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Catherine’s Financial Detox

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This is a re-post of a summary of Catherine Austin-Fitt’s financial detox plan as given to Max Keiser five years, ago. The 15 pieces of wisdom extracted from the video are timeless. If you had started working on them in 2009 it would have had a dramatic impact on your life. Five years from now the same will be true about starting to work on them, today.

Catherine Austin Fitts is a breath of fresh air.

With a keen understanding of the links between politics, corruption, and money she is unmasking economic con-games, one by one, for the benefit of us all. Give her 15-minutes and she’ll explain the most complex schemes and enable you to see right through all sides of the rhetoric we’ve been hearing all our lives.

Not only that, but, she offers powerful solutions and action plans that can be implemented within minutes of watching one of her videos.

Listen to her describe her “Bailout Plan” in the video, below, which I found on The Edge with Max Keiser.

1. – Save Time

  1. Cut out TV and corporate media. They’re a brainwashing waste of time. You’ve got better things to do and think about. Get radical about cutting this out and save 5-10 hrs a week of “bad training”.
  2. Get corrupt people and enterprises out of your life. They get access to your data and money. Consider carefully the banks, brokerage houses or institutions you do business with.
  3. Control personal data. There is no privacy. Think through who you do business with and who has access to your data.
  4. Compliance – be impeccable with compliance. In a situation with highly complex rules and no privacy it’s easy to get caught up in a dragnet.
  5. Simplify. The less things you’re responsible for the better.

2. – Get Smart

Implementing 1. gives you time for 2. and 3.

  1. See things as they truly are.
  2. The greatest wealth creating entity of all time is the family. Think strategically about your family and friends.
  3. If you’re not in a conspiracy you need to start one. Conspiracy means to breathe together. Start a conspiracy with your family to benefit each other and keep corrupt institutions out of all your lives.
  4. Network with other people who know what’s going on. Nobody is as smart as all of us.
  5. If you have time, understand history. What’s happening today is logical if you understand the history of things like narcotics trafficking, mortgage fraud, etc.

3. – Reposition Your Assets

  1. The goal of the games of economic warfare are control and equity.
  2. Build your equity. Invest in your health and your knowledge. Think strategically about managing these key assets.
  3. We’re leaving a large bubble and now people want hard assets. Shift out of phony financial instruments into securities and hard assets with solid economics.
  4. Stick with long term trends. Follow the tapeworm. Don’t be confused by economic nonsense into investing into anything that is not long term and high quality like food, water, gold, Precious metals.
  5. Demonetize. We put money into financial assets, get yield, then buy things. This is a losing proposition.

Catherine Austin Fitts is always worth your time. Check out her blog which she calls, The Solari Report.

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Gold Pour
Business

Wealth Transfer around Collapsing Asset Prices

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The decimation of the middle class continues through 23% unemployment1 and the daily evaporation of net worth. Those who remain employed are running to stand still  taking up the slack of former, less fortunate, co-workers. Mortgage holders above water are the exception and many are cashing in what’s left of their 401k to meet expenses. The word retirement is fading into the dreams of yesteryear and will be a mere web-search term for children born after 2000.

There is a moral, peaceful and non-violent way to be on the receiving end of this slow-motion artificial wealth transfer. One of the keys is to understand . . .

Why Asset Prices Collapse

“Asset prices collapse during periods of hyperinflation when priced in gold.”2

When first reading that I wondered, “If assets are desirable and the currency is worthless then why would their price go down?” The answer is that prices rise in fiat and fall in gold. Why would prices fall when measured in gold? Current news headlines provide some answers:

  1. Some assets were overpriced to begin with and are returning to normal.
  2. Unemployment leaves people with less to spend causing less demand.
  3. Those with income cut back, save more and buy less causing less demand.
  4. Current housing inventory and projected foreclosures could meet demand for three years of sales. That figure is closer to four months in an efficient market.
  5. Equites, when priced in gold, have lost enough real value to cause people to flee into safer investments.
  6. Retirement plans are being liquidated to meet monthly expenses
  7. Luxury items are being sold to meet monthly expenses.

If current trends continue #2, #3, #5, #6 and #7 will get worse. If the banksters checkmate themselves into an inflationary corner then they will get much worse.

Women, Computers and Volcker to the Rescue?

In the early 80’s America was rescued from runaway inflation by three things:  A massive influx of women into the workforce, the personal computer and the temporarily sane monetary policy of Paul Volcker. Many women followed the pied piper of woman’s liberation but the piper’s agenda was to double the work-force tax base. The second rescue was the personal computer and the ensuing  productivity boost it poured into the economy. From a monetary point of view the same amount of money was now circulating in an economy with more productive workers and twice as many of them. Once again, the American public and ingenious entrepreneurs saved the state from its incompetence. Mom is now gone from the house, working and replaced with daycare and using computers developed by private entrepreneurs. And yet, it’s Paul Volckers’  monetary policy that is purported to have rescued America.

Is there anything on the horizon that could rescue the economy, today, as women and computers did in the early 80’s? Cold fusion? Free energy from the sky? A quadrupling of workers or their productivity? I’m not sure. But, there are ways to rescue oneself and family in any circumstances if they are understood.

Inflation and What Else?

The US has done more to cause hyperinflation than any country that’s ever actually had it. And yet, the US continues to escape this well-earned fate. Instead, bubble after bubble is popped and the proceeds are put into the bags of the ones who create them.  For those who care about macroeconomic measures the most reasonable short-term expectations are more of the same of the last decade:

  1. Informal Devaluation
  2. Stagflation
  3. Continued Decline

Great, but it’s a waste of time to dote on things one has no control of. Instead, why not bone up on the usual ways wealth is transferred under these circumstances? The “Collapse” that everyone is expecting is occurring in slow motion. However, since it’s easier to see the trades if we pretend it will happen overnight I’ll refer to what I think will happen over many years as the “Collapse”, below.

Wealth Transfer around Collapsing Asset Prices

Vulture economics is wealth transfer from weak to strong, emotional to rational, unprepared to prepared, city dweller to farmer, productive to unproductive, Keynesian to Austrian, and from the manipulated to manipulator. In a crisis the unprepared and wealthy (In fiat only) will sell anything to meet basic needs. In Weimar, well-to-do city dwellers came out to the countryside to exchange cigars for meat, pianos for wheat flour and gold watches for potatos.3 In essence, they traded Diamonds for Water.

Prior to Collapse

In a trade of Diamonds for Water the guy with the water gets both and the guy with the diamonds gets some water before losing both.

The general pre-collapse roadmap is to:

  1. Think like a foreigner in your own country.
  2. Move towards employment and safety.
  3. Postpone the purchase (And sell excess) of future collapsing assets.
  4. Don’t payoff your house. Make the minimum payments on all mortgages and large fixed debts.
  5. Purchase real money and wealth storing assets.
  6. Stock up on the life essentials while they’re available and cheap.
  7. Invest in the factors of your own production.
  8. Warn who you can without causing resentment.
  9. Make a shopping list for the eye of the storm.

My Optimal choices are laid out in Your Optimal Bailout Plan, Depression Proof Your Money, Checklist for Hard Times and 240 Jobs That Won’t Disappear in an Economic Crisis. Essentially, you sell assets whose price will collapse (Further) and buy the staples of life while they’re available and cheap. Later you buy the “diamonds” by preserving the purchasing power of your savings and not relying on anyone to provide life essentials for your family. If hyperinflation occurs pay off your mortgage with an egg. If it doesn’t use silver and inflation to pay off your house.

Foreigner in Your Own Country

You hear it all the time: Those ‘foreigners’ come over here with suitcases and buy everything in sight because the Euro/Yen/Yuan/Franc is strong. The opposite used to be the norm: Americans traveling everywhere for $10 a day on world wide shopping sprees.

Gold is the best money in the world and enables easy conversion to every form of cash. If your idea of cash is limited to government issued fiat then at least hold a stable one. They’re all based on nothing but Swiss Francs and Canadian dollars will faire better than the dollar. See How To Buy Swiss Francs in 5 Minutes or Less.

Today, you can swap in and out of any currency in the world with the click of a button. There’s nothing to prevent swapping into the strongest fiat of the moment. It’s well known that during the currency crisis’ of Chile and Argentina the first people to exchange local fiat for US dollars were among the few to keep their savings from disappearing into smoke. Those who bought dollars prior to the official devaluations and newly issued local currency were saved. Soon it will be even more ironic that the widespread use of US dollars provided the stability needed for these countries to transition into a new fiat currency based on ten times the nothing of the first one that collapsed.

Or, you can “play it safe” and keep your “money” in the bank.  You’ll be able to retain and spend every cent as it’s being devalued.

Field Trip

Take $500 to the bank and tell them you’re going on a trip to Switzerland and would like to purchase Swiss Francs. Take the Swiss Francs and put them in your pocket and let the feeling of having cash wash over you. If you ever need emergency cash convert them back and you’ll probably get more dollars than you started with.

Factors of Your Production

The best investment is in the factors of your own production: Health, education, training, building a strong network and community. If there’s no market for your specialty consider moving and/or directly producing what your family needs. Create a water rain catch system, grow your own food, make your on electricity, etc..

“Before you hunker down get out of the way”4

Many people are newly unemployed. Though beyond the scope of this article to explore would moving be a better use of your time than scanning the want ads? Would a move within the US, or to another country, be the best start of a new business or profession?

Wealth Storage

The TRJ/CRB is a benchmark representation of commodities as an asset class. These commodities are not the only place to store wealth but they do represent assets with well established markets.

  1. Aluminum
  2. Cocoa
  3. Coffee
  4. Copper
  5. Corn
  6. Cotton
  7. Crude Oil
  8. Gold
  9. Heating Oil
  10. Lean Hogs
  11. Live Cattle
  12. Natural Gas
  13. Nickel
  14. Orange Juice
  15. Silver
  16. Soybeans
  17. Sugar
  18. Unleaded Gas
  19. Wheat

Most of these have indexes for those who trust brokerage accounts. At least 10 of them, however, could be personally purchased and stored. Notice this list is in the Before Collapse section of the article.

Collapsing Assets

All of the following assets are collapsing and will continue to collapse relative to gold. Don’t be fooled by nominal price increases in fiat. Sell them now, if you can.

  • The US Dollar
  • Municipal Bonds
  • US Treasuries
  • High Multiple (P/E) Stocks
  • Financial Stocks
  • Equities in consumer discretionaries
  • Grand Pianos
  • Diamonds
  • Luxury cars
  • Yachts
  • Jewelry
  • Rental Houses
  • Designer Watches
  • Designer Handbags
  • Recreational (Only) Property
  • Luxury (Empty) Apartments
  • Overpriced Wine

Signals to Look For

The Mainstream Media does not report real news so you’ll have to glean the timing of the worst part of the collapse from alternative media or inductive reasoning applied to personal observations. The short list would be:

  • Witnessing a diamonds for water trade.
  • A precipitous rise in gold or silver.
  • Stock market collapse or close.
  • Sharp increase in the rate of failing banks.
  • Social unrest, heated protests or riots.
  • Bank holiday followed by formal devaluation.

We had family members stay with us, last Christmas, from Venezuela. The week after they returned home Chavez devaluated the Bolivar by 40% for non-food and medicine imports causing panicked shoppers to flood the stores to beat overnight price increases. A devaluation of 40-50% seems to be the norm. States may fear social unrest if taking more than 50% of people’s money overnight.

During Collapse

  1. Trade gold, silver or other wealth storing assets for assets whose price has collapsed, but, still represent good underlying value.
  2. Stay out of the way of those competing for food, water and essentials.
  3. Help whatever family and friends you can.
  4. Pay off your mortgage and all fixed debts denominated in the collapsing currency.
  5. Buy houses, land or whatever real estate you can use and manage.
  6. Buy equities of companies unlikely to be nationalized (If there are any) and who produce things needed to rebuild.
  7. Go bargain hunting with whatever you have left.

Shopping List

  • Real Estate
  • Farm equipment
  • Fertilizers
  • Agricultural commodities
  • Energy producers
  • Mining companies
  • Oil producers
  • Energy
  • Forestry
  • Manufacturing
  • Mining
  • Transportation
  • Utilities
  • Water

Real estate now shifts to a good buy as people dump it for essentials or to escape. You may have sold luxury condos and vacant rental houses prior to the collapse. Now is your chance to get them back … if you want ’em.

Gold Cost Average the Purchase of Real Estate

You can do it with stocks so why not with real estate?

It’s the same principle, just harder to imagine because real estate is rarely cheap enough to allow it. Instead of lamenting the nominal price drop of your house buy two or three more during the collapse. When things return to normal it will more than make up for what you overpaid in the housing bubble. By this time you may have already paid off your house with silver because the mortgage is denominated in fiat and you’ve got real money.

When sanity returns you will have saved yourself from being one of those guys you meet who got burned in Peru, Chile or Argentina and are still bitter over never having recovered from the collapse.

After the Collapse

Welcome to the latest third world country. Your neighborhood is starting to resemble the pictures from your last trip to Mexico. The middle class is gone or fled, labor is cheap, imported goods are expensive and the local goods get exported to countries that can afford them. Infrastructure disintegrates for lack of money and power outages are  a way of life.

