Coping: The 2016 Financial Plan

imageI need YOUR investment advice.

This takes a bit of explaining, so here goes:  On Wednesday, over on the www.peoplenomics.com side of the house, we had the start of a very interesting discussion about 2016 financial planning.

This morning, I’d like YOU to toss in your 2-cents worth in response to a very simple question:

How good are you going to be at picking THE ONE BEST INVESTMENT VEHICLE which should outperform ALL OTHERS in 2016?

I’d ask that if you have any ideas that you post a “comment” since the computer will take care of all the message handling that way and it won’t flood my inbox.

Then we can all go gold-panning through the comments section.

Think of the problem this way:

If someone came along and dropped some money on you, where would you deploy the money right now – today – so that you would have a reasonable expectation about it being there when you come to get it back a year from now?

This will be reviewed in detail – along with a big discussion of risks and left-field threats and all – in a future issue of Peoplenomics. But the raw answers are free for all.  (We do a lot of free-for-alling around here…)

Since we have the evolving “discussion community” here, I figured “What the hell?  Let’s see where people are willing to put their money…”

So here’s your chance.

I think it would be useful to segment this a bit…we need to talk about some basic concepts.

If someone were to lay $5,000 on me right now and say “Go Yee forth, Ure, and Profit… I’ll be back for the Profit next year…”  I frankly don’t know for sure (even writing some of this while wide-awake on Wednesday afternoon) where I would deploy the money.

Peoplenomics readers know that I am expecting the government will have to crank over into hyper-inflation at some point.  When they do, the price of gold (and real estate) should go back through the roof again.

But what many people forget is that one of the major functions of a depression is the destruction not only of DEBT but also of SAVINGS.

My consigliere and I get deeply into this almost every time we talk.

The reason (and we agree on this) is that DEBT is money owed to whom?  SAVERS.

So when debt gets destroyed (which is what bankruptcies by the millions will do in a “good” depression, then on the other side of that realize that SAVINGS will also be destroyed.

About the only thing not perfectly clear is where to expect the transition from a deflationary plan to an inflationary approach.

What has been going on here lately is that the Fed has slowly been letting the air out.  There is deflation – but it is masked by so damn much money printing that it is not terribly apparent to the (non-economic) masses just what the hell is going on.

What they read (if, right?) is that a few wild outliers like Ures truly are ranting and raving about how the Fed is printing so much money that they are effectively burying what would otherwise be “in you face” deflation.

What this means, then, is that the Fed is doing its job of meeting the “dual mandate” but THAT makes absolutely no reference to maintaining the integrity of the nation’s money.

We are on about our Fourth Money System in the US – and over the past 239 years, one of the hard realities is that the American “money” had been revalued and renamed many times.

As a newly founded country we had the Continental. But that didn’t come until after we had a kind of “dollar” that was roughly based on the Spanish dollar (1792) so if we are going to count how many “dollars” we have been through, we would count the one before the Continental.

Wikipedia then goes on about how congress set up lawful money after that…

The U.S. dollar was created by the Constitution and defined by the Coinage Act of 1792. It specified a “dollar” to be based in the Spanish milled dollar and of 371 grains and 4 sixteenths part of a grain of pure or 416 grains (27.0 g) of standard silver and an “eagle” to be 247 and 4 eighths of a grain or 270 grains (17 g) of gold (again depending on purity).[31] The choice of the value 371 grains arose from Alexander Hamilton‘s decision to base the new American unit on the average weight of a selection of worn Spanish dollars. Hamilton got the treasury to weigh a sample of Spanish dollars and the average weight came out to be 371 grains. A new Spanish dollar was usually about 377 grains in weight, and so the new U.S. dollar was at a slight discount in relation to the Spanish dollar.

The Coinage Act of 1792 set the value of an eagle at 10 dollars, and the dollar at 1?10 eagle. It called for 90% silver alloy coins in denominations of 1, 1?2, 1?4, 1?10, and 1?20 dollars; it called for 90% gold alloy coins in denominations of 1, 1?2, 1?4, and 1?10 eagles.

I find it HIGHLY significant than the page on U.S. money over here gives only a passing mention to the term “greenback” which is explained in its own entry:

Greenbacks were paper currency (printed in green on the back) issued by the United States during the American Civil War. They were in two forms: Demand Notes, issued in 1861–1862, and United States Notes issued in 1862–1865. They were legal tender by law, but were not backed by gold or silver, only the credibility of the U.S. government.

Since we are “counting out our money” this morning, this makes the Greenback #4 for the U.S. government and that’s in the short space historically of 1792 up to 1861.

I would offer that the dollar was a bit of a different thing thereafter (1865 and later) but we could quibble.

Obviously, the Dollar was NOT THE SAME as a Silver Certificate…and the Federal Reserve NOTE is nothing more than a confidence game which most people find too much work to really dig their heels in about.

