Many of you know that I've got dogs. Most dogs aren't picky eaters, and
some will eat anything. But we've got two Chihuahuas that are quite the
opposite... for different reasons.
One has had some stomach issues, possibly related to a food allergy. We've
spent a lot of time trying to find a food that didn't make his stomach upset,
and that gave him all the nutrients he needs. The other Chihuahua likes to be
fed by hand.
(Don't blame me -- she was here before I was.)
Now, we can feed our other dogs, and our horses, and barn cats in well
under an hour if we're efficient.
Feeding these two Chihuahuas could take a half hour on their own, with
coaxing and bribing. And we couldn't wait them out for long... They are about
four pounds each, and don't have a lot of fat reserve to call on. If they
missed more than one meal, they would get sick.
I'm sure you can see the analogy I'm getting at.
These Chihuahuas are the Democrats and Republicans we've elected to run
our government.
Things need to be "just right" if we are going to get anything
done. And things are far from "just right." One difference between
my house and Congress? Our other dogs didn't have their kibble cut just
because these two Chihuahuas couldn't come to an understanding.
From CNBC:
Anxiety over the fiscal cliff
isn't just affecting Wall Street. Many entrepreneurs report slower activity
as uncertainty swirls about how tax hikes and government spending cuts will
affect them. Faced with unanswered questions, entrepreneurs are stuck
contemplating trimming costs and laying off workers-not creating Main Street
jobs, which has traditionally fueled economic recoveries.
[Charlie] Arnold [owner of Arnold Powerwash] said there's a "huge
gap" between entrepreneurs' economic reality and the stalemate between
Congress and President Barack Obama. "The longer they bicker, the worse
my business is," he said.
Of course, the economy doesn't work the same way as a bag of dog food. In
the real world, average folks making between $60,000 and $88,000 could get
hit with tax hikes between $2,700 and $3,700 a year!
That's not chump change to the tens of millions of people who fall into
this tax category.
That's more like a month's mortgage, or your teenager's first car.
(Mine was a Pontiac Sunbird I got for about $3,500... Turned out to be a
bad deal with a cracked head gasket and shoddy spark plugs, but it got me
around for a few months.)
But the fact is, though the fiscal cliff is going to be painful and scary,
so is the solution.
From the Maestro, Alan Greenspan:
The presumption that we're going to have a painless solution to this,
I think, is fantasy. There are a lot of risks out there but the one thing I
can be reasonably certain of is we won't get through this whole issue without
some pain.
Greenspan blames both the Democrats and Republicans for the huge spending
boom that has brought us to the cliff. We can also blame both sides for not
addressing these issues a decade ago... And perhaps we can include
Greenspan's "easy money" solutions back during the dot-com
bubble and the housing bubble that slashed interest rates and bumped up cheap
credit consumption.
But blaming sides is not as productive as blaming policies, and until
we get down to the honest nitty-gritty about how policies actually affect the
economy, we're just going to have obstinate Chihuahuas turning their noses up
at their food.
This could take a while...
In the meantime, our personal wealth is in jeopardy. And we've got
precious little time to protect it. The good thing is that the markets have
pushed gold and precious metals prices sideways instead of to the moon.
Why? There are several theories, but none of them matter at the moment.
Look at this chart, from the U.S. Mint:
I grabbed it from Peter Schiff's recent article, "Ditching before the
Fiscal Cliff."
He says that the most secure way to try to avoid the cliff is to get into
precious metals, and even though prices aren't moving much, physical bullion
sales are booming. He's calling this an under-the-radar rally.
"The figures are astounding," he writes. "For US Gold Eagle
coins, mint sales are up some 150% from the QE3 announcement on September
13th. Despite what the spot prices show, there has been a tremendous surge in
people buying physical gold."
But it's not just people. Governments are, too. Check out this chart from
the World Gold Council.
View larger chart
From July 2012 through October, countries have purchased 139.85 metric
tons of gold. That's on
top of the 168.3 metric tons purchased in the first half of the year, and
384.2 metric tons purchased in 2011.
Peter says, "Looking back to the debt ceiling debate of August 2011,
we saw big movements into physical gold there as well. What investors are
concluding as they hear these grand debates is that whatever the result, the
budget, the dollar, and the taxpayer will lose."
In his opinion, the only way to win is not to play. But if you can't ditch
your portfolio entirely, the next best thing is to move heavily into gold,
and hold on for dear life.
Happy Investing,
Sara
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