Try to look on the bright side: Markets have been cleared of toxic debt, derivatives have disappeared, entitlement programs have been cut or renegotiated and policy makers have learned their lesson!? Or is that being too optimistic?

Well, at least labor is cheap and you can afford a nanny for each child if that’s your style. And massages, spa treatments, manicures and dinner out will be as affordable as they were on that last trip to the Belize!

Don’t Be a Vulture

The problem with eating raw flesh and blood is that it’s not good for you. Vulture economics requires stomach bacteria for digesting flesh without remorse. You’re not a genius to be in a temporary position of strength with your fellow man. But, you have a chance to act like one for recognizing him as such. This is your moment to shine by using strength in an exemplary manner. The golden rule remains golden. Will you?

If someone offers diamonds for water give them water and let them keep their “precious” diamonds. Use the chaos to invest in assets and people who are going to improve lives. If anyone’s going to be left with capital to rebuild why shouldn’t it be the good guys?

“For to everyone who has, more shall be given, and he will have an abundance; from the one who does not have, even what he does have shall be taken away.”

– Matthew 25:29

1Shadowstats, September 9th, 2014

2In Peter Schiff’s 2007 edition of Crashproof

3When Money Dies: The Nightmare of the Weimar Collapse

by ADAM FERGUSSON.

4Peter Schiff, “The Little Book Of Bull Moves in a Bear Market”

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Pawn Shop Sign
Business

So You Wanna be a Pawn Star?

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Pawn Shops were the largest source of consumer credit until 1964 before the flood of institutional credit.

Pawnbrokers have been around since ancient times and even kicked out of the Temple by Jesus for getting greedy on half-shekel premiums. Whether or not they’ve recovered from the incident is your call. But, one thing is for sure: Pawn brokers are filling the huge credit vacuum left by banks who have trillions in reserves but not a penny to lend. Unlike banks, the money a pawnbroker lends is based on real goods — first yours, then theirs.

After a Tivo marathon of Pawn Stars I’d seen Rick, Corey and the Old Man go through their process 50 times or so. Then, the was the last straw. Why does Rick let customers see his expert appraisals?!

A guy comes into the shop hoping his cuckoo clock may be worth something, but, has no idea. Rick thinks it’s original and calls an expert. By the time the expert is done blabbing in front of the customer a deal is struck for $4,200. Whuh? That guy would have been thrilled to get $500 bucks. Rick paid $3700 more than he had to! What’s going on here? This is terrible business . . . unless. . . you have a TV show. Then, it’s marketing genius!

Of course, cheating or abusing customers is not only wrong, but, the quickest way to lose a legitimate business. But, when it comes to the business of pawn shops . . .

Appraisals are the Heart

Modern pawn shops offer lots of services. None of them work without the shops ability to appraise the value of the goods their services revolve around. The History channel describes the Old Man as “The Appraiser” for good reason.

The ability to glean the value of a wide range of items makes or breaks a pawn shop. The quality of the appraisal, and negotiated price, determine the maximum profit potential for each item. Jabbering everything you know about an item puts the customer on an equal footing with the business. In fact, it provides a free service to the customer outside the scope of the pawn business. Pawn customers need money or a loan. If they need an expert appraisal then either . . .

Charge for Appraisals

Or don’t provide them. If you have to bring in an expert then charge a flat fee plus whatever the expert charges you (And have an agreement with the expert that you get first dibs). If the item is not worth an appraisal fee then the customer won’t purchase one.

So, why does Rick give away the heart of his business to folks who just need a few bucks to pay the rent? He doesn’t. The Pawn Stars are savvy businessmen using . . .

Appraisals as Marketing

You gotta love these guys. They take a $3700 loss on an item while demonstrating their expertise to TV viewers across the country. In other words, the ‘loss’ they take in front of the TV cameras is the cheapest marketing you could buy. What other pawn shops get 1000 customers a day and are doubling their store space?

Rick is talking to the TV cameras to demonstrate his shop’s expertise. He’s giving up some of the profit on each item pawned in exchange for marketing his business all over the country. And it’s working, fabulously! While I’m questioning their appraisal process these guys are marketing them all the way to the bank!

In one episode, Corey and Chum Lee are cleaning up the storage room and discover a statue that’s off pawn and should have been put up for sale. The item was a statue that Rick estimated could be sold for $2000. The Old Man comes in and recognizes the statue as one of his ‘buys’ for which he paid $200. I guess the TV cameras weren’t on for that one and the Old Man didn’t blab what he knew the statue to be worth. That’s the pawn business. The customer was happy enough with $200 to make the trade or he wouldn’t have sold it.

These guys are no dummies. Rick, The Old Man, Big Hoss, and even Chum Lee (For video games) are expert appraisers in their own areas.

Gold & Silver, The Blood

If Appraisals are the heart of the pawn business then gold and silver are the blood.

Watch the show closely and you’ll hear the Pawn Stars answer the phone with the greeting “Gold & Silver?”. That’s because the name of the shop is Gold & Silver Pawnshop. The “Old Man” is often seen counting money at his desk surrounded by silver bars. And notice the amount of silverware, superbowl rings and jewelry in the display cases in the background.

Antique guns, helicopters, cuckoo clocks and pinball machines are great fun! But, make no mistake: Their purpose is to draw attention to a business providing credit or reselling the equity in real things. More often than not those real things are gold & silver.

Few pawn items have the benefit of an international exchange to set price. That takes much of the risk out of appraising the real value of an item made with precious metals. Sure, the price changes every second, but, so does the price of everything if there was a ticker tape to broadcast it.

From a business vetting standpoint the gold & silver aspects of the pawn business are something that should interest you, or you’d be happy to learn more about. Pawnbrokers require a second hand dealers license (same as precious metals license) or a pawnbrokers license to buy and sell gold and silver. In Florida, the scales used to weigh gold are regulated by the department of agriculture, which is ridiculous.

Inside Scoop

When selling jewelry or odd lots of gold or silver to a pawn shop bring a nickel with you. It should weigh exactly 5 grams. If it weighs less, or, the pawnbroker doesn’t weigh your item, at all, then find another shop. So much for the department of agriculture.

Sell or Pawn?

Judging by Pawn Stars you’d think the business was 98% sales and 2% pawn. It’s actually 40% sales and 60% pawn (According to one of the fun facts between commercials). One episode showed they had almost 4000 items in the back of the shop!

Anyone contemplating the pawn business should be good with managing thousands of inventory items. And police require reporting, on a daily basis, of everything that’s purchased. Another tracking hassle is that no item may be sold until it sits in the ‘buy room‘ for 30 days and checked for theft. 30 days can make or break the sale of an ipod should a new generation come out making the old one obsolete.

From the customers point of view it’s either sell your item for a fraction of its value or take out a loan based on a fraction of its value. The customer will talk up the value of their item and convince the broker he wants the item back. That’s to persuade the broker that he’ll be paying the interest and will pay back the principal of the loan.

From the brokers point of view he has to accept the risk of not being able to sell the item or the risk of the customer not making loan payments. Either way, he’ll be left with the item. It’s his job to make sure he can resell the item for a profit if the customer doesn’t pay back the loan.

In Florida, the maximum interest allowed is 25% per month. If you come back in two weeks you may negotiate an extension on your 30-day loan. If you don’t pick it up after 30 days, or whenever you extended the loan to, you have a 30-day grace period (At the same interest rate). If you don’t pick it up it becomes property of the pawn shop on day 61.

Inside Scoop

The pawn broker doesn’t want your motorcycle helmet or guitar. He’s got lot’s of them in the back. What he wants is for you to make the interest payment, pay back the loan and pick up your item. Of course, he’s loaned you an amount that he can still profit on if he sells your item. But, unless it’s an exceptional item, the interest payment is what he wants. Even better, if you get the item back you’ll have it for another pawn and interest generating loan, later.

If you have a good track record of paying the interest and getting your item back there will be room to negotiate a higher price on the next item you pawn.

Competition

The competition for pawn shops are:

  • Garage sales
  • Word of mouth
  • Newspaper
  • Ebay
  • Craigslist
  • Flyers at the market
  • Bargain trader
  • Loan from Friends & Family using the item as collateral

If you’ve got time, and no money, then a little sales work puts the money into your pocket. If not, then the pawnbroker does the work and you get less money.

Most items have less value to others than to us as personal possessions. Whether you discover the objective value, yourself, or hear the adjusted value from the pawnbroker (After building in his profit) there’s no sense in blaming the messenger. It’s unlikely you’ll hear the pawnbrokers true appraisal for a valuable item, even if he knows it. Pawn shops are not the Antiques Road Show you’d expect by watching the Pawn Stars.

There’s nothing wrong with needing a bridge loan, now and then. But, pawning will cost you 25% of the loan amount on a monthly basis. The loan amount does not equal the full value of the item because that would leave no room for the pawn broker to profit from the items sale if you default. But, you’ll be chipping away at the value of the item at an alarming rate. That’s the nature of the pawn business.

Some customers interviewed after their Pawn Stars deal say they’ll just sell on ebay. That’s the right thing to do if you’ve got the time. But, there is something to be said for a trip to the pawn shop, talking with real people and quick money to pay the rent.

Restoring Disasters

One of the unique aspects of the Pawn Stars are their restorations. They buy disasters and restore them to original, sometimes better, condition. Rick has a rolodex of restorers that perform these miracles.

In one episode Rick buys a 1992 Schweizer helicopter for $10K. The thing was in pieces after a crashed landing. Although his expert quotes a price of $100k for the restoration he says it would then sell for $150k. Eventually, Rick gets the Old Man to agree to the restoration which turns out to be a stunning achievement. The episode ends with the Old Man taking off from North Vegas with a smile on his face and the aviation expert saying they could probably get $160k for it.

Great TV.

These restorations are wonderful and have the most profit potential of any part of Rick’s business. However, there’s one aspect to take into consideration that’s not mentioned on the show. If you were looking to buy the helicopter in question would you prefer one that had been restored from a crash or had never crashed?

If you’d prefer the one that had never crashed then:

  1. You’d want to pay less for the restored helicopter.
  2. The restored helicopter. would have to be in better shape than the non-crashed version.

The resale prices on the show are overstated. What the experts say its worth and what it actually sells for are two different things. But, hey, it’s great TV, either way.

Creating the Market

In many cases, this is irrelevant because there’s no market, whatsoever, for the non-restored version. In one episode Rick restores a 1930’s gas pump into a thing of glory. There was no market, at all, for the non restored version other than Rick, himself. The restoration created the market.

Now THAT’S good business!

Pawn for Hard Times?

Vetting a business you’ll be running yourself is more than learning the facts. It’s making decisions about the opportunity cost of not running any other business during this period of your life. To assist my wife in the vetting process I created a business vetting mindmap as a way of describing how to Vett Any Business Idea in 10 Minutes. It’s free and may it assist in discovering Your Optimal Buisiness.

Pawn Broker Characteristics

Pawn brokers seem to:

  • Have a talent for appraising value. Part of that is knowing when to call in an expert.
  • Have a collectors’ mentality and eclectic interests.
  • Be willing and competent to deal with items for which they have no interest.
  • Understand value and money and the difference between them.
  • Be willing to buy, fix up and sell.
  • Be comfortable negotiating price and loan terms.
  • Be tactful and firm with customers who disagree.
  • Be comfortable in a cluttered environment.
  • Be able to manage inventory.
  • Be organized enough to adhere to all the regulations and compliance that surround the business.

You’ll want to already have many of these characteristics, not just be willing to acquire them because ‘pawning is big, right now’.

Price of Admission

Pawning is highly regulated. Varying by state, you’ll need to obtain or have a:

  • Banking and lending license.
  • Second hand dealers license (Or Precious metals license)
  • Pawnbrokers license
  • FFL if you’re buying/selling guns.
  • Large positive net worth.

You’ll be subject to extensive criminal background checks to obtain the licenses, above. And a large positive net worth is required to fund the beginning inventory of gold and silver. Pawn brokers give loans, they don’t get them.

Security

For this pure cash business security is a major concern complicated by customers needing close up access to gold and silver items. On one episode, Cory refers to the number of employees working at the shop and it was more than I expected. I’ll bet some of those folks are needed for extra security.

Related Possibilities

No need to be the owner. You could also be:

  • An employee.
  • A consultant appraiser in the area of your expertise.
  • A restorer.

Pawn Shop +

If pawn shops become the new hub for consumer credit then why not make it a fun gathering place? Rent Movies, Instruments, serve coffee, provide web access, whatever.

I hesitate to recommend Check Cashing, Payroll Loans and Car Title Loans because they have a reputation for taking advantage of people when they’re down. If you can provide these services, fairly, then they wouldn’t require any more infrastructure or regulatory hoops than you’ve already taken on for your pawn business.

Also, a pawn shop could have a coin shop, and vice versa. Pawn & Coin or Coins & Pawn is a natural combination.

Beauty’s in the Eye of the Gold

Beauty may be in the eye of the beholder, but, all you have time for is the gold. If you add coin shop services then deal in bullion only. If people bring in collectible coins give them a fair offer on the bullion content only. They’ll get the picture and you’ll bypass the hassles and risks of collectible coins.