But, if we can it like it is, we can enumerate as follows:

  1. The Spanish dollar clone
  2. The Continental
  3. The pre-Civil War dollar
  4. Greenbacks
  5. Post-Civil War dollars
  6. Silver Certificates
  7. Federal Reserve Notes

The key point to be thinking about is this:  convertibility.

This is the time of the year to get some neurons firing around this topic because between now and a year from now it is a dead certainty that money will not be equally convertible from today’s values into tomorrow’s products.

It may be higher – as would be the case if the dollar actually bought you more of a specific thing.  We would call this deflation because the prevailing prices of things would seem lower.  Like gasoline is going through deflation here lately.  On our travels last week, the cheapest gas I saw was $1.669 for unleaded up in the Dallas area on a no-brand operation.

On the other hand, when prices go UP, more often than not, the “price” of a thing isn’t going up so much as the U.S. dollar is being constantly eroded by [your] elected government.

There is an inflation calculator over at the Minneapolis Federal Reserve site that makes this simple enough to prove.

Just based on government reported inflation  (watering down of money’s purchasing power) what has happened to prices since the Fed stole control of “money” from the FedGov?

$100 of goods in 1913 will cost today $2,394.74.

If I roll up by regression sleeves and see how 102 years of inflation averages out, we can see that it pencils to 3.1626% per year of baked-in-the-cake monetary inflation for the past 102 years!

Not that inflation is bad.  It is one of the FEW ways that the middle class can actually build some net worth.

Still, the government method of calculation is HIGHLY suspect.

While it is true that you could get a good steak dinner for $1 in 1913, and you can get one that’s passable for $23.94 today (we can test this at the local Outback on prime rib – you buy) when it comes to the other essentials of life even this systematically understated metric blows up.

Take housing for example.

The U.S. Census says that the AVERAGE PRICE OF A HOME in 1963 was $19,300.  Check the source for yourself over here.

Now look at the most recent data in that study:  In 2010 it was reported at $272.900.

Now let’s flip back over to the Minneapolis Fed and see what THEY believe was going on.  Thanks to the fine job they did on the calculator, we can put in both dates, the starting price and see what we would EXPECT based on Government figures, that home to be worth.

Well, don’t look now but the inflation adjustment on that 1963 average house price worked out to $137,425.07 by 2010.

HOWEVER the REAL price of housing was just about TWICE THAT amount.

So we are left with the ugly ponders here:

  • Is the government inflation calculation a bald-faced lie?
  • Or is the US Census lying about their average home prices.

Honestly, half a century of economic education argues that the government consistently lies about inflation.

There is a business reason they do this.

Many benefit programs (military retirement, federal employee retirement, Social Security, and yada, yada – are all indexed to the inflation reported by the government.

They go through every year making little “fudgies here and there” and hope that they won’t be caught out.

But when a serious person looks at the underlying data (we just did even though I know you’re only pretending to be serious at this hour) the reality come sparkling through like a million watt flood lamp of truth.

I’m sure with a half dozen phone calls, I could get someone in officialdumb who would be able to soft-shoe around this.  But frankly, I’m not interested.

I’m sure one reason is the evolution of condos.  But wait!  These are smaller, lower cost homes – they should lower current prices, not double them.

Larger homes?  Well, no, because size and none of that matters because the look-see here this morning is average price, not cost per square foot.

Could it be due to the arrival of lots of manufactured housing in the South?  Ding-ding-ding:  NO!  They are cheaper and would lower the average home price.

Inclusion of new appliances?   Ding-ding…No!

The kind of deviation we are talking about in the government data – which I will round off to $150,000 because we are friends will buy you 100 refrigerators per home, or three refrigerators in the average home plus a dishwasher, disposal, trash compactor, prewire cable, and two garage door openers and STILL have enough left over to live like a King & Queen in Hilo on the windward side of the Big Island for a year!!!

See how crazy all this shit is?  See why I don’t like to write about it all the time?

But it’s the most important thing there is to do – help people understand who the screwers are and how to avoid becoming the screwee.

If the price of the home went up twice what the government said it did, then we should see the price of most other things going up by similar, fraudulent prices, if we just open our eyes to it.

Look at the price of a new car in 1960.  It was $2,600 according to this site

USA Today says the price of a new car in 2015 was what?  $33,560.

Off to the Minneapolis Fed machinery again.   According to the government’s version of things, the car adjusted price should be $21,269.21.

The different is again HUGE.  Either USA Today got it wrong (which I doubt) OR I’m beginning to see a pattern here called “Systemic lying in the long term so we can exploit the people and grant members of the power elite a huge benefit check!”

