written by reader Plan for economic crash

By Anonymous Questions, May 13, 2014

Many economic experts are predicting another economic crash like or worse than we saw in the 1970s with ultra high interest and high inflation. That is no surprise with the government spending more than they have for years. I would not be surprised there is no gold in Ft. Knox either.

I would like to request the stock gumshoe plan on how to protect our wealth through these times? I would imagine all your members have the same question.

What changes is the gumshoe making to protect his fortune?

Is the US Dollar doomed and if so what can we do about that? Will there be a new world currency that is solid?
Thanks.

This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.

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investor101
6 years ago

Thanks….I think you have expressed what is weighing heavy on people’s mind. I seriously don’t know which way to go. I have quite a few US Savings I Bonds I bought for my sons in the 90’s, sitting in the safe deposit box and have wondered if I need to go ahead and cash them. I certainly can’t put everything in gold, have a stock account etc… I sure do hope our friends here will express their thoughts. I will heed that more than the paid for newsletters!

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Travis Johnson, Stock Gumshoe
Reply to  investor101

I bonds from the 1990s might be an awfully compelling hold if you’re worried about inflation — they would probably still have a substantial base yield plus the variable inflation protection, check with TreasuryDirect to see what they’re earning. I personally buy I bonds and max out on those before adding to my savings accounts, and I often buy foreign currency CDs through Everbank for diversification … Though I don’t own any right now. The third leg of my savings strategy to diversify is periodic
Small purchases of precious metals. Foreign currency CDs, I bonds, and precious metals are not intended to make me any money, they’re intended to preserve purchasing power of savings. To actually grow my investment portfolio I focus on companies that can compound earnings and grow over time, with diversification across countries and sectors.

I find it useful to think about those two baskets as separate — I want to protect the purchasing power of my savings as we’ll as I can, and I want to grow my investments. And perhaps most importantly, diversify in a way that allows for the fact that whatever you think is inevitable about the path the global economy will take (and what the best-marketed pundit thinks) is probably wrong in lots of ways. Prepare for a variety of possible outcomes rather than worrying about betting your future on predictions that are well-marketed and frightening.

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George
6 years ago

I am conserned about any accet backed by the US dollar. This currency could inflate very fast when people loose confidence in the USD. The traditional way to reduce the impact is precious metals, investments not in USD, and land to mention a few. Anyone have any better ways to hedge against a big USD inflation run?

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euclid
6 years ago
Reply to  George

I too am concerned about any asset backed by the dollar and after reading the 3 Aftershock books by Wiedemer et al I am in the process of shedding the dollar where I can: PM, of course, Canadian and Australian backed equities, currencies (see EverBank), take look at currency play XCRD by Deutsche Bank, Jim Rogers says buy farm land, some say real estate but Wiedemer says it will crash again but it still might be better than dollar. The more extreme approach would be to leave the US. I hope others with good ideas let us hear about them.. If we get out of the dollar now it may be early but that is better than late.

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Travis Johnson, Stock Gumshoe
Reply to  euclid

Careful with thinking of the dollar as an asset or as some sort of “backing” to a country or a company — it’s just a currency, a way to describe the value of something and move that value around.

Most assets like real estate or stocks aren’t “backed” by the dollar (though fixed income can be thought of that way) — they are denominated in dollars. If the dollar goes down in value, many such assets would simply be worth more dollars (all else being equal). That’s an oversimplification, of course, and I too try to diversify some of my savings away from the dollar and some of my investments away from the US economy… though both of those hedging efforts have depressed my returns in recent years as the US has led the recovery and the dollar has remained a “safe haven”. Just don’t assume that anything priced in dollars or based in the US necessarily becomes less valuable if the dollar declines — if the asset has intrinsic value and is traded more or less freely, like a share of stock or a piece of property, it should, to some degree, protect against a declining currency.

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robinsteel
6 years ago

As we know, gold and silver have been the traditional hedges against inflation, and it seems that even the richest people are buying a lot of PMs these days…the ultra rich have huge holdings in the biggest miners, and RIO and BP Billiton have a lot of accessible reserves in Utah and New Guinea.

So, world wide, “the market” is ripe for a fall, and PMs are easily manipulated by High Frequency Trading on behalf of the same people who own most of the “quality” stocks in existence …It follows that these people are going to short the markets that they control, at some time in the near future; fall back on their “physical wealth” to pay for more shorts, and make a killing by killing the “little people”, again…

What to do? try to have enough cash to short consumer stocks but avoid the temptation to bet against the obvious things that the ultra rich will keep buying…like defense and cyber security…Gold and Silver miners might make a big move up in the near term, and some may be takeover targets when financing becomes difficult as interest rates shoot up…so watch out for sudden price drops that seem counter intuitive and find out who is selling…insiders won’t sell if there is a takeover in the works, but big ETFs will try to push the price down just before it happens…I don’t have much “faith” in “free” Markets anymore…so maybe it will be wise to get into cash and buy the blue chips when they drop 10%-20% at the first sign of a broad sell off, since none of them will go bankrupt , and people still need TP, beer, burgers, and netflicks…..

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investor101
6 years ago

Would somone please address these US Savings Bonds???? Travis, I am not a whiz kid with the stocks, but do have a portfolio with Ameritrade, too much personal real estate, some g/s, geez…just a regular girl not liking what I see our govt doing to us. I live within my means and don’t like debt. I see the prices rising every time I go to the store and wonder how in the world families are going to make it, it is taking a whole lot more dollars. Thanks everyone for your valued opinion.

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