Parting Facts & Words

  • Pawning is a multi billion dollar business with some 125,000 shops in US and several traded public companies.
  • The National Pawnbrokers Association says the average loan is $80 and that most customers are employed.
  • Customers tend to be primarily men, homeowners around 35 years of age that need quick money because they have no line of credit.
  • Not all pawn shops sell guns due to the additional burdens of the FFL license and paperwork required.

Pawn shops are getting busy partly due to the TV show and mostly because people need them to supply credit. Banks aren’t lending, credit cards are maxed out and millions are out of work for the foreseeable future.

If you’ve exhausted your options (See competition section above) and can save bank fees, eviction, payroll or getting the heat shut off then, by all means, at least pawn shop loans are based on real goods.

For those vetting the pawn business, however, more customers don’t necessarily mean more profit. If new pawn customers default on their loans it leaves behind a pile of stuff. If nobody wants, or can afford, that stuff then the pawn shop just becomes a huge repository of unsaleable junk.

That’s not the kind of bubble you’ll need to be a Pawn Star.

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Business

240 Jobs That Won’t Disappear in an Economic Crisis

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The real unemployment rate is 22%.1 John Williams predicted a climb to 35% in light of the many negative converging factors of this artificial economic crisis we’re in.

A job lost in this economy is hard to replace. We may attempt to do what we love and hope the money will follow. However, less division of labor means less job choice. With one out of three workers unemployed it may come down to to doing what we must so that groceries will follow.

If you have a job hold onto it by:

  1. Becoming an invaluable employee with a superior attitude.
  2. Volunteering for extra work and showing great interest in what’s profitable for the business.
  3. Helping your company cut costs and waste.
  4. Contributing to your companies goal of bringing in revenue or new customers.
  5. Being a source of income, not expense, to the company your work for.

If you lost a job, recently, can you work part-time for your previous employer or hire yourself out in the same field?

If not, it’s back to the drawing board of . . .

Matching Abilities to Market Opportunities

In good times we may have the luxury of matching our most fulfilling abilities with a market opportunity. With less opportunities we have to either create our own market in line with our purpose (Optimal, but not easy) or match one of our less fulfilling abilities to a remaining opportunity. Either way, it’s helpful to have a clear view of what opportunities still exist.

The purpose of this article is to keep a running list of jobs and opportunities that exist even when the economy goes south. Such a list is useful to both entrepreneurs and job seekers, alike. Obviously, the more self-knowledge you have about the complete range of your strengths, weaknesses, values, goals and purpose the better chance you have at optimizing the work you do in any environment. However, a comprehensive list of jobs, known to be available in hard times, makes it much easier to zero-in on a best fit. My hope for this list of Jobs is that it:

  • Puts a wide range of opportunities in front of you all at once.
  • Jars your mind into creating a clear picture of what always needs to get done
  • Points out an opportunity you might have missed or never thought of.
  • Causes you to think of something, not on the list, that you wouldn’t have thought of otherwise (Please e-mail me your suggestions).
  • Enables you to optimize a match between your abilities and market opportunities rather than taking the first thing that comes along.
  • Enables a jump to higher state, closer to your individual purpose, even during these hard times.

As a list maker I know the value of a complete list. Although overwhelming, at first, its true value is the specific insight they give. You’ll care about only two to five items on this list. But, you’ve got to sift through a mountain of dirt to get to a gem. And, your dirt is someone else’s gem. The goal is to do what needs to be done that nobody else can, or is willing, to do.

Range of Strengths

People have a range of strengths and talents and are very adaptable. Let’s say, for the sake of argument, that each person is capable of doing 100 different jobs for which they could get paid. Let’s also say that each of those 100 jobs were listed out and prioritized such that job 100 was least preferred and job one was most preferred. It would be a very fortunate person working only on jobs 1 through 5. In hard times, however, one may need to flexible and willing to do any of those 100 jobs depending on what opportunities exist.

Of all the things you can do, for which there are opportunities available, pick the ones you could do, with relative ease, better than 80% of the people. It may sound cold, but, if you can’t perform in the top 20% then you’re a general worker and more likely to be expendable as companies cut back.

Consider More Than One

The ideal work for you may be doing two or three of these jobs on a part-time basis and getting your own small business started as a long term project. There may not be full-time work for your top choice and businesses seek temporary help during hard times. Even if you can find steady work in your top choices it’s always wise to hedge risk through multiple sources if income.

The Ways of Hard Times

In hard times, people and businesses tend to:

  • Fix, not replace, existing equipment.
  • Expand sources of revenue for their business.
  • Cut the number of paid work hours in the week (Furlough days).
  • Ask employees to take pay cuts.
  • Focus on cutting costs to the bone.
  • Take better care of what they have.
  • Focus on essential needs rather than desires.
  • Seek entertainment or psychological relief from endless worries.
  • Seek temporary help rather than full-time employees.
  • Keep work in-house rather than outsource.

Dirty, Difficult, Dangerous (And in Demand)

There’s always work available for people willing to perform dirty, difficult or dangerous jobs. Since these terms are subjective only you can decide what they mean. Ideally, something others consider difficult is not difficult for you. Same goes for dirty or dangerous. To provide good samples I’ve included all the jobs from the Discovery Channel’s Dirty Jobs and denoted them with an asterisk.

Work is Everything You Must Do

Anything you must do to provide for the needs of your family is work. When performing this work you are employed whether you’re paid or not.

What we really need is to provide food, clothes, shelter and security for our families. We need the real things listed in Checklist for Hard Times. A job is an indirect means of providing these real things for our family. Anything you can do to provide them, directly, decreases your dependency on working for someone else.

  • Barter with your excess instead of spending new money you have to work for.
  • Cut overhead.
  • Swap services and expertise with trusted friends.
  • Store new money into real things instead of disintegrating fiat money.

All the simple things suggested in Your Optimal Bailout Plan and Depression Proof your money can be done whether you have a formal job or not. In fact, being formally unemployed may create a time and space to work on eliminating the need for a conventional job, altogether!

After all, who cares if your labeled ‘unemployed’ if you’re meeting all the needs of your family?!

Jobs For Hard Times

Anyone who has seen a balance sheet for a business knows there’s a small number of income sources and a large number of expenses. Each job, below, represents a possible source of income.

(Note: This is a running list. Please e-mail your ideas for additions and subtractions. I’ll post them here at YourOptimal so others may benefit.)

Accounting – Cut costs and avoid taxes
Accupuncturist
Agricultural Equip. Parts & Personnel
Airport Maintenance*
Alligator Farmer*
Alpaca Farmer*
Alternative Communications Systems
Animal Barber*
Appliance Repair
Auto Mechanic
Auto Parts & Personnel
Bakery
Bankruptcy Consultant
Bar – Tender, Keep, Supplier
Barge Demolition*
Barter Exchanges – Clearing Houses For Goods.
Bat Guano Collector*
Battery Recharging Services
Bee Exterminator*
Beekeeper
Bicycle Shop & Repair
Big Animal Vet*
Billboard Installer*
Bio-Diesel Recovery*
Blacksmith
Blogger or Freelance Writer in a Unique Niche
Bodywork – Car, Truck
Bologna Maker*
Bridge Painter*
Buoy Cleaner*
Bus Driver
Camel Rancher*
Candle Maker
Cardboard Packaging
Career Counselor
Carpenter – Temp shelters, House Repair, Security
Casino Food Recycler*
Catfish Noodler*
Cattle Rancher*
Cave Cleanup*
Cave Digger – Excavate Wine Caverns In Napa Valley*
Cell Tower Maintenance
Charcoal Maker*
Cheese Maker*
Chick Sexer*
Chicken Raising/Breeding
Child Daycare
Chimney Sweeper*
Chiropractor
City Hall Jobs
Coal Miner*
Coffee Shop – Barista, Proprietor
Communications Equipment Repair
Community Colleges – Career (Re)Training
Complementary alternative medicine
Computer Rental & Repair
Concrete Spreader*
Cook/Chef
Cooper – Barrel maker
Copywriters for Ad Copy
Cosmetologist – Basics That Boost Spirits
County Clerk Office
Crab Fisherman*
Crawfisher*
Custodian for Empty Buildings
Dairy Farmer*
Debt Advisor
Debt Collection
Demolition Worker*
Dentistry/Oral Surgery
Diaper Cleaner*
Direct Marketing
Disaster Cleanup*
Doctor
Doctor’s Offices
Drivers – Bus, Van, Truck, Dumptruck
Drugstores
Educational Services – Trade Schools, Retraining
Egg Farm*
Electrician (Power Generation & Distribution, Communication)
Electronic Waste Recycling*
Engine Repair / Mechanic / Machinist
Engineer (Mechanical, Electrical, Civil, Metallurgical/Materials)
Entertainment And Diversions – DVD Rental
Exterminator*
Farm Equipment Repairman
Fill-In Worker For No Shows
Firearms Instructor
Fish Gutter*
Fix Things
Food Recycler*
Foreclosure Services
Fruit
Fuel Tank Cleaner*
Garbage Collector*
Garbage Pit Technician  – Convert Trash Into Electricity*
Gardener
Gasoline Service Stations
General Stores – Mom And Pop
Generators Ac & Dc (Supply, Repair, Maint, Installer)
Glass Maker*
Goat Farmer*
Golf Ball Diver*
Goose Down Plucker*
Gourd Maker*
Green Algae Grower*
Grocery Store
Groundskeeper for Large Estates
Guns And Ammo Supply
Gunsmith
Handyman (Carpenter, Plumber, Roofer, Mr. Fix it)
Harvest Field Workers
Harvest Hops*
Harvest Walnuts*
Healthcare Services (Admin, Therapy)
Heating Oil Tank Removal*
Herb Grower/Supplier (Medicinal)
High-Rise Window Washer*
Home Retrofitting For Senior Access
Home Security And Locksmithing
Homeschooling Teachers
Honey Harvester*
Hoof Cleaner*
Horse Breeder*
Hot Tar Roofer*
Hunter/Trapper
Hydroelectric Dam Maintenance*
Import / Export – Anything & Everything
Infrastructure Repair – Communications, Utilities, Roads
Installing Insulation
Internet Café
Junkyard Dealers
Language Translator
Lawn & Garden Parts & Personnel
Leatherwork / Tanner
Leech Trapper*
Liquor Stores
Locksmith
Maggot Farmer*
Marketers – Drum Up Business
Massage Therapist
Mattress Recycler*
Mechanic –  Aircraft
Mechanic – Automobile
Mechanic – Keeping Stuff Running
Midwife
Mortician
Mosquito Control*
Mule Logger*
Museum Conservator
Mushroom Farmer*
Nurse
Nursery Worker
Off-grid Power Supply – Sell, Install, Repair, Consult
Oil Drilling*
Optometrists
Ostrich Farmer*
Oyster Harvester*
ParaLegal Services
Paramedics/EMT
Parent – Stay at Home, Homeschooling
Parts & Personnel for EVERYTHING
Pawn Shops
Pest Control*
Pet Groomer*
Pharmacist
Physical Therapy
Physician (General Practice, Surgeon, Ob-Gyn)
Physician Assistants
Pig Farmer*
Plumber
Plumbing Parts & Personnel
Potato Farmer*
Power Supplies – Fix, Repair, Maint
Precious Metal Dealer
Psychological Counseling
Recharge Batteries
Reindeer Farmer*
Reloading
Repair – Home, Car, Commercial, And Industrial Repair
Repair Shops
Repairs And Maintenance Of All Kinds
Repairing Utilities
Repossession Services
Roadkill Recovery*
Rock Quarry*
RV Maint & Repair
Salespeople
Salt Miner*
Salt Supplier
Schoolbus Driver
Scrap Metal Recycling*
Second Hand Stores
Security Consultant
Security Guard
Security Improvements – Building Barriers, Install Cameras
Seed Supplier
Senior Care Management
Septic Tank Technician*
Sewer Inspector*
Shark Catcher*
Sheep Castrator*
Shoe Repair
Shrimper*
Skull Cleaner*
Sludge Recycler*
Snow Plowing
Soldier – If you really must
Spray Insulation*
Steam Ship Cleaner*
Steel Mill Worker & Recovery*
Stonemason/Bricklayer
Storage Unit Cleanout
Storm Drain Metal Recovery*
Street Vendors – Meat, Corn, Fruit, Ice Cream, Tacos, Candy
Sunken Logs Recovery*
Survival Supplies Dealer
Swap Meets – Setup, Organizers
Tailoring/Alterations
Teacher/Tutor
Telephone Repair
Temporary Workers (Biggest Category And Opportunity Here)
Termite Controller*
Tire Recycler*
Tofu Maker*
Toilet Crusher And Recycler*
Towtruck Driver
Trade Schools
Truck Farming And Large Scale Vegetable Gardening
Turkey Farmer*
Unloading Railroad Cars
Utilities
Van Drivers
Vegetable Gardening
Vellum Maker – Turns Animal Hides In To Paper*
Veterinarian
Vice: Sex, Moonshine, Drugs, Gambling
Waste Water Sewage Plant*
Welder
Well Digger*
Wind Farm Technician*
Windshield Glass Repair
Wine Maker*
Wood Stoves
Worm Rancher*

*These were featured jobs on the the Discovery Channel show “Dirty Jobs“.

