Messianic's picture

Survival talk....Bad?

Wed, 12/07/2011 - 15:36 | 1955765 CPL
CPL's picture

It's called hedging Greg.

 

You should learn it or start using a stop loss.

Wed, 12/07/2011 - 19:33 | 1956682 mkkby
mkkby's picture

Another way to look at it is INTC is at 1998 levels.  Nice return for 14 years.

Wed, 12/07/2011 - 12:46 | 1955123 tgatliff
tgatliff's picture

The author above makes a confusing argument.   In my mind, the issue of whether gold and silver will continue to appreciate in value is predicated on one assumption.   That assumption is that widespread defaults (deflation) will not occur.   Let me explain...

Simply saying that the FED is poisoning the currency because they are printing money is not really a valid argument because it ignores the elimination of money by defaults.   Meaning, if the FED does not OMO on $1B while at the same time a $100B of loans are defaulted on, is this inflationary?   In my mind, it is not deflationary, but does further dilute the overall money supply to help the most wealthy (1%) at the expense of everyone else (99%).  If history is a model tofollow, a cluster of civil wars will be the end result, which are almost always deflationary... Meaning, metals go down in value.. Not up...

In short, simply saying that because gold / silver has done well, that this is proof that they will do well in the future.  We do know that a good part of those buyers are central banks, which appear to be using it as a hedge in the event that we go back to a gold standard.   

I would be interested in knowing why I am wrong on the above.  To me the risks are quite high staying in gold considering the amount of leverage.  Hedge funds cannot pay margin calls (yet) on gold, so it must be liquidated.

 

Wed, 12/07/2011 - 12:58 | 1955182 MachoMan
MachoMan's picture

And your alternative cost?  In your scenario, what assets do you get to keep?

It seems to me most of the investment advice out there can be summarized as follows: "just put your money in a whole bunch of different things and you're sure to have a little left over."  As sad as it is, I'm not sure I can materially challenge this notion.  About the only way to play differently would be to have insider information (member of the club) or have vastly superior deductive capabilities.

 

Wed, 12/07/2011 - 13:19 | 1955279 pasttense
pasttense's picture

tgatliff:I think you are right that there is a very good possibility that gold and silver will go down in the short term because of margin calls, etc.

  So, a major consideration is how many years worth of liquid assets you have.If you only have a couple years worth of liquid assets then I think a good case could be made for not buying precious metals because of these considerations. But if you have 10 years worth of liquid assets then you won't need to spend these assets in the short term, so the question arises as to the best way to hold the assets for the long term. And here i agree gold and silver look good.

Wed, 12/07/2011 - 17:39 | 1956360 Smiddywesson
Smiddywesson's picture

I agree with the sentiment that gold and silver won't help if you don't have food, however ten years?  I really don't think they can drag this out much longer, and when the collapse comes, it's likely to come all at once.

That being said, don't buy so much PMs that you have to liquidate before this is all over or you risk a loss. 

Wed, 12/07/2011 - 18:02 | 1956447 tgatliff
tgatliff's picture

For me personally, in the medium term, I think history is clear, just in my opinion, on what will occur.   The current inflation actions by the FED are being perceived poorly by the public and will ultimately create a political backlash.  The attempted mail bomb of the german bank today further indicates this movement taking place. This political backlash "movement" will at some point tremendously limit the FEDs response to any situation.   Once this occurs, the events that transpired on 2008 will be allowed to continue.   Meaning, if the FED was smart, they would making painful decisions now on the banks before their powers are ultimately trimmed.

In short, deflation in the medium to longterm I think realistically is the only outcome when one considers the political response to what is currently occurring.   Once this occurs, all financial institutions as well as all sovereign nations will default on all debt obligations.   Also, I think history will see it as a "great reset" of the financial system.  If enough players are wiped out in the process, then the system can start over and real productive business activity can once again come back.

Wed, 12/07/2011 - 13:24 | 1955304 LynRobison
LynRobison's picture

Here's a "widespread default" for you. How about the U.S. government defaulting on its debts and obligations? The government cannot meet its $70-$200 trillion obligations over the next decade or so. It will have to either default outright, or massively devalue the USD. Either way, the USD is a gonzo. The dollar is just paper backed by promises that cannot be fulfilled. So, do you really believe that the paper dollar will continue to act as a store of your wealth in the future? If that is what you believe, good luck.

