Gold News

A Quick Paper Fortune

Start with gold to protect your finances from this reckless government spending...

an investor should ask him or herself today, this is by far the biggest one, says Porter Stansberry, publisher of the Daily Wealth email:

"How can I protect myself and my family's finances from the surge in reckless government spending and debt?"

This has become such an important topic. Because the current administration's economic strategy could – I believe – create the greatest economic disaster in recorded history.

Not only is the administration planning on enormous deficit spending this year, but the current plan calls for increasing deficit spending for the next decade – spending that will more than double our entire national debt during Barack Obama's presidency.

At the same time, Obama plans to extend federal control over vast and critical sections of the US economy, promulgating new and extensive rules and taxes over both the power industry and the health care business – probably the two most important engines of our economic growth.

The upshot? Huge amounts of inflation but severe restrictions on the most productive sectors of our economy. It's a recipe for catastrophe.

I don't have room for the all of the details in this space – and you hear enough bad news in the newspaper. Just know that, by 2019, our government's financial profligacy will saddle every family in America with around $800,000 in debt and unfunded liabilities. That doesn't include state or local governments, and it doesn't include any personal or corporate debt.

The government will pay for this debt by increasing taxes and inflating away the value of our currency, the US Dollar. This will create a disaster in the coming years.

I can't tell you when it will happen...but I can feel certain in telling you that it will happen. That's why it's critical you take precautions right now. That's why we must answer the question I laid out above.

The first thing you should do, if you haven't yet, is Buy Gold. It's easy: You just call or visit a few dealers, and find out who's offering the lowest premium on Gold Bullion. Wire them the money, and get your gold. If you want to take possession at home, then Gold Coins are easy to hide, easy to store, and easy to transport – which is one way to hold wealth the US government cannot easily get its hands on.

The second thing for the average investor to do is make sure to own America's most important economic assets: energy, communication, and transportation. I realize it's paradoxical. But the coming crisis will make lots of people rich. It's not hard to generate a paper fortune in a huge inflation.

Yes, keeping the profits from these assets away from the government might be difficult, not least on domestic property and stocks. But in the early stages of this crisis, the value of these impossible-to-replace assets will soar. So the thing I think investors should do right now – besides Buying Gold – is buy the assets you know the government has to have for the economy to function. These assets will remain in private hands amid the inflation, and their values will increase the most.

For example, I've been telling people to own the best communications company in the world – Verizon – for more than three years. Because I believe Verizon has one of the most valuable assets in the United States, a $40 billion fiber network, right up to everyone's front-door, that will dominate the flow of data in this country for at least the next 50 years. The stock has held up well, despite huge losses in the stock market. And it has paid a very safe and steady dividend. It is now yielding 6%.

As for energy, you might recall during the big inflation of the 1970s that oil was the top-performing asset. It did better than gold (No. 2). Imagine how big the gains might be, in dollar terms, if the world's major oil-producing nations begin to price oil in something other than US Dollars? As our new stimulus spending kicks in and as many of the world's governments crank up the printing press, there's no doubt in my mind the price of oil, as measured in dollars, is going to soar. Own some oil is my advice.

As for transportation assets, I believe you want to own America's largest railroad concerns. I know they've been killed in the past year, but in real terms (measured in Gold Prices, for instance), the rails are very cheap.

Looking ahead, I think inflation and currency debasement are going to take hold by 2011. If I'm right, and you make sure to protect yourself with Gold Investment and the other assets I've just described, there's no reason you shouldn't prosper.

Contributing editor to Steve Sjuggerud's widely-read DailyWealth email, British-born Tom Dyson is a proven contrarian investor, qualified to the Chartered Institute of Management Accountants (the UK equivalent of CMA in the US). After working on the bond desk at Salomon brothers in London, and writing for The Daily Reckoning newsletter, Tom launched the 12% Letter for US retirement savers looking to extend and defend their income and wealth.

See the full archive of Tom Dyson articles.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

Follow Us

Facebook Youtube Twitter LinkedIn



Market Fundamentals