1It’s 9/2/2014

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Insurance is Not Health
Family

Insurance is Not Health

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Health insurance is to health what car insurance is to safety: Both pay for damage only after it’s occurred. Insurance doesn’t prevent anything and may even give a false sense of security leading to the very behavior that necessitates its use.

Health comes from food, nutrition, lifestyle, wise choices, habits and from God’s bountiful earth. Most of that is under your direct control and can’t be delegated.

Whether you pay for medical ‘care’ with insurance or out of your own pocket orthodox medicine deals with the effects of sickness rather than the causes of health. You’re neither safe nor healthy by having the means to pay for your sickness after it occurs. What are you doing to remain healthy and prevent sickness in the first place?

Reliance on orthodox medicine as the only means to provide for health is a poor strategy. In the video, below, meet a group of people who don’t rely on orthodox medicine (Or the insurance that pays for it) for anything. Instead, they invest into the direct causes of health and rely on the best person in the world to take their medicine: Themselves.

You may not agree with everything Mike and his fellow Health Rangers say and do in support of their own health. However, instead of pointing out differences what parts of their approach to health sound like common sense?

People without health insurance are not all homeless, destitute or in ill-health. They may be the most healthy among us. Certainly, the people in the video, above, spend more on their health than someone fully ‘covered’. Yet, we’re supposed to think of them as crazy because:

  1. They don’t want to pay for something they don’t need or use.
  2. They prefer to invest the $1000/month directly on their health and not insurance that only pays for care that doesn’t work, treatments they don’t need and medicine they wouldn’t take even if it was free.
  3. Their children rarely need a doctor, are not sick and will most likely remain so if they follow in their parents’ footsteps. The people in the video believe that part of the reason their children are not chronically sick is because they’ve never received the vaccines we’re made to believe are the only possible means to achieve immunization against disease. They don’t believe that vaccination is a synonym for immunization.
  4. They enjoy supporting companies that make products that keep them healthy. They even say they can afford the organic food and nutrients they need for their health because they don’t waste money on health insurance to pay for orthodox medicine that doesn’t work.
  5. They’re not concerned about getting cancer because the chemo and radiation treatments they would be offered would kill them faster than the cancer.
  6. They say that insurance doesn’t prevent anything because detection is not prevention.
  7. They believe the detection tests themselves are harmful or inaccurate leading to either harm or misdiagnosis. Even if they get sick they’re more likely to choose a treatment that actually works, most of which are outside of the system and wouldn’t be covered by their insurance, anyway!

While everyone is clamoring for something called “Health Care” these people say they don’t have it, don’t want it, don’t need it and wouldn’t take it even if it was free!

Is Zero Health Insurance Optimal?

Modern orthodox medicine handles one area, extremely well: Trauma and catastrophic damage to the body. My view on Optimal health care is combining Mike’s approach with an alternative medicine doctor and the ability to pay for the odd catastrophic event. Whether or not insurance is needed to cover all this is another question.

My father used to say that, “Any insurance offered can’t be a good deal“. His reasoning was that any insurance worth it to the customer would cause the insurance companies to lose money and that never happens.

While my fathers view was a bit extreme insurance companies do have the resources to study every angle and risk. On average, most of the events they would insure are more cost-effectively self-insured. One of the guys in the video alludes to this when he says that by investing in their own health they are really self-insuring their own health care. The big picture of whether health insurance is needed, at all, breaks down like this, in my view:

  1. Good food, nutrition, lifestyle, wise choices & habits – Requires some money, study and time but no insurance.
  2. Alternative medicine doctor – Very reasonable cost per visits which are usually preventative in nature. No insurance required. Ironically, since the visits and natural medicines recommended are preventative ‘health’ insurance is less inclined to reimburse for these visits, anyway.
  3. Catastrophic medical – If you get hit by a bus you’ve got to pay to get put back together. Orthodox medicine handles this well, but, the costs are high. My recommendation is to put aside 1/3 of what you would pay for health insurance, on a monthly basis, to pay directly for anything that may happen. Ironically, the fact that most pay for catastrophic medical with insurance greatly inflates the price. You need to negotiate the price back down to the non-insurance inflated cost. I have done this twice in my life: Once for dental work and once for surgery. My direct family members have done the same. It would take a separate article to cover this topic well. I only describe it here to present a complete picture of alternative ways to pay for every aspect of one’s own medical care.

A Service is Not a Right

If a service is a right then doctors and nurses are slaves. How long will doctors and nurses continue to sacrifice and pay for their extensive medical training to keep us well if their only reward is to be made slaves of the people they serve?

Indeed, socialized medicine is a prime cause for the ‘brain drains’ that follow in their wake. The best students stop going to medical school, interns and residents opt out, current doctors quit medicine and there are massive doctor and nurse shortages. These shortages would be difficult to handle even with current demand. As millions of magically ‘entitled’ people are added to ‘the system’ the quality of medical care declines fast for everyone. In Canada, such shortages have given rise to illegal clinics just to meet basic health care needs. Officials pretend not to notice hundreds of illegal clinics because they enable them to say that their socialized medical programs are working well.

I’m all for working towards a solution where all people can receive medical care. However, turning a service into a right has so many historical precedents of destroying the service in question that it’s hard to believe anyone who really wants to help people would try it (Again). More importantly, turning a service into a right is morally wrong and turns the service providers into slaves. Realizing this the service providers simply stop providing and less people are served than before the ‘fix’ was implemented.

There are 307 Million people in the US. If 40 Million don’t have health insurance then 87% of the population is insured. Destroying the entire health care system for 13% of the population would be bad enough if it weren’t for the point of this article that . . .

Insurance is Not Health

Insurance doesn’t prevent sickness or promote health. Detection is not prevention and treatments are rarely cures. The detection, treatment, drugs and procedures that are most likely to be reimbursable by your ‘health’ insurance deal only with the effects of sickness rather than the causes of health. Focusing on being reimbursed for treatments that don’t work perpetuates a flawed system.

Health comes from food, nutrition, lifestyle, wise choices, habits and from God’s bountiful earth. Most of that is under your direct control and can’t be delegated. Invest into the direct causes of health and rely on the best person in the world to take your medicine: You.

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Optimal Barter Equation
Banking

Optimal Barter Equation

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An item with money qualities might be a good barter item. To be an Optimal Barter Item it must also directly fulfill multiple human needs in the circumstances of the barter.

For each scenario under consideration ask yourself what items would directly fulfill multiple human needs and be widely accepted in trade in excess of the trader’s need. If the item is also transportable, divisible, storable, measurable and hard to counterfeit then it’s a winner: An alternative form of money in the circumstances of the barter.

Since anything can be used in barter it’s worth making an equation as a tool to separate the wheat from the chaff:

(M * N * LP)1-n = Optimal Barter

Where M are the money qualities, N is how directly the item fulfills a need and LP is the Life Priority of the need fulfilled. Note the 1-n subscript. That’s because an item can fulfill needs across multiple categories of life. In fact, the best barter items do.

Money & Substitutes – (M)

One way to compare barter items with each other is to compare each with money and rate them according to how they measure up. The top items on the resulting list are possible money substitutes. Their fulfillment of human needs, however, is another matter entirely. See ‘Ammo vs. Money’ where I compare ammunition with all the attributes of money.

When barter is king money is dethroned: It takes a backseat to the direct fulfillment of human needs. The concept of money and its substitutes is still useful, however, because many items that fulfill human needs are also decent money substitutes.

Water, food, syringes, antibiotics, IV Lines, portable water filters, firearms, ammunition, batteries and radios are worth more than the money used to buy them even in good times. In a crisis some of these are needed so badly they might overcome the biggest stumbling block of barter: The lack of a double coincidence of wants.

Direct Need Fulfillment – (N)

Water quenches thirst, Food satisfies hunger, Tarps block rain and wind.

The more direct the fulfillment the higher quality the item. I’m a big fan of substitutes but they’re not as easily recognized in the midst of a crisis as the real thing. Since barter items are best stocked after covering the essentials for your family it’s best to focus on items that fulfill needs, directly. There’s one exception to this line of thinking.

The best barter items span multiple categories of use: They directly fulfill some needs and indirectly fulfill others. Water is an easy example: It directly quenches thirst and cleans skin and has an almost infinite number of other uses. Water’s indirect uses multiply it’s desirability as is the case with other Optimal barter candidates.

Life Priorities – (LP)

It’s a constant burden to mankind that choices must be made with imperfect knowledge. With perfect knowledge ordering priorities is a cinch. However, wait too long for specifics to prepare and risk not being prepared, at all.

My Life Priorities are the same in good times and in bad. In a crisis I’ll rely on intuition to reorder priorities according to the scenario. For instance, although Water is #1 the urgency in finding a source is greater in a desert than in a rainforest. Medicine is #5 though in the absence of sickness or injury securing communications might pay bigger dividends. These are not compromises; just working flexibility and a trust of intuition after being prepared, in general.

For the purposes of preparing in advance for a non-specific crisis I’ve chosen to order life’s priorities in the following categories:

  1. Water
  2. Shelter & Clothing
  3. Food
  4. Security
  5. Health & Medicine
  6. Communications
  7. Power
  8. Hygiene & Sanitation
  9. General Tools
  10. Transportation

Going through your own reasoning process and placing these categories in order is surprisingly useful. Knowing your priorities is key in making disciplined and balanced choices when allocating limited resources.

Narrowing Down the Barter List

  1. Think through your Life Priorities and order them into categories (As many as you find useful).
  2. Consider the bolded items in the Comprehensive Barter Item List as barter items worthy of consideration (And please send me your suggestions).
  3. Group the resulting items from step 2 that strike you as filling the most pressing human Needs into your life priority categories.
  4. Sort items within each category by your sense of its importance.
  5. Use your Life Priority categories and assign a primary category and then the secondary categories that the item serves.
  6. Take each item compare it with the attributes of money and assign a value where 10 = Money and 0 = nothing in common with money.
  7. Keep sorting using the criteria in steps 4 thru 7 until you narrow the list down to 20 to 50 items or however many you’d like to use as input to the Barter Equation.

The resulting items are the best items to use as input to the equation.

Consider Three Scenarios

Consider narrowing down your preparation scenarios to three:

  1. The most likely threat to your physical location.
  2. The threat that comes to mind when consulting your informed intuition.
  3. The everyday potential threats and outages that normal life presents.

For example, my three are Fire, Dollar devaluation/Inflation and Electrical Power Outages.

Applying the Equation

Grabbing some promising barter items from the Comprehensive Barter Item List for my three scenarios here’s my impression of the values that should be assigned to them for each variable in the Barter Equation. The equation has not yet been applied. They have merely been sorted by their primary Life Priority category and then by their respective Money qualities. This is as far as people usually go when when considering barter items.

  • The higher the N the more direct its fulfillment of LP1 (As Ordered by my Life Priorities, above).
  • The higher the M the more qualities of Money the Item has.
  • LP1 is the items primary fulfillment category (In my opinion) and LP2 thru N are its secondary fulfillment categories.

Sorted by Primary Life Priority, then by Money Qualities

Barter Equation not Applied.

Item N M LP1 LP2 thru N
Water Packets 10 7 1 3,5,7,9
Portable Filters 5 5 1 3,5,7,9
Duct Tape 7 7 2 4,5,7,8,9
Tarps 8 6 2 4,7,8,9
Aluminum Foil 4 8 3 5,7,9
Coconut Oil 10 7 3 5,7,9
Eggs & Milk 10 6 3 5
Baking Soda 3 5 3 5,7,9
Ammunition 8 8 4 3,6,9
Syringes 5 6 5 7,9
Alcohol Wipes 6 6 5 7,9
Antibiotic Lotion 8 6 5 7
Fuel 8 6 7 4,5,6,9,10
Generator 8 2 7 4,5,6,9,10
Soap Bars 7 6 8 5

 

Applying the Optimal Barter Equation (First Dimension Only)

Here is where the items rank after using a spreadsheet to apply the equation to each items M, N and the LP of their primary category only. In other words, this is where the item would rank if its fulfillment of needs in other life priority categories was left out of consideration.

(M * N * LP) = Optimal Barter

Rank Item N M LP1 LP2 thru N
1 Water Packets 10 7 1 3,5,7,9
2 Coconut Oil 10 7 3 5,7,9
3 Eggs & Milk 10 6 3 5
4 Ammunition 8 8 4 3,6,9
5 Duct Tape 7 7 2 4,5,7,8,9
6 Tarps 8 6 2 4,7,8,9
7 Antibiotic Lotion 8 6 5 7
8 Aluminum Foil 4 8 3 5,7,9
9 Portable Filters 5 5 1 3,5,7,9
10 Alcohol Wipes 6 6 5 7,9
11 Fuel 8 6 7 4,5,6,9,10
12 Syringes 5 6 5 7,9
13 Soap Bars 7 6 8 5
14 Baking Soda 3 5 3 5,7,9
15 Generator 8 2 7 4,5,6,9,10

Applying the Optimal Barter Equation to All Dimensions of Each Barter Item

Applying the equation now to both the primary and secondary life priority categories the item serves. Notice the increased liquidity of items that serve a broad number of categories.

