Storms have dumped buckets of snow across the Midwest this holiday season.
We have a tamped-down pathway to get to our wood boiler and the snow comes up
to our knees.
When you're sitting all cozy inside with a mug of coffee or hot chocolate
(or something stronger) it's gorgeous to look at: pristine white crisscrossed
by rabbit tracks and the occasional deer. Our pines are weighed down with
thick cloaks of snow.
But out in this winter wonderland, it takes a lot of effort to do
anything.
It took me an hour to shovel out one small car-sized portion of our
plowed-in driveway. I sometimes wear snowshoes to get our mail. And it took a
half-hour and a second heavy truck to pull our wood delivery pickup truck up
the slight hill from our wood boiler.
I can't just run to the barn to throw hay for our horses. It's a long
process to get there. I have to bundle up -- coat, hat, gloves, heavy boots
and sometimes snow pants -- and trek over half-frozen crusted snow banks
continuously replenished by the wind coming down our valley.
It's not easy, or fast, or gorgeous.
It's winter in Wisconsin, and I knew what I signed up for when I moved
here.
The same can't be said for the hundreds of millions of Americans snowed in
by our economic winter. We've seen massive job losses, trillions in wealth
evaporate, and a near collapse of our financial system.
Folks can't get loans, and we're all about to pay a lot more in taxes.
It takes a lot of effort to do anything in today's economy.
And the sad part is, things are only going to get worse. We are in an
economic winter. There's no way our snow banks of debt are
going to just melt away tomorrow, and it's going to take more than hours of
shoveling to get us out of this mess.
Our spring may come in just a few months, but our economic spring could be
years away.
Here's how things stand.
An economic winter consists of:
- Confidence: Concern - Fear - Panic - Despair
- Inflation: Fall of inflation quickens to outright
deflation
- Credit: Following credit crunch - virtually no credit
- Interest Rates: Rates fall, then rise in credit crunch,
then fall much lower
- Investment: Gold, and Cash, and Bonds (after credit
crunch)
- Economy: Decline into depression
These are all necessary aspects of an economic cycle. This is where we
deleverage our debt. Heck, it's why we deleverage our debt. But
that's not happening. The only thing we're really doing is cutting the value
of our dollar so that the value of our debt drops too.
That won't get us out of an economic winter.
Governments are delaying the inevitable. Economic cycles are too big to
change. Interventions are only pushing spring farther away... perhaps even
making our economic winter worse. So much so that we could see 10 more years
of winter before the green shoots of growth finally start poking their heads
through the snow.
In the meantime, pay close attention to that investment bullet point. In
economic winters, you should hold cash and gold.
Both of these assets are taking an unusual beating right now. Gold is down
below $1,700 an ounce -- even as the Federal Reserve has promised to keep the
dollar cheap for the next two years. And the dollar itself has been buying
fewer and fewer euros of all things!
View larger chart
This could be a good opportunity to get positioned in both gold and cash.
But don't think you have to just pick gold and the dollar.
Both platinum and silver have great supply and demand
fundamentals that are pointing to higher prices over the next year and more
-- and they can hold their value just like gold. Look at the last 25 years
for these three precious metals.
View larger chart
And there are so many strong currencies to choose from that it is easier
to customize your cash allocations than ever before.
The Australian and Canadian dollars and even the Japanese yen could have
given you decent returns over the last 25 years.
The point is, even though this economic winter points you to cash and
gold, you don't have to sit idly by and wait for spring. There are a number
of investment opportunities
that could grow your portfolio even in freezing temperatures.
If you do only one thing as we head into January, put these currencies and
precious metals on your watch list. See how they perform against the rest of
your portfolio.
Happy Investing,
Sara
Editor's Note: Since 2008, one little-known silver
investment opportunity has crushed the return of physical silver by more than
10-fold... And here the thing: It has NOTHING to do with owning risky mining
stocks, silver coins, ETFs or options.
It's no wonder some of the world's savviest billionaires are pouring what
could be millions into this incredible opportunity.
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