Wed, 12/07/2011 - 13:53 | 1955417 Imminent Collapse
Imminent Collapse's picture

If there is deflation, will it be limited to gold?  Doubtful.  It will cover all classes of assets and I wonder if gold will continue to be valuable in the same ratio that it is today (or better) vis-a-vis other assets.  That is, even if the dollar value of gold decreases, it will still buy what it would buy today.  Am I wrong in this assumption?

Wed, 12/07/2011 - 16:41 | 1955990 Smiddywesson
Smiddywesson's picture

Correct.  In the unbelieveably lucky event that Ben and company slowly guide this monster in for a landing without a systemic collapse, and all the good little boys and girls of the world don't lose everything, gold will do fine vis a vis other assets and its purchasing power.  How fortunate holders are in how it is denominated depends upon how well a particular fiat currency fares in this fantasy land. 

But how likely is that?  The deflationist argument is that global panic will cause money to flee to the dollar, thereby propping it up, but theory is different in practice.  That money flowing into the dollar is flowing out of the euro and european banks, and our banks cannot survive their failure.  We are bailing out the EU in recognition that we cannot survive its collapse, yes?  

The whole system is chained together.  As money is taken out of the system through defaults, a deflationary process which would ordinarily cause a rise in the value of the dollar, your proverbial indominable force, will meet an immovable object,  a domino effect of cascading defaluts will occur because we allowed too much debt and too much leverage and too much counterparty risk. 

The deflationists are right, cash is king, until the whole system goes tits up, then it's trash with everything else.  This is going to be a hurricane where your normal deflationary process won't be given the time to bring about the expected result.  It's hard to envision the dollar emerging unscathed from an overnight meltdown where all banks, funds, and insurance companies are wiped out. 

Wed, 12/07/2011 - 17:28 | 1956322 ronin12
ronin12's picture

 Exter's pyramid - the bottom isn't cash.

Wed, 12/07/2011 - 18:17 | 1956501 tgatliff
tgatliff's picture

I agree 100%... Except on the definition of "until the whole system goes itis up".   The system will never go away simply because people ultimately need to live.  To do this, they ultimately need something to barter with.  That something is much more likely to be USDs, than ever gold.  As defation hits, people will need USDs to pay debts, and ultimately most will be forced to sell their metals (gold/silver/etc) to convert to those USDs.   

An uncle of mine said it best without even thinking about it... He told me that "during the Great Depression, you could buy a farm for $100, but the problem was that no one had $100".  What he never grasped was that the value of the farm never changed.  However, the value of the currency did...  As long as I continue to see the backlash of the FED, I think that it is just a matter of time before they are irrelevant.   Meaning, to me... USDs, which is still the worlds reserve currency, is the only true safe place to be before the inevitable deflationary wave hits...

Wed, 12/07/2011 - 19:49 | 1956717 blunderdog
blunderdog's picture

He told me that "during the Great Depression, you could buy a farm for $100, but the problem was that no one had $100".  What he never grasped was that the value of the farm never changed.  However, the value of the currency did...  As long as I continue to see the backlash of the FED, I think that it is just a matter of time before they are irrelevant.   Meaning, to me... USDs, which is still the worlds reserve currency, is the only true safe place to be before the inevitable deflationary wave hits...

So you've concluded from that statement that during the Great Depression, a $100 bill would've bought the farm, but 5 ounces of gold would NOT have done so?

Wed, 12/07/2011 - 16:40 | 1955996 Badabing
Badabing's picture

Deflation in gold has been going on for some time now.

 

If gold is money it can buy alot more than it could last year. that is deflation my frend.

 

That's why Benny and the FED says gold is not money, if they did, they would have to admit we are experinceing deflation.

Wed, 12/07/2011 - 18:27 | 1956528 tgatliff
tgatliff's picture

I think you have it backwards... Notional to what?   If you are talking about notional to the USD (which is all you can buy with at the moment), then it would be inflationary.  