(M * N * LP)1-n = Optimal Barter

Rank Item N M LP1 LP2 thru N
1 Water Packets 10 7 1 3,5,7,9
2 Duct Tape 7 7 2 4,5,7,8,9
3 Ammunition 8 8 4 3,6,9
4 Coconut Oil 10 7 3 5,7,9
5 Tarps 8 6 2 4,7,8,9
6 Fuel 8 6 7 4,5,6,9,10
7 Eggs & Milk 10 6 3 5
8 Portable Filters 5 5 1 3,5,7,9
9 Aluminum Foil 4 8 3 5,7,9
10 Antibiotic Lotion 8 6 5 7
11 Alcohol Wipes 6 6 5 7,9
12 Generator 8 2 7 4,5,6,9,10
13 Soap Bars 7 6 8 5
14 Syringes 5 6 5 7,9
15 Baking Soda 3 5 3 5,7,9

The above fifteen choices were chosen only to show how to apply the equation. It would be interesting to apply the equation to all barter items and see the results. If there’s enough interest that would be a fun exercise for another article.

The resulting Top 10 items of your application of the equation are most worthy of your barter resources. They will directly fulfill the needs of your family while providing a backup form of money or trade liquidity during barter economies. Your proposed trades with these items are more likely to be accepted by fellow traders than those who haven’t gone through the exercise.

Whiskey, Cigarettes & Chocolate

These three items have proven themselves to be good barter items in real barter ‘economies’. The equation handles them well if you add them to your Life Priority list and give them a high “M”, which they deserve.

For instance, perhaps you would swap my priority of “Transportation” with “Vices” to account for Whiskey and Cigarettes. You would also rate these items high in “M” because they do fair well as money substitutes.

Chocolate fits naturally in the Food and Health categories and has a high “M” if the climate is not too warm.

The value of everything varies continuously in time. That doesn’t mean there’s no value in evaluating their relative standing in the only moment we have: Now.

Optimal Barter Items are like Superfoods

To be honest I had a different equation written when beginning this article. After going through the entire process it became obvious that some items are to barter what superfoods are to health: They provide a kind of comprehensive nourishment; they fulfill multiple high-priority needs!

I did not rig the equation to favor items that met multiple needs. I only discovered that no item that fulfilled only one need could compete with the liquidity or desirability of a barter item that fulfilled needs across the spectrum of life’s highest priorities.

The Trade Trumps the Traded

As with the use of money trade is more valuable than what’s traded. Who makes that judgment? You do by making the trade. After all, if you’d rather keep the items you’re exchanging then why don’t you? Even protesting ‘no choice’ admits you value what you get more than what you give. And, your fellow trader feels the same, no?

The Trade Trumps the Traded, every time, as evidenced by the fact that the Trade was made.

Human Needs Trump Liquidity

The purpose of your Optimal Barter Equation is to zero-in on the barter items most worthy of your limited resources. They’re the most liquid components of your preparedness plan. Since the top candidates are also essential it’s a judgment call to decide when you have enough. While your overall preparedness will be well served with these items be careful not to prioritize barter items over the broad range of essentials needed by every family.

Copyright © 2014 by Terence Gillespie. Permission to reprint in whole or in part is gladly granted, provided full credit and a live link are given to McGillespie.com

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Douglas Family Stockpile
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400 Items for Barter

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Anything can be used in barter. But, what good is a list of everything? Still, I found the attempt to be comprehensive revealing of how vast the possibilities of barter are.

I made this Barter List as a sub-task in writing an article comparing Ammunition with other barter items. While searching the web for ideas I was surprised to find that the largest list contained only 101 items. Nobody had taken barter to its logical extreme of anything being a potential barter item. The list, below, has 422 items and gets the ball rolling.

I don’t recommend going out and purchasing excess quantities of the items on this list; that’s not its purpose. Most people don’t have all the essentials needed for a disaster. Stockpiling excess for barter before having enough of the essentials could be a tragic mistake. However, knowing where enough ends and excess begins is not easy. After all, the best barter items are essentials that only become eligible for barter when possessed in excess.

This Barter Item List will be used as raw input to create more focused and actionable lists. See the Optimal Barter Equation for a method to rate these barter items with respect to money, essential needs and life priorities.

See Checklist For Hard Times for a list of tasks and essentials that every family should consider having on hand.

(Note: Items in Bold are potential money substitutes. The word Items is used as there are no skills or services listed. I may make a separate list of barterable skills and services in a subsequent article.)

Air Pumps
Alarm Systems
Alcohol For Sterilization
Allen Wrenches
Aloe
Aluminum Foil – Heavy
Ammunition
Ant Traps
Antibacterial Soap
Antibiotics – Augmentin & General
Anti-Fungal Spray
Anti-Histamines
Apple Cider Vinegar
Aspirin
Atmospheric Water Generator
Auto Mechanics Tools
Axes

 

Baby Food Jars
Baby Formula
Baby Oils
Baby Wipes
Backpacks
Bag Balm – Antiseptic Lotion
Baking Sheets
Baking Soda
Baking Supplies
Ballpoint Pens
Bandages
Bandana
Barley
Baseball Bats
Baseball Caps
Batons
Bats
Batteries
Beanies
Beans
Belts
Betadine
Bibles
Bicycle Chains
Bicycle Pumps
Bicycle Tires & Tubes
Bicycles
Binoculars
Blankets
Bleach – Sterilization
Blood-Pressure Cuffs
Board Games
Bolt Cutters
Bolts
Book – Carla Emery’s “Encyclopedia Of Country Living”.
Book – Favorite Novels
Book – Gray’s Anatomy
Book – How Things Work Type Books
Book – Hyperinflation Survival Guide
Book – Physician’s Desk Reference (PDR)
Book – Recipes
Book – SAS Survival Handbook
Boots
Bow Saws
Buckets, Pales & Lids
Bugout Kits
Bullet Proof Vests
Bullion Coins – Silver & Gold
Burn Treatment Supplies

 

Calculators – Solar
Can Openers
Candles
Canned  Beans
Canned  Chili
Canned  Fruit
Canned  Milk – Evaporated
Canned  Salmon
Canned  Tuna
Canned Fruits
Canned Meats
Canned Soups
Canned Stews
Canned Veggies
Cannabis
Canning Jars With Seals And Lids
Canning Supplies
Containers – Tools
Carabiners
Carbon Monoxide Alarm
Carrying Cases
Cash – Foreign Or Domestic
Cereal
Chain
Charcoal, Sand And Barrel For Filtration
Chewing Gum
Chickens
Chisels (Wood And Metal Working)
Chocolate
Cigarettes
Cigars
Clamps
Cleaning Brushes
Clothes Pins/Line/Hangers
Clubs
Cocoa
Coconuts
Coconut Oils
Coffee
Coleman Fuel
Coleman’s Pump Repair Kit
Condoms
Containers – Food Storage
Containers – Water
Cooking Spices
Cookstoves
Copper – (Wire, pots, etc.)
Cosmetics
Cots And Inflatable Mattresses
Cotton Hankerchiefs
Crackers
Cups
Cutters (Side-Cutters, End-Cutters, Snips)

 

Dental Floss
Dentistry Kits
Diaper Pins
Diapers
Diaries
Dice
Dishes
Drill Bits
Driver Bits (With Manual Drivers)
Duct Tape (Camo Or Olive Drab)
Duffel Bags
Duracoat
DVDs & Music CDs

 

Ear Protection
Egg Beaters
Eggs (Freeze Dried)
Electricity Generator
Epoxy
Eye Protection

 

Feminine Hygiene Products
Files – Iron
Fire Extinguishers
Fire Starters – Magnesium
Firearms
Firefighting
Firewood
First Aid Kits
Fish Hooks
Fishing Line
Fishing Rod & Reel
Fishing Tackle
Flashlights
Flour
Freeze DriedFood
Fuel – Diesel
Fuel – Gasoline
Fuel – Natural Gas/Propane
Fuel – Stove – Sterno, White Gas

 

Garbage Bags
Garbage Cans
Garden Seeds (Non-Hybrid)
Gardening Tools & Supplies
Garlic
Gas Stabilizer
Gasoline Containers
Generators
Glasses – Reading & Prescription
Gloves – Work
Glue
Goats
Gold
Graham Crackers
Grain Mill (Non-Electric)
Graphite Grease
Gravy
Grease
Gun Cleaners
Gun Cleaning Kit
Gun Holsters
Gun Magazines
Gun Parts
Gun Scopes
Gun Sights
Gun Slings
Gunsmithing Tools

 

Hairbrush
Haircare
Hammers (Of All Sizes)
Hand Pumps & Siphons
Handguns
Handsaws
Hard Candy
Hatchets
Hats – Sun Protection
Heater Head For Propane
Hemostats
Hemp
Herbs
Holsters – Gun
Honey & Honey Powders
Hot Water Bottles
Hydrogen Peroxide

 

Ice Chests
Ice Or The Ability To Make It
Ice Packs
Imodium
Iodine
IV Lines & Bags

 

Jackets
Jean Shirts
Jeans
Jerky
Jewelry
Journals

 

Kerosene
Kleenex
Knife – Folding
Knife – Hunting
Knife – Machete
Knife – Multi-Tool

 

Ladies’ Supplies
Lamp Oil
Lamps
Lanolin
Lantern Mantles: Aladdin, Coleman, Etc.
Laundry Detergent
LED Lights For All Rooms In The House
Light Bulbs
Lighter Fluid
Lighters – Disposable
Lightsticks
Lime – Outhouse
Liquor – Whiskey, Vodka
Lotions
Lumber

 

Magazines – Reading
Magazines & Speed Loaders – Gun
Mantles: Aladdin, Coleman
Maps – Topographic Of Your Area
Masterlocks
Matches
Mats
Mattress’s – Inflatable
Measuring Cups
Measuring Spoons
Medical & Gas Masks
Medications – OTC
Medications – Prescription
Metal Mixing Bowls
Milk – Powdered & Condensed
Milk (Freeze Dried)
Minerals
Mop Bucket W/Wringer
Mops
Mosquito Repellent
Mousetraps
Mouthwash/Floss,
Mylar Bags

 

Nail Clippers
Nails Nalgene Water Bottles
Needles – Medical
Needles – Sewing
Notebooks And Pads
Nuts
Nylon Cord

 

Oil – Canola
Oil – Motor
Oil – Olive
Oil – Tools
Oil – Vegetable
Oil- Coconut

 

Pacifiers For Babies
Pad-Locks
Painkillers, Aspirin
Paintball Gun
Pans
Paper
Paper Plates
Paper Towels Paracord
Paraffin Wax
Pasta
Peanut Butter
Pellets For Winter
Pencils, Paper, Note Pads
Penlights
Pepper
Pepper Spray
Peroxide
Pet Food
Pillows
Pins
Pipe Tobacco
Plastic Sheetin
Playing Cards
Plywood (3/4 inch)
Popcorn
Portable Toilets
Posts
Potato Peelers
Pots And Pans
Pretzels
Propane Cylinders
Protein Bars
Pry-Bars

Q-Tips

Radio – AM/FM (Crank Power)
Radio – Long Wave For Backup Communications
Radio – Police Band Monitoring
Radio – Short Wave For Local Communication And Monitoring
Rain Gear
Rakes
Rat Poison
Razors
Reading Glasses
Rice
Rifles
Roach Killer
Roasting Pans – Aluminum
Rope
Rubberized Boots
Rubbing Alcohol

 

Safe – Fireproof
Saline Solution
Salt – Sea Salt And Some Iodized
Saltines
Sand Paper
Sandals
Scalpels And Blades
Scissors
Screen Patches
Screwdrivers
Screws (All kinds, 3-inch Deck Screws)
Seeds
Sewing Kits & Items
Shampoo
Sharpening Stones, Files
Shaving Razors & Cream
Shotguns
Shovels
Silver Bullion
Silver Coins– Pre-1965
Skin Products
Sleeping Bags
Slings/Splints
Slingshot
Smoke And CO Detectors
Snares
Sneakers
Soap (Hand, Dish, Laundry, Cleansers)
Socket Sets
Socks
Soda
Solar Calculators
Solar Panels
Soup Base
Soysauce
Spices
Spikes
Spotlights – Portable
Spray & Squirt Bottles
Stakes
Staples
Steel Wool
Sterile Pads
Stethoscopes
Stevia
Stove – BBQ Grill Or Portable Coleman
Sugar – Brown
Sunglasses
Sunscreen
Sutures
Syringes – Dental, Intravenous
Syringes – Wound Cleaning
Syrups
Surgery Kit

 

Tampons
Tang
Tarps
Tea
Thermal Underwear
Thermometers
Thermos Bottles
Tires – Spare
Tobacco
Toilet Paper
Tomato Paste
Tools – General
Tools For Gardening
Toothbrush/Paste
Towels
Trail Mix
T-Shirts
Tuna Fish (In Oil)
Tweezers
Twine

 

Underwear
Utensils
Vaseline
Vegetable Oil (For Cooking)
Vinegar
Visqueen
Vitamins

 

Wagons & Carts
Washboards
Watches
Water – Packets, Locally Purified
Water Containers
Water Containers For Car
Water Filter – 3-Stage Under Sink For Drinking Water
Water Filter – Whole House Chlorine
Water Filters/Purifiers – Portable
Wax Paper
WD-40
Weather Stripping
Web Gear
Wedges
Welding Tools
Wheat
Whiskey
Whisks
Wicks
Window Insulation Kits
Wine
Wire – Electrical
Wire – Fence
Wire – Household
Woodworking Tools
Wool  Scarves
Wool Blankets
Wool Mittens
Wool Socks
Wool Sweaters
Wool Work Clothes
Work Gloves
Work Shirts
Workboots
Wrench Sets
Writing Paper/Pads/Pencils
Yeast
Zip Ties

Copyright © 2010 by Terence Gillespie. Permission to reprint in whole or in part is gladly granted, provided full credit and a live link are given to McGillespie.com

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Ammo for Barter – Part 2: Ammo vs. Other Barter Items

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I put Ammunition after Water, Duct Tape and Coconut oil and before Fuel, Tarps, Paracord and Whiskey. But, that’s just me. On a recent trip to Peru I noticed a fresh role of toilet paper on the dash of every taxi.

