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Investors should be gravely concerned
about the future of their portfolios, according to a newly released report
from Bullion Management Group Inc (BMG). The reason? Because today’s
fiscal and monetary policies have set the stage for a wrenching period of currency
devaluation, portfolio destruction and potentially devastating
inflation.
"How to Protect Your Portfolio
from the Economic Insanity” notes that today’s financial
policymakers are displaying a dangerous absence of common sense. The report,
authored by noted bullion expert Nick Barisheff, seeks to educate mainstream
investors about the powerful but often unnoticed riptides affecting the
global economy and, by extension, the health of their portfolios.
Beginning with an explanation as to why
we are experiencing one financial crisis after another, this report offers
investors a carefully researched but easy to understand look at the inner
workings of our deeply flawed economy. In doing so, it manages to shed new
light on three of the most pressing issues affecting investors today.
Three pressing issues explained
- Why
the global debt crisis is far more dangerous than it appears;
- Why
monetary policies are driving the global economy to the brink;
- How
investors can protect their portfolios from the inflationary storm.
Government debt is already a global
problem, but government denial may be the bigger issue. Japan’s debt is
already twice its GDP, and will grow even larger in 2010. Britain’s net
debt will reach 56 percent of GDP in 2010, while Spain, Italy and Portugal
are facing massive fiscal deficits. “Official” US government debt
is already 90 percent of GDP, and that number will soar as trillion-dollar
budget deficits become the norm for the next several years. Yet little is
being done to solve the problem. If America’s fiscal policies aren't
changed, its debt-to-GDP ratio will soon rise to the same level as that of
Greece and Portugal. These are extraordinary times.
The protection of
wealth
Today, wealth protection is the primary
goal. According to the report, precious metals bullion is the one asset class
every astute investor must own today. Why? Because it maintains its value
under virtually all economic conditions. Most investors confuse money and
currency. Gold is money, currency is not. Gold is money because it is a
store of value. Currency, whether US or Canadian dollars or euros or rubles
or yuan or yen, is losing its value – fast. Currencies are being
depreciated at an unprecedented rate because they are being created out of
thin air by desperate, deeply indebted governments.
A shift in mindset?
The report emphasizes that in
today’s economic environment, it is crucial that investors take a new
approach. They need to make the shift away from a “currency mindset”
to a “gold mindset.” The switch to a gold mindset does not mean
investors need to become gold fanatics and convert all their possessions into
gold. It means allocating the proper percentage of one’s portfolio to
gold and precious metals. And that means understanding the importance of
intrinsic (monetary) value versus currency-based value.
Value: in the eye of
the beholder
The report demonstrates that with gold
at US$1,400 per ounce, the bullion market remains miniscule compared to the
financial assets markets. In fact, as the table below shows, privately held
gold bullion is valued at but a fraction of total global financial assets.
And the total amount of all the gold ever mined, including central bank
reserves, industrial applications and jewellery is less than 4 percent of the
total value of global stocks and bonds.
Nick Barisheff
Bullion Management Group
Nick Barisheff is
the co-founder and President of Bullion Marketing Services Inc., which was
established to create and manage The Millennium BullionFund. The fund is
Canada’s first and only RRSP eligible open-end Mutual Fund Trust that
holds physical Gold, Silver and Platinum bullion www.bmsinc.ca
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