Inflationary trends are to be expected with the actions that the FED has taken recently.   I think it is obvious to say that the FED would love to enact a QE3 ASAP.  However, the politics are turning on them, and I think they realize this first hand.  As to the inflation, we saw the same thing near 2007 just as we are seeing now.  Ultimately, however, solvency can never be solved by endless liquidity.   Not even zero interest loans will help in a solvency issue.  Widespread defaults will occur at some point in the near future, and I think most agree that this is clear.  Once this event eventually happens, which I think will ultimately occur once a political backlash forces it, then people will neeed USDs to pay their debts.   Seeing as metals cannot be bartered (yet), then they will be forced to convert those assets to USDs.   As long as you are one of the first at the door, you will be fine.   If you are late, however, then physical gold will not be worth much...

Wed, 12/07/2011 - 16:15 | 1955907 Smiddywesson
Smiddywesson's picture

In short, simply saying that because gold / silver has done well, that this is proof that they will do well in the future.  We do know that a good part of those buyers are central banks, which appear to be using it as a hedge in the event that we go back to a gold standard.   

Psst.  Central bankers know where they are taking this monetary system.  You don't hedge without risk, and they have the inside information and the power to MAKE their purchases the right decision.

As for deflation, you are correct.  If the economy survives, gold will go down in price along with everything else, however, it should still outperform other assets.  But, how likely is this global economy to survive?  All of the deflationary arguments assume paper will remain an asset and not revert to worthless toilet paper due to counterparty risk, unpayable debt, unimaginable amounts of derivatives, and political instability.  If I thought for a second we could survive this crisis, I would entertain the thought of hedging my PM bets.

If they don't print, the system crashes.  If they print the fiat crashes.  Take your pick, in either case PMs win.  The time for the deflation argument has passed.  We leveraged ourselves way past the point where this beast will die a slow death by strangulation.

 

Wed, 12/07/2011 - 12:50 | 1955142 Uber Vandal
Uber Vandal's picture

I think the author should have mentioned to focus on buying the small gold denominations, such as the 1/10 ounce coins, and perhaps the 1 and 2.5 gram ingots.

Also, buying the coins, which may be more of a collectible than bullion, may be a good way to work around another executive order 6102

Much like when people ask for my advice on buying silver, I recommend dimes, quarters, and halves.

If things totally go Mad Max, no one is going to have change for a 1 ounce Krugerrand, Buffalo, Eagle, Maple Leaf, or Panda.

Personally, I would recommend that people keep their pocket change, and separate it into pre 1982 copper cents, nickles, dimes, quarters, halves, and dollars. Use that FIRST if things get out of control, and keep the good stuff for high value transactions.

But, keep in mind that Mad Max himself was wealthy, because he had a shot gun shell, a dog, can of dog food, and five gallons of gasoline. Gold was not part of that equation.

Wed, 12/07/2011 - 14:28 | 1955529 LFMayor
LFMayor's picture

he had a Falcon XB too man.  Better than gold!

Wed, 12/07/2011 - 14:47 | 1955598 Saro
Saro's picture

My thinking as well.  I'm buying my silver in dimes and my gold in 1/10s.

Wed, 12/07/2011 - 13:00 | 1955166 Zero Govt
Zero Govt's picture

We are in deeeep trouble ...caused entirely by the rotten bankrupt institution that is Goverment

Govt is the source of our poverty (debt).. the unproductive parasites of Govt have consumed too much of the productive peoples wealth via theft (taxation)

all other problems (banking, property, industrial, energy, transport, healthcare, pensions etc etc) stem from the biggest systemic mistake in human history: putting a monopoly institution, Govt, at the centre of society or more bluntly, the fuktard parasites at the top of the food chain

Our world has been impoverished by the suffocating incompetence and corruption of monopolies

the solution Chris Martenson is individualism. The individual must stop paying their taxes and feeding/sponsoring these most rotten of parasites

Zero Tax = Zero Govt 

Wed, 12/07/2011 - 14:23 | 1955510 FeralSerf
FeralSerf's picture

There is no way for one to stop paying their taxes.  Inflation is the worst tax of all.  How do you propose to stop paying that one?

Wed, 12/07/2011 - 14:24 | 1955511 FeralSerf
FeralSerf's picture

There is no way for one to stop paying their taxes.  Inflation is the worst tax of all.  How do you propose to stop paying that one?