A man’s got to have his priorities!

Life Priorities – (LP)

For the purposes of preparing for a non-specific crisis I’ve chosen to order life’s priorities in the following categories:

  1. Water
  2. Shelter
  3. Food
  4. Security
  5. Health & Medicine
  6. Communications
  7. Power
  8. Hygiene & Sanitation
  9. General Tools
  10. Transportation
  11. Spices & Vices

Going through your own reasoning process and placing these categories in order is surprisingly useful. Knowing your priorities is key in making disciplined and balanced choices when allocating limited resources.

Any situation requiring something akin to a remote control drill is eligible for the deployment of firearms and ammunition. Contrary to mainstream media brainwashing firearms have a broad range of application: They serve needs in three out of ten of my top 10 Life Priority categories: Security, Food and General Tools.

Differences of opinion on the value of barter items will be rooted in Life Priorities. Your vision of where Food, Security and General Tools fit into the big picture –And your strategy in providing them– will change the ‘price’ and liquidity you assign to firearms and ammunition.

Informed Subjectivity

In a barter economy you are one half of the pricing system and your fellow trader is the other half. Making subjective judgments about the value of a barter item is not a weak method; It’s the only method. Barter economies have no broad pricing system other than the subjective judgments of the traders. Instead of complaining about subjectivity develop an informed subjectivity to become a better trader.

In barter price is expressed in terms of the desired item. To save myself from drowning in a sea of subjectivity I came up with Your Optimal Barter Equation. Please see that article for a description of the equation. Simply stated:

(M * N * LP)1-n = YO Barter

Where M are the money qualities, N is how directly the item fulfills a need and LP is the Life Priority of the need fulfilled. Note the 1-n subscript. That’s because an item can fulfill needs across multiple categories of life. In fact, the best barter items do.

Money – (M)

Ammunition is compared with the attributes of Money in the first part of this series. Ammo fairs well in the comparison. On a scale of 1-to-10 where 10 is money I give Ammunition a rating of eight. It is viable, if not strong, in seven out of the 10 attributes of money; it is not fungible, is divisible only within the same cartridge and is best traded in manufactured lots. It is also destroyed or unpredictable if wet.

Direct Need Fulfillment – (N)

Bartering ammo instead of a gun is like bartering fuel instead of a car. The ‘fuel’ for these machines have more of the attributes of money yet directly fill needs for the same Life Priorities.

Because ammunition requires a gun I’ve given ammo an eight instead of a 10 when scoring its direct fulfillment (N). Before settling on eight, however, substitutes should be considered.

Ammunition Substitutes?

  1. Security. Walking through the aftermath of Haiti or Katrina with pepper spray or rubber bullets is a weak security play. Even if you emerge unscathed what’s your strategy to provide security for your family? The stabilizing peace that follows in the wake of responsible gun ownership is dramatic, even in good times. How much more so in a crisis? Avoidance, lights, fair trade, keeping your word are minimum behaviors of rational people. However, security is not holistic until violence that may be thrust against you by less spiritual or less rational creatures can be stopped.
  2. Food. Yes, if complete proteins are stocked in advance. Have plenty of beans & rice, whey, TVP, Hempseed, milk, eggs, soybeans, etc. You can leave hunting to hunters only with advance preparation (And hunters would be grateful if you would be so prepared).
  3. General Tools. Need a remote control drill? Then you need firearms and ammunition. No substitutes as of 2010.

Substituting peace for violence is a noble quest undertaken within one’s own heart. Would you stake your life on all those around you achieving this state of Grace? Stockpiling a nutritious variety of complete proteins will quell your families need to hunt. Do you have this food set aside and ready to go?

At best, substitutes for firearms and ammunition are indirect and require advanced preparation. While encouraging all reasonable avoidance of violence and advanced preparation my direct fulfillment (N) score of ammunition remains an eight.

How Does Ammo Stack Up?

I took the best money substitute candidates from the  400 Item Barter List and narrowed it down to 44 Items. After assigning M, N and LP values to each item a spreadsheet was used to calculate scores using Your Optimal Barter Equation:

(M * N * LP)1-n = YO Barter

The equation was applied to the items primary (LP1) and secondary (LP2 thru N) Life Priority categories. The top 21 items ranked as follows:

Rank Item N M LP1 LP2 thru N
1 Water Packets 10 7 1 3,5,7,9
2 Lighters 9 6 2 3,4,5,8,9
3 Duct Tape 7 7 2 4,5,7,8,9
4 Batteries 10 5 7 4,5,6,7,9
5 Coconut Oil 10 7 3 5,7,9
6 Ammunition 8 8 4 3,6,9
7 Fuel 8 6 7 4,5,6,9,10
8 Tarps 8 6 2 4,7,8,9
9 Paracord 10 6 9 2,4
10 Salt 10 7 3 5,11
11 Hemp 9 7 3 5,11
12 Silver (1 oz) 10 10 9 5
13 Eggs & Milk 10 6 3 5
14 Portable Filters 5 5 1 3,5,7,9
15 Wine 10 5 11 3,5
16 Whiskey 10 7 11 5,8
17 Handgun 8 5 4 9,3
18 Razors 8 7 8 5,9
19 Aluminum Foil 4 8 3 5,7,9
20 Aloe 10 6 5 8
21 Rifle 8 4 4 3,9

As you can see, accounting for a barter items use across multiple categories yields surprising results. I didn’t expect Lighters, for example, to rate so high. However, it’s difficult to protest a Lighter’s compactness, money-like qualities and it’s direct fulfillment of needs across six of my highest Life Priority categories. Water, Lighters and Duct Tape are clear winners (Using my values).

The next three items grouped closely; there was no clear winner among Batteries, Coconut Oil and Ammunition.

I expected Eggs & Milk to rate higher but the equation is a measure of a barter items liquidity in a barter economy. The ranked items are not a preparedness list, per se. It would be a tragic mistake to stockpile excess of the above items instead of focusing on your overall preparedness needs. However, having an excess of top scoring barter items would be among the easiest errors to correct in a crisis and might help fill in the gaps of your overall plan.

Point in Time Value

Change the scenario and change the price. A box of .357 costs less when golfing at Pebble Beach than in the aftermath of the LA Riots. The value of everything changes in time for too many reasons to list. That doesn’t mean there’s no use in taking a stab at relative value in the only moment we have: Now.

My ranking of these barter items was done in the same way as a trade: Subjectively. If I place a higher value on Coconut oil than Aloe does that make me an informed consumer of Coconut oil or an ignorant one of Aloe? You tell me, my fellow trader. The subjective evaluation of the price of a barter item is not a weakness of method: It IS the method.

Ammunition is a Barter Superfood

These top 21 barter items are the superfoods of a barter economy: They provide a kind of nourishment across Lifes’ Priorities. Even after a good meal a bag of Salt still appeals. Even with a full tank of gas a spare five gallons is not to be dismissed. And, you don’t have to be a shooter to know that a few boxes of .38 Special could be traded for just about anything.

While discussing the subject of this article with a friend he jokingly said, “Forget about other barter items. A gun is your ticket to get everything you need!”. When we were done laughing I realized he had perfectly captured the spirit of the unprepared, less rational or desperate. Unfortuneatly, even in good times there are at least 76 Reasons to Have a Gun and the ammunition they use.

Like water in the desert, food during famine or shelter in a storm, the value of a gun and the ammunition it uses is exactly equivalent to the value of the life it defends at the moment it defends it. Unlike water, food and shelter, however, the gun may not have to be fired to achieve its full value.

May only one half of that decision be left to someone else.

Ammo for Barter — Part 1: Ammo vs. Money

 

Copyright © 2009 by Terence Gillespie. Permission to reprint in whole or in part is gladly granted, provided full credit and a live link are given to McGillespie.com

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How To Pay Off Your House using Silver & Inflation – Part 2

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The Daily Grind

Working this plan to pay off your house doesn’t free you from the daily grind, in the short term. You’ll still need to:

  1. Keep making the payments on your mortgage.
  2. Keep making payments on other fixed debts and expenses.
  3. Scrape and save whatever you can.
  4. Store your savings into silver until you reach your target number of ounces.
  5. Keep your head above water during this disintegrating economy.
  6. Monitor the price of silver and be willing and able to cash in when the time is right.
  7. Cash in, pay the taxes, make large payments on your mortgage and lay low.

Doomed From the Start?

Are you paying on a mortgage from the overvalued bubble market?

The contrast between the difficulty of paying off a bubble mortgage and buying a new house in cash is going to get extreme. If it’s too much harder then consider a short sale, rent for a while and use your silver to purchase a new home when the time is right. You might as well benefit from lower housing prices.

As mentioned in Part 1 the money the bank ‘gave’ you was conjured out of thin air because of The Awful Truth of How US Dollars are Created. It’s morally wrong to break a legal contract and I’m not advising one to do that. However, many debtors are questioning whether a mortgage is a legally binding contract since the bank doesn’t provide equal consideration (The Bank brings no risk to the contract since the money is created out of thin air using your signature).

Tax on Standing Still

Standing still will cost more dollars in the future than it does now. If you manage to come up with more dollars to stand still you’ll be taxed as if you’ve gained something.

This double theft of inflation and more taxes is ridiculous, of course. But, you’ll have to put more silver aside to pay the taxes on your non-gain. Otherwise, you’ll fall short of you’re goal to pay off the house.

How much more silver you’ll need for taxes is a function of the size of your mortgage and your current and future tax rates. It’s a moving target, but, you’ll have to take a stab at quantifying it to achieve your goal.

Federal

Buying or selling back silver eagles require no 1099 broker reporting. $1000 face value of junk silver (752 oz silver) is the threshold of reportabability. Less than 1000 oz of other forms is not reportable. A tax advisor would probably tell you that its good to know the reporting rules, but, they don’t affect the definition of when you’ve realized a capitol gain. You may, however, want to sell in increments less than 1000 oz. to minimize paperwork.

Sales Tax

Purchase in increments greater than $1500 to avoid paying sales tax on the purchase. Check your state rules for the threshold.

How Much Silver Do You Need?

Enough to pay off your mortgage, pay taxes on the non-gain and cover the spread on the buy and sell of the silver. If you can swing it why not add all your fixed debts to the mortgage amount and buy your way out of all debts?

The 1980 price of silver was $50/oz. The inflation adjusted price of $50 in 1980 is $129 in 2008. And yet, the current October 2009 spot price of silver is $16.32/oz.

Based on your belief use a silver price of anything between $35 and $129 for your calculations of the number of ounces to purchase with today’s savings. Then pick the month and year you think it will be worth that price. My number is $75.

I believe the dollar will fall and silver will rise in dollar terms so that one ounce of silver will be denominated in at least 75 dollars within three years. Tell me that its November 2012 and silver is $75 an once and I wouldn’t think you were saying anything extraordinary.

Example

Principal owed = $100K
Silver Now = $16.32
Silver Then = $75
Cap gains tax = 15%
Spread on the buy = 6%
Spread on the Sell = 2%
Ounces needed = 1537 costing $26,589 in todays dollars with buy spread
Sale price of 1537 oz. after paying sell spread = $112,969
Cap gains paid = $12,957 (costing 173 ounces at $75/oz)
Net (After taxes and spreads) = $100,012

So, for every dollar you save in silver you’ll be able to payoff 3.8 dollars of mortgage after paying the taxes on the silver gain if silver goes to $75.

How does that compare to saving dollars in a bank at 0 interest? Let’s say every dollar you have now is worth 60 cents then. That means instead of having 3.8 dollars you’ll have 0.6 dollars. That means you’ll have 6.3 times more dollars in your hand if your savings is in silver rather than dollars (3.8 / 0.6 = 6.33).

