Hard Assets Alliance was created as a cooperative of investment professionals who believe there’s a better way to invest in precious metals. This is a guest perspective on the markets from one of these partners; we hope you enjoy it.
In overly simple terms, after 1971 and the death of the U.S. dollar, money became debt. For the economy to expand, you and I had to get into debt. That is why credit cards came in the mail and home equity loans were available to people who had less than stellar credit.
That same year, while I was fighting in the Vietnam War, my rich dad warned me that the rules of money have changed. He said, “The dollar is now officially Monopoly money, and the rules of Monopoly are now the world’s new rules of money.” At the time, I had no idea what he meant.
A few days after I received his letter, I found a well-worn game of Monopoly in the officers’ lounge. Because I had played the game many times, I never really bothered to look at the rules. But with rich dad’s words about the rules of Monopoly being the new rules of money echoing in my head, I started to thumb through the rulebook and read, “The Bank never ‘goes broke. If the Bank runs out of money, it may issue as much more as may be needed by merely writing on any ordinary piece of paper.”
Technically, the money in your wallet is Monopoly money, scribbled on an ordinary piece of paper. It is an IOU. Our money is debt. The reason the current financial crisis is so severe is because the banker’s rules of Monopoly money allowed our biggest banks and Wall Street to package debt and sell it to the world as assets.
If we as a people knew that our money was debauched, Monopoly money, we might not be in the financial mess we are in today. If people had a financial education, there would be more than one person in a million who could diagnose our financial problem. If people had more financial education, they would not blindly believe that their house is an asset, that saving money is smart, that diversification would protect them from risk, and that investing for the long term in mutual funds is a smart way to invest. But because of our lack of financial education, the powers-that-be are able to continue with the destructive monetary policies. It is to their benefit that you and I are in the dark.
Why Not Gold?
Some of these so-called experts say gold has no “intrinsic value.” The experts say gold has no intrinsic value because no one really uses gold. Also, gold has no intrinsic value because it pays no interest.
Silver, on the other hand, has intrinsic value because it’s used as an industrial metal. And shares of McDonald’s have intrinsic value because people eat Big Macs.
For most people, gold is just gold, an expensive piece of metal that they wear or hide in safe places.
To me, gold’s intrinsic value is the value of trust. People trust gold and have trusted gold for thousands of years. In today’s world of global incompetence, trust is a valuable commodity. Take a moment to think about how valuable trust is to you. Think about people you trust. What is your trust worth?
I’m very bearish on the U.S. dollar and have been for years. That’s why I have so many of them. This sounds like a contradiction but let me explain. The reason I have so many dollars, even though I think they’re worth less and less, is because I don’t hang on to them. In my mind, cash is trash.
One of the reasons why we have this enormous gap between the world’s haves and have-nots is because the have-nots value money—they work for it, save it, cling to it, and lose it.
So, what’s going to happen? The answer is, I don’t know. If I had a crystal ball, I’d be a much richer man than I am now.
What I do know, however, is that the dollar is in trouble. The rich understand that savers are losers, and they’re continually looking for assets into which to move their money.
Banking on Your Future
You might be asking how you can preserve your assets when our national banking system is so broken. There are many different ways to thrive in today’s economy. You can not only survive but also profit from it. Here are a few ways to not only guard, but also increase your assets in these seemingly precarious times:
- Buy Gold and Silver: For most people this is the simplest way to protect your financial future. As long you can purchase gold under $2,000 and silver under $50 an ounce, your chances of surviving the coming crashes are good—if you can afford to accumulate a stockpile of gold and silver. I’ve been a gold and silver bug since 1972, when I witnessed the Vietnamese people panic over paper money. The nice thing about gold and silver is that it’s a good investment, even for financially brain-dead people. It doesn’t take much intelligence to go to buy gold and silver coins, and store them.
- Invest in Oil and Gas: For doctors, lawyers, and other high-income people, oil and gas production are a great investment. The reasons oil and gas are good investments for high-income people are the tax advantages and monthly passive income, if you invest with a good drilling company. For example, if an investor invests $100,000 in an oil project, the government grants a 70 percent tax break to the investor. And if—and that is a big if—the drilling product strikes oil or gas, the investor receives cash flow from the sale of the oil or gas every month. If an oil well produces oil for 25 years, the investor receives passive income for 25 years. In addition to the passive income, the investor receives a tax break for 25 years on the income. That means that rather than pay taxes on their income, which they’d pay if they saved money in a bank or invested in a retirement plan, the investor gets a tax break.
When the Reality Sets In
The reality of rising inflation will suck the life out of those who save money and reward those who know how to use debt and commodities to increase their wealth. In other words, the hair of the dog will make life harder for the working class and make a few others very rich.
If you want to be rich, you also have to think like the rich. What I’m not suggesting is that you invest in gold. Only do so if you do your homework, measure the risk, and feel it’s the right thing to do. What I am suggesting is that you start looking for places to move your dollars. Whether it be real estate, business, technical stock investing, or commodities, it’s important for you to invest in assets that can hedge against inflation—if you want to be rich.