Wed, 12/07/2011 - 15:58 | 1955837 ironsky
ironsky's picture

You go first. Say hello to Irwin Schiff for me.

Wed, 12/07/2011 - 12:58 | 1955183 RobotTrader
RobotTrader's picture

DBA is crashing to new lows

Food prices getting crushed

Where is the inflation?

Wed, 12/07/2011 - 13:03 | 1955204 Spastica Rex
Spastica Rex's picture

Boring -1

Wed, 12/07/2011 - 13:10 | 1955245 kito
kito's picture

how do you argue with a guy who always makes the right call after the fact....pure genius.....

Wed, 12/07/2011 - 13:26 | 1955317 jimmyjames
jimmyjames's picture

Where is the inflation?

***************

There is no Inflation and there will be no Inflation in the foreseeable future which is precisely why Gold (money) is the asset to hold-

I've told you many times--you have it all assbackwards-which is why your posts are so laughable-

Wed, 12/07/2011 - 13:27 | 1955325 tmosley
tmosley's picture

In the real world.

You might as well talk about how expensive real estate is in your game of monopoly.  "The economy must be getting better, I've got a hotel on Boardwalk and Park place!"

Wed, 12/07/2011 - 15:22 | 1955724 hardcleareye
hardcleareye's picture

Robo,

DBA doesn't reflect the real prices your Mom pays to put food on the table that you eat.

Per the USDA the average cost of a Pound of Beef at the retail store was $4.47 a pound in October 2010 and $4.93 per pound in Nov 2011.

http://www.ers.usda.gov/Data/MeatPriceSpreads/

That is about a 10% increase in one year of the cost of beef on the retail level.

 

 

Wed, 12/07/2011 - 13:02 | 1955194 TheMerryPrankster
TheMerryPrankster's picture

If everyone is broke because of a currency collapse, gold may not be as useful as 'useful objects'

some 'useful objects':

soap, detergent, bleach

lightbulbs,flashlights,batteries

sugar,flour,yeast,alcohol

hand tools,blocks,bricks,concrete mix

guns,long guns, ammo

 

most of these objects, aside from flour,yeast and batteries have a very long shelf life and can be stored for years.

a single ounce of gold will buy a buttload of all these materials now, if you have the space it might be handy to load up on many of these.

gold may be a good way to preserve wealth, but 'useful objects' are a great way to preserve and extend your life.

Wed, 12/07/2011 - 13:27 | 1955323 ZackAttack
ZackAttack's picture

I also don't think people recognize how important their tribe and its skills will be. Alone, a person has no chance to survive this in any reasonable way. My tribe right now has a doctor who served in the Kenyan bush; a farmer and his wife who know all the old ways, the skills so many have lost - planting, harvesting, canning, preserving; among others.

 

Wed, 12/07/2011 - 13:34 | 1955360 Long-John-Silver
Long-John-Silver's picture

I've been contemplating writing a survival book for our modern times. It would detail surviving the ultimate economic crash where the grocery stores are sold out with no possibility of restocking them and most other retail outlets have been looted out of existence. This book would assume the absolute worst situation where even utilities are gone. Basic farming, producing and using your own soap and other basic necessities, producing and using your own electric power, scrounging and re-purposing common items that will become worthless (automotive vehicles and home appliances), security, and how to setup a barter system with other survivors. At this point I fear it may already to be late to bother writing it because by the time it's published the collapse may have already come.

Wed, 12/07/2011 - 14:12 | 1955484 GFKjunior
GFKjunior's picture

Just start a blog and write articles as you think of them. No need to spend several months with writing the entire thing.

Wed, 12/07/2011 - 14:21 | 1955504 mtomato2
mtomato2's picture

Already [recently] been done. One Second After, by William Forstchen

Wed, 12/07/2011 - 15:31 | 1955750 New_Meat
Wed, 12/07/2011 - 15:32 | 1955755 MsCreant
MsCreant's picture

Go see survival blog.

http://survivalblog.com/

If you can do better than Jim Rawles for us, do it. If not, have peace of mind knowing a group of folks are out there doing just what you think should be done.

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