Step-by-Step

  1. Decide what you think the price of silver will be in three years.
  2. Look up how much you’ll owe on your house in three years.
  3. Divide principal owed / silver spot in #1.
  4. Add in the buy spread on the purchase
  5. Add in the taxes on the gain.
  6. Add in the sell spread.
  7. Add 2, 4, 5 and 6 and recalculate #3 substituting the new number for the numerator (It’s recursive because of the taxes. I made a spreadsheet to calculate 1-7).
  8. Find a source to purchase the silver.
  9. Purchase the silver
  10. Purchase a gun safe, not necessarily shipped to your own property.
  11. Take physical delivery of your silver and store it somewhere safe — The gun safe being one of many options.
  12. Keep making your mortgage payments and other expenses
  13. Monitor the spot price of silver
  14. Get as familiar and comfortable with selling your silver as you did in buying it in step 9.
  15. Wait until the value of your silver hits your spot price.
  16. Sell the silver in increments that enable you to minimize taxes on the gain.
  17. As you sell the silver make huge payments on the principal of your mortgage.

Check the current spot price here and find a local coin shop.

That’s it! Don’t think about it too much or cash in the silver too early. Get back to your life.

If You Don’t Have the Money

The savings required to buy enough silver to pay off your mortgage is small in comparison to the size of a mortgage. However, it’s by no means a trivial amount of savings.

If you don’t have enough then either buy what you can or focus on other real assets. I keep a running list of my favorite real assets in Checklist for Hard Times. In that article I recommend not buying precious metals until you have the real things needed to fulfill the needs of your family. Providing shelter (Paying off the house) certainly qualifies as providing for the needs of your family, in my book.

With all this talk of money and sliver you might be surprised that my philosophy is that Everything is Worth More Than Money.

Belief is Good (And Downside Risk is Minimal)

The technique I’m proposing will work for balanced and financially conservative reasons. Yes, silver is undervalued, but, don’t bet the farm on it. Rather, payoff the farm with it. Use the rest of your savings to hedge risk and purchase tools and seeds for the harvest.

What I’m not saying:

  • Buy silver because you’ll make a lot of money.
  • Silver is your last chance at an investment of a lifetime.
  • Put every spare dime into more silver.
  • The silver market is manipulated and will spring back with a vengence.

I can’t make these statements because markets can be manipulated and investors can be wrong longer than you or I can remain solvent.

What I am saying:

  • The dollar will continue to fall and there is no government plan, action or will to save it.
  • The dollar will not be saved by deflation (Occuring simultaneously with overpowering inflation).
  • Silver is the most undervalued candidate among many other choices for hard assets in which to preserve savings.
  • Silver is not your only alternative for this plan. It’s just what I think is the best alternative.
  • Silver will preserve, though not necessarily increase your real purchasing power. It is the preservation, not the increase that this plan depends on.

Whether you execute the plan depends on your belief. Writers that specialize in precious metals are better sources to hone your beliefs than I can be in this article. I’ll list my favorites, below and suggest a reading sequence.

Belief is best when it comes from your own research. I recommend reading the following articles, in this order, to optimize your time.

  1. Refuting Myths about Gold
  2. “Why is Gold Money?”
  3. Then and Now
  4. The Great Silver Spike of 1980
  5. Find Your Local Coin Shop
  6. Future Gold & Silver Prices
  7. The Silver ETF: What’s the deal?
  8. The Money Chart
  9. How to Buy Silver, & Avoid Getting Scammed
  10. Silver: Questions and Answers
  11. Why Silver is better than Oil as an Investment
  12. Fekete Questions Me, & Why Banning Usury Won’t Work
  13. Fekete Answers Me & the Debate Continues
  14. Bar Graphs of Silver vs. Money
  15. FAQ
  16. The Money Charts – 2008
  17. What’s the Price of Silver? 
  18. Troubled Silver Dealers
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How To Pay Off Your House using Silver & Inflation – Part 1

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In 1980 it took 814 ounces of silver to purchase a median-price home in the US.1 In today’s dollar 814 ounces would cost you $13,154.2

If this happens again you’ll be able to purchase a home, free and clear, for $13,154 of today’s dollar if stored in silver instead of the bank.

This article is not about buying new houses. It’s about a technique to get out of debt and own the house you live in. The debt I’m referring to, here, is fixed: Your rate and monthly payments are the same for the life of the loan.

You need only track the remaining principal on your mortgage and the spot price of silver to come up with input numbers for my proposed technique. Whether or not you execute the plan will depend on your belief.

Belief is best when it comes from your own research. I’ll provide some points of departure for that research but want to focus on execution, here.

Perhaps your belief will come easier knowing that what I’m proposing is just a . . .

Faster Version of the ‘Same Old Thing’

As a debtor, inflation helps pay off your mortgage if your wages keep up.

Every monthly payment is worth less to the bank. The inflation (Theft) is slow enough that wages get a chance to catch up. They rarely do keep pace, but, the number of dollars you receive usually does increase over time.

Three things are happening here on a normal basis as you pay off your mortgage:

  1. Your getting paid more dollars from your employer or customers as you attempt to maintain purchasing power.
  2. Each of your fixed payments are worth less to the bank.
  3. The value of the balance due on the mortgage decreases by the principal portion of your payment and the inflation adjusted value of the remaining debt.

To speed up this existing process I propose that more of the the fruits of your labor be stored in silver to preserve (And possibly increase) its purchasing power. In effect, you’ll be speeding up step 1, above, by translating back your silver savings into dollars at some future date and paying down your mortgage. By that time, however, the dollar will have fallen and silver will have risen.

The silver you cash back into dollars will pay off a larger chunk of the currency your mortgage is denominated in: Dollars. Those increased number dollars may or may not have more purchasing power. But, you don’t need them to. All you need is for the silver to buy more fiat dollars to satisfy the mortgage. In other words, the mere act of preserving existing purchasing power will give the same effect as an increase in purchasing power when it comes to ‘purchasing’ debt.

In this one respect the falling dollar can be used as a One Trick Pony to help you escape from fixed debt.

Give to Caesar What is Caesar’s

As the dollar falls silver (And gold) rise in dollar terms to accurately reflect their unchanging value through the prism of a disintegrating metric (The dollar). Happily for you that disintegrating metric is what you owe the bank. Your mortgage says you owe dollars, not gold or silver. So store real value. When that real value is inevitably worth more tokens in the future turn them over to the bank to purchase your freedom.

Give to Caesar what is Caesar’s: The tokens he conjured out of thin air that now enslave you.

This Bubble’s For You

As people start to catch on and gravitate towards true value more will flee the dollar and buy up real assets. Silver is one of the prime candidates. The above ground silver available for purchase starts to disappear. This secondary event, in turn, causes more flight from the dollar which feeds an even more rapid rise in the price of silver. Then silver, itself, starts to rise even above its true value being one of the few worthy recipients of the flight from the dollar.

The amplification effect on price between silver scarcity and flight from the dollar continues until it takes the familiar shape of historical bubbles we’re now all familiar with. However, knowing this in advance and setting aside a modest amount of silver means that This Bubble’s For You.

I base this on . . .

A Radical Prediction that What’s Happening Will Continue

The Dollar Has Fallen 40% in the Last Eight Years. Contemplating another 40% decline in the dollar is no more outrageous than expecting things to continue as they have been.

If the dollar falls another 40% then a mortgage of $100K will be worth $60K in current value. Before shedding too many tears for the bank recall that the money they ‘gave’ you was conjured out of thin air because of The Awful Truth of How US Dollars are Created.

Apart from some temporary uptick the MSM will seize on as ‘proof of recovery’ do you know of anything being done that will save our fiat tokens?

Get On the Short List

You won’t fully benefit from the decreased value of the mortgage unless you can manage one of the following:

  1. Your wages keep up with Inflation. If you increased your wages by 40% from 2001 to 2009 it was due to your own efforts not the silly CPI adjustments referred to as your raise.
  2. You get paid the same wages in a currency that maintains its purchasing power. If you can manage this you either don’t live in the US or I’m reading your financial columns and watching your youtube videos. Thank you and enjoy the fresh air of the Swiss mountains or I hope your Mandarin lessons are going well, Mr. Rogers.
  3. You use today’s dollar to purchase an asset or commodity that maintains its purchasing power.
    Bingo! Now, that’s I’m talking about.
  4. You come up with a money making idea that brings in tons of dough. Creating value for our fellow human beings is what it’s all about. Please don’t get lazy and keep the fruits of your labor in tokens.

With sharp inflation it’s a challenge to keep wages up even if you own the company. Business owners walk their own tightrope raising prices. Will the inevitable price increases be passed onto employees, immediately? Actually, they can’t.

Conducting business with a volatile currency is an expertise more likely possessed in a Banana Republic. If you’re trying to acquire such expertise there’s a fabulous little book that has a place on your nightstand: The Hyperinflation Survival Guide: Strategies for American Businesses

Stay Tuned for Part 2 of 2

I’ll get very specific in Part 2 of 2 with:

  • The Daily Grind
  • Tax on Standing Still
  • How Much Silver Do you Need?
  • Step-by-Step Implementation
  • If You Don’t Have the Money
  • Belief is Good (And Downside Risk is Minimal)

1Guide to Investing in Gold and Silver, Michael Maloney, Page 152. Maloney uses the Case-Shiller Home Price Index January 1980 home price of $42,747 divided by the silver price of $52.50/oz.

2It’s 10/30/2009 and silver is $16.32/oz. The dollar index is 76.38.

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Living With My In-Laws (One Year Later)

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It’s been 13 months since we moved my mother in to live with us. She was in a nursing home and it was time to get her out of there. Just prior, my mother and father-in-law moved in to live with us, as well. Five months later Timothy, our first child, was born.

That’s five adults, one baby and two dogs spread accross 4 generations; all living under one roof.

Our house was large enough, we had a baby on the way, needed help taking care of my mother and my in-laws were looking for a way to decrease their expenses and take life a little easier. For more background on the decision and the story of moving in together see Why I Live With My In-Laws.

This is an update to that article.

How’s It Going? – Bottom Line

Extremely well, with unexpected benefits and problems and ways to handle each.

Unexpected Benefits

Part of the ‘unexpected’ benefits are how much I didn’t expect to appreciate the benefits listed in my previous article as much as I do. Division of labor, economies of scale, precious time with family, help with mom. It’s one thing to think about these things and its quite another to experience them in your everyday life.

Grandparents for Timothy

This was just an idea last year when everyone moved in. Now, its real. The reality of having Timothy, Martha, Fabio and my mom together in the same house is truly priceless. There’s only three people on the planet that love Timothy as much as Isabel and I do. Having them all under one roof is a daily unfolding wonder and blessing. Even now I may not fully appreciate all the aspects and advantages to Timothy, and all of us.

And the babysitting? Are you kidding me? Who ya gonna call? Isabel and I haven’t had to contemplate the tradeoffs, risks and worries of leaving Timothy with a stranger as we run errands or just want to spend some alone time, together.

This is way beyond money.

Productivity at Home

I work at home. With an 8 month old baby it’s a miracle I can be so productive out of a home office. Sure, we could drop Timothy off at day care. He spends all day with his grandparents and me in what has to be the ideal environment. Even if we incurred the cost, risk and effort to leave Timothy at day care it would be a downgrade in the quality of his life and ours.

Daughter and Father

Isabel and Fabio have a similar temperament: They’re both quick to react and quick to wind down. At first, we all thought they’d be arguing with each other since they’re so similar. Nope. Turns out they’re so in tune with each other that things get resolved almost before they happen.

Daughter and Mother

Isabel and Martha don’t have the same tempermant. But, they are both very feminine and give ideas to each other in a non-competitive way. They may not admit this but I think they motivate each other to do more.

In other words, they both do more than they would without each other.

Mother-in-Law and Son-in-Law (Me)

Martha and I both tend to “Work behind the scenes” to accomplish our goals. Now we conspire with each other for the same purpose.

Nerve Center for Family

With five (Instead of two) adults in the same house its easier to keep in touch with extended family members and friends. That’s more connection for less effort. Since these are people we love and care about that is a very good thing.

All of us enjoy having guests. We have more guests because there are more people to visit. And, we enjoy them more because we’re all pitching in to entertain.

As a single man until the age of 44 I traveled for Christmas 20 years in a row. Now, I’m thrilled to have most of the family here and pass the travel burden onto the remaining single members of the family or those looking to take a break in wine country.

Circular Benefits

Everything that benefits one of us loops back around to benefit all of us. Here are some examples of how this plays out:

  1. My productivity at home leads to peace of mind and more abundance brought into our house. That peace of mind is felt by Timothy and sets an example for him that its possible to live a great life and not be stressed out all the time. More abundance leads to the ability to sustain our lifestyle.
  2. Isabel is freed up from most of the conventional tasks on a new mother’s list. The way I put it is, by the time her alarm clock rings in the morning, she has accomplished more than most new mothers can in two days.
  3. We purchased reclining couches for the living room to make it more comfortable to watch TV. That lead to ‘movie night’ Fridays. Movie night is a great excuse for everyone to spend time together. It also saves on the $150 it would cost for all four of us to go to the movie theatre after coke, popcorn, babysitting and who knows what else.

Unexpected Problems

And what about me and my new in-laws? Most people have trouble even with roomates. How about living with two new roomates you’re just getting to know? There had to be problems and arguments and blow-ups, don’t you think?

Not really. Sure, we’ve had our misunderstandings while getting to know each other, but, nothing more. Once you translate the culture and language our underlying goals are so united there’s nothing to argue about.

The real surprise was watching Fabio and Martha go through the adjustment of living with each other while spending the whole day together. They’d raised two kids and been married for 30 years, but, had never spent as much daily time together as when they moved in with us.

Trash

We do more shopping online, nowadays. Things that would normally come together in a bag get delivered separately in a box. That brings more boxes into the house. With baby showers, birthdays, more guests, medical supplies and holidays we have a lot of trash!

I’m bad about remembering trash day. That’s a disaster with six people in the house. One false move and we’ll never catch up without a trip to the dump.

Fabio has taken to overseeing our trash situation. Believe me, when I wake up on Friday morning and don’t have to panic at the sound of the garbage trucks I’m very grateful.

Space & House Layout

More people means more guests. Guests need a place to stay. Our only ‘spare’ room was my office. So, whenever we had guests I had to give up my office. Sure, I could use the computer during the day, but, at least half of my productivity happens at night after everyone is asleep.

Guests were’nt the only reason for a new home office. The only room that could hold my filing cabinets, computer, books, reference materials and have room for a meeting with another person was my first office. That was also the only downstairs room available for my mom. As it turned out, using the last remaining bedroom upstairs didn’t work for several reasons:

When guests came I lost night-time use of the office. For me that was about half of my productivity.

The room was not really all mine. Isabel kept her office books, cabinets, lights and reference materials in the room. The closet was half full of her stuff and the other half was an overflow closet used by Martha.

My office was half upstairs and half downstairs. I had to go up and down the stairs three times just to stage the items needed to work on a project. Any doorbell ring or need for additional materials would send me upstairs and downstairs, yet again.

And so . . .

The Man Cave is Born

What this all lead to was the need to create another room in the house. The optimal room would be:

  • Downstairs.
  • Big enough for all the ‘tools’ for my work.
  • Not infringe on another mandatory use of space.
  • Accessible, but not too accessible to the daily activities of the house.

And so, my friend David and carved out 1/3 of our 3-car garage and made it into an office. It took 2.5 months of back-breaking work. Frankly, it was a study in the drawbacks and benefits of working on only one goal and ignoring all others. One day I’ll write an article on whether or not that’s the optimal approach.

Although I had designed an addition to the house that would have been perfect it was just too expensive to build considering all the other purchases I was making to make sure we’d make it through this terrible downturn in the economy.

Person by Person

In my first article I said there had to be something in it for everyone for the whole multi-generational living to work. Now that we’ve been together 13 months let’s go person by person and look at how its been for each one of us.

Mom

The joy on my mom’s face when she see’s Timothy (Every day) says it all.

On her second trip to the doctor, four months after moving in, he couldn’t believe how much she had improved. And that was before Timothy was born. We have lunch every day together and sometimes even a party on the patio. Timothy looks over and screams when mom waves at him and that’s a great ‘conversation’ to watch.

My mom’s health is not well and she doesn’t always cooperate with Martha when its time to do her exercises. However, I have my doubts that she’d be with us, at all, if it weren’t for the comfort and care she receieves by living with us.

Martha

Martha is obviously happy and also a bit restless. She’s taken on another child to take care of during the day for extra income and earns every penny of it.

Fabio

Fabio loves being at home. Later, he’ll probably need to get out more. But, for now there’s plenty going on in the house to entertain.

Timothy

Timothy gets parents who are smiling and not stressed out. He has the priceless attention and love of his grandparents. He feels the support of living in a home where everyone is looking out for each other and gets far more interaction than would be possible in daycare.

He’s learning Spanish as his first language and will pick up english like a sponge when it’s time. He might even be ready to learn a third by the time most students are deciding on a second.

Isabel

Before Isabel’s alarm clock goes off in the morning she’s gotten more ‘done’ than most mothers could in three days. That’s because most of what needs to be done around the house is split between myself, Fabio, Martha or other Martha (Who comes to clean house three times a month).

“People like doing things for me.”, she says. As a smart husband I won’t touch that statement.

Me

When I was single just thinking about living like this would have been like thinking about walking on the moon. Even now its an unfolding mystery. I’m suprised to find very little on the internet written about the subject coming from Americans. For economic reasons I predict that’s going to change.

Ironically, being willing to give up the freedom I had when I was single has been the very means of becoming more free than I’ve ever felt in my life.

I’m surprised the whole arrangement goes as well as it does.

What Happens Around Here

Here’s some things that happen around here:

  • Almuerzo – Spanish for “Lunch”. Everyday at 12pm prepared by Fabio. You know its happening when the intercom rings.
  • Movie Night – We bought special couches that recline so up to 6 people can recline in comfort. I figure every movie saves us $150 though saving money wasn’t the motivation.
  • Boys Day / Girls Day – With lots of people around this need becomes obvious. The girls want to do their thing without prying eyes. The boys want to do their thing without hearing comments.

Everybody’s Got Their Secret Stash

Martha has her sweets, mom’s got her cookies, Fabio has his whisky and I have my figs and wine. Isabel doesn’t have to keep a stash because Fabio keeps it for her for. Or maybe she’s just better at keeping secrets than we are.

What Our Friends Said?

Last month our friends and family told us they gave us two months, tops.

Can you blame them? What odds do you give someone bungy jumping from a helicopter?

And this article is not a, “See?, We TOLD you it would work!” I can’t do that because the lifestyle is an unfolding mystery. I can tell you the benefits and drawbacks in retrospect, but, the future is not predictable.

One of my favorite comments was, “If we predict failure we only have to be right once. For you to pronounce success you have to be right 24 hours a day, forever”. That’s only true if we took some kind of club oath. I’d say being happy for a solid year counts for a good measure of success.

Hernan (Fabio’s brother) thanked Fabio, not me, for his hospitality for a 2 week stay at the house. It occured to me, that night, that it was a sign of the success of living together. It’s not really my house, anymore. Its “our” house.

The things I have are just things I’m using while I’m alive. They don’t seem like mine, really. They’re just things and tools and materials. Now the house has become just another tool to get a job done.

Coverage

One of my favorite benefits is coverage. Here’s some examples:

  • If I need to run an errand I have coverage for Timothy and mom’s care.
  • If Isabel needs to work late she has coverage for Timothy. Tasks she ‘meant’ to get done that night can be delegated to us and she’ll probably have dinner waiting for her when she gets home.
  • If Fabio wants to go to Colombia for a few weeks he can pack a few things and go. He can easily plug back into his routine upon return.
  • If Martha needs the afternoon to go the doctor there’s not much planning needed for Fabio and I to cover for her.

The real value of coverage is that it is general and flexible. As things come up for each of us we know others are there to cover for us. Its a general comfort that becomes specific as life events unfold.

BBQs

I love BBQ’s. With more people and guests there are more excuses to have one. There’s also more oppurtunity to combine events like birthdays and anniversaries.

Cadence of the Day

Our days unfold with a cadence that marks time and gives things to look forward to. I know for sure this doesn’t happen when you’re single.

The Future

Fabio and Martha have considered selling their home in Orlando and probably would if the market allows.

If we have a second child the guest room goes to the baby. Even with the garage office I built to free up an official guest room we’ll be left with no spare rooms.

A prolonged recession in the US is now guaranteed. That makes our living situation even more beneficial. Perhaps these articles will be helpful to more Americans as they contemplate throwing in, together.

Copyright © 2009 by Terence Gillespie. Permission to reprint in whole or in part is gladly granted, provided full credit and a live link are given to McGillespie.com

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Depression Proof Your Money

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The money printing bailouts have only just begun.

Yes, we’ve had some deflationary bankruptcies to help decrease the money supply, thank God. But, as you can see, even the most staunch conservatives are now begging the government to crank up the printing presses. As history predicts, they just can’t help themselves.

Most of the strongest advocates for the bailouts know what they’re doing. They know that pumping this much fiat money into the economy will lead to hyperinflation. But, whoever gets the money first can use it to purchase valuable assets while it still has some purchasing power left. By the time the money makes its way to you and me its purchasing power will be mostly gone.

But, there’s still time. . . (As of 9/25/2008) . . .

. . .To Depression-proof your hard earned money, savings and retirement plans from the upcoming hyperinflationary depression.

If you know what to do it doesn’t take long to:

Move Your Money From Here . . .

  • Bank Accounts
  • Savings Accounts
  • CD’s
  • Government Sponsored Bonds
  • Money Market Accounts
  • US Domestic Stocks
  • Financial Stocks of Any Kind, in Any Country
  • Treasury Bills
  • Municipal Bonds
  • Mutual Funds Made Up of Primarily US Domestic Equities
  • Bonds and/or Bond Funds of Any Kind
  • Under Your Bed
  • In Your Backyard

. . .To Here

  • Swiss Franc Bonds
  • Foreign Stocks that pay dividends
  • Agricultural Indexes
  • Gold
  • Silver
  • Real Estate (Low Prices and Hyperinflation can payoff your house!)

It might only take one hour to preserve a lifetime of savings!

Talking Heads

Judging from the reactions and interviews on TV many wealthy people were blind-sided by the financial crisis’ of the past week. After those talking heads get off the air you can bet they’re moving their money and assets around to protect themselves.

I like Ben Stein. He’s a smart, likeable and decent human being. He’s also more wealthy than the average Joe and is frequently seen on TV commenting on economic and investment issues. Unfortunately, Ben didn’t see this financial crisis coming.

When history is used to predict or avoid an outcome the correct past event has to be chosen as the model. The dollar is losing its status as the world’s reserve currency. Central banks around the world are covertly dumping dollars and purchasing gold and other real assets. And the US government is largely powerless to do anything about it. In fact, the stewards of our currency are printing up their own personal bailout packages just prior to their exit from the world stage.

This is not a normal recessionary business cycle we’re witnessing. The talking heads on TV telling you to “Stay the course” are giving you the correct advice for the wrong time. If they didn’t warn you of a financial crisis of this magnitude then why would you trust their advice now?

Return OF (Not ON) Your Investment

In times like this the perfect is the enemy of the good. If you haven’t already reallocated your investments then you don’t have time to be a perfectionist. Think in terms of preserving the purchasing power of your money and consider any increase a bonus. Look at the list of destinations, recommended above, and choose one you’re comfortable with.

Brokerage Accounts

Correctly choosing the particular holdings in your brokerage account is much more important than choosing the brokerage firm, itself. People who were using Bear Sterns or Lehman Brothers to hold their investments did not lose the holdings in their accounts. It was the stock of the brokerage firms, themselves, that plummeted, not the investments they held for you as custodian. I don’t use this firm myself, but, one company that is getting it right is Peter Schiff’s Europac.net. Check them out if you’re looking to make a switch.

Banks

Even with a bank you’ll probably get money less than $100k back if you want it. You may have to stand in line, be limited to partial withdraws and be inconvenienced, but money you have in the bank will most likely still be returned to you. But, the dollars may not have much purchasing power when you get them back. The FDIC does not have enough to insure all the deposits in banks that are about to fail. But, the government will just create more money for the FDIC to keep functioning when they run out.

If you want to be spared any inconvenience for your short term banking then choose one with a high star rating at www.bankrate.com.

Silver May Not Be an Option

In the Bailout Plan sent out two months ago I recommended silver as my personal favorite way to store and preserve value. There is very little physical silver left for purchase. I still recommend calling your local coin shops to check. However, you may end up having to purchase gold instead of silver. If so I recommend gold eagles, austrian philharmonics and any denomination of bullion bars from a well-known mint.

You could purchase shares of the silver ETF SLV, but, this is a far less attractive alternative to keeping the physical metal in your possession. See my article SLV is Not Silver for more on the pitfalls of investing in SLV.

For a broader perspective on precious metals read my article Silver and Gold Do Nothing or Why is Gold Money?

How Much Inflation and When?

10% and now. One, three, six months from now? Increasingly more. But, isn’t 14% and climbing enough?

Start making decisions now while your dollar still has enough purchasing power to purchase things that have lasting value.

Checking Account Alternatives

If you’re losing 14% a year in your checking account due to inflation then even simple things around the house start to be a better “Investment”. You should probably have at least three months of expenses in your checking account. After that, if you’ve already paid off your credit cards and reallocated your Retirement account then here are some alternatives for the money left in your checking account:

  • Food That Stores for Long Periods like cereal, canned goods, rice
  • Water, Water Filters or Storage
  • Computer Upgrades
  • Software
  • Prepaid Utilities like gas, electric, cable, cell phone
  • Prepaid Property taxes

Or anything else you’re going to have to purchase in the next year or two. Why not purchase them now while the purchasing power of your money is stronger and you still have a job?

Web Resources

This article is an update on the Your Optimal Bailout Plan I sent out at the end of July. See that article for more background.

www.europac.net

www.shadowstats.com

www.lewrockwell.com

www.allamericangold.com

www.silverstockreport.com

Copyright © 2008 by Terence Gillespie. Permission to reprint in whole or in part is gladly granted, provided full credit and a live link are given to McGillespie.com

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