I can see the cost of the car gong up $2,000 more than the Fed calculated “inflation” should put it…maybe the nav system, right?  OK, and $200 more for radial tires and $500 more for that Mark Levinson Sound system.  (Which Lexus wants something like $2G’s for on their option list if memory is working here…)

Even in our wildest, we still find an $8,000 discrepancy between reality and the government’s self-reported numbers.

Several Readers have asked me if I really believe the numbers which we dutifully report from the mouthpieces of Gubmint.

Not no, but Hell No.

Just like we don’t believe the “budget numbers” when the CAFR numbers report real balances and those are frequency way off from the “Oh poor me crap…”

But it is what it is.

Which is why  – circling back to the front question this morning – what would you buy if someone handed you a $5,000 bill and said “Go forth and make as much as you can off that in 2016…  I’ll be back for the winnings next year.”

With government watering down the money’s purchasing power (debt-logging the currency) about the best investment I can think of is probably to take the money and make some investments on CraigsList.

Go out and buy a motorcycle (murdercycle) on the coldest, wettest most miserable day here in the next two weeks.  Look for a solid bike and someone who needs the dough for Christmas.  Negotiate hard, but don’t screw ‘em to the wall (too badly).  Karma comes around.

Then hang onto the bike and sell it on the first really warm, fine riding day in April or May.  Something smaller than a Gold Wing – parents like kids to start on a 350 to 650 if they have any brains at all…but that’s another topic.

It’s like when we bought our airplane:  Not at the peak of airplane prices (Feb to April) but at the end of the summer flying season.

I kinda like convertibles…and maybe this year I will try flipping a Miata MX-5.  I’ve made money on every Porsche I’ve owned.  Buy in the miserable cold – the one that needs rubbing out and detailing….and turn me loose with the buffer and the wheel cleaner and Elaine loose with the Q-Tips and Windex.  Clay the car, show-ready condition.

(Small problem:  Once our car is detailed, E hates me to drive it, lol…)

And if the car comes in really good on sale day, then maybe, just maybe, you’ll be able to beat the Fed’s money-watering-down program for another year.

If not, and you’re young?  Buy a damn house. Read Art of the Deal first, regardless.

And if you’re not happy with these investment schemes – put it on the line and tell us what you would buy for $5000…with the goal of having a huge return in a year.  Rationale is expected, too.

Thanks in advance and….

Write when you break-even…

George   george@ure.net

P.S. You can’t invest in Hillary or Trump.  Trump doesn’t want your money and Hillary’s already being sold to everyone with a checkbook.  For details, call Bill.  I’m sure the Clinton’s will take your money.  Winking smile

Comments

Coping: The 2016 Financial Plan — 53 Comments

  1. I would buy a copper still, and practice using it. It is not illegal to own and operate a still, as long as you register it and pay off the government taxes. You can use it to make fuel for your car, or liquor. When things get chaotic, liquor becomes trade goods. When I spent time in Romania doing medical relief work (1996), each village had a guy with a still. People would grow apricot trees in their yards, ferment the fruit to mash, and take it to the village still. Jugs of really bad apricot brandy were a more stable currency than their paper money at the time. Everyone we knew said to be sure not to drink it. “Just for Trade.”

    Or if you prefer stocks, why not invest in the original stock market? Put your $5000 in with a local cattle farmer to buy some cows. The farmer sharecrops them for you, and you split the expense and the sales price at the end of the season. If all goes to hell, butcher the cattle and have a barbeque.

  2. 5k should buy you 1000 lbs of garlic
    after 9 months should give you a return of 5k to 7k lbs
    which can be cashed out or re invested (buried)

  3. Where to put $5000? Right now, I’d have it on the sidelines. A dip is coming. Pick a reason, any reason. Geopolitical concerns, a debt ceiling fight in congress, deflation setting in despite any rate hike, a historical replay of the depression is unfolding. At some point everything will drop, metals included. With everyone selling to cover there just won’t be any money available to support prices.

    The question is…. is this the run up right now, or is there a bigger one on the horizon when everybody goes all in one last time.

  4. Well one crazy idea, coal, as people have divested in it heavily. It has been vilified for co2 emissions, however the Paris climate talks have addressed storing co2 back in the soil. Increasing soil carbon by ,4% a year (very doable) would alleviate the co2 green house gas issue(non).

    On the flip side would be shorting solar pv companies as their production puts many worse ghg’s into the atmosphere hfc’s (I think). So I think that with the epa’s pushing people away from coal power, calpirg’s and others investment in green stocks and out of old energy cleared house for those with money to money to lead into green stocks and after the lemmings have been tricked out of a solid investment into pv stocks they can scoop up the tried and true energy stock that with rangeland sequestration of co2 it becomes viable in the climate change world discussion.

    Same topic would be investing in the co2 monitoring companies that should sprout up quickly.

    Not one idea but four as this, if it goes public, would be a great company, http://www.allpowerlabs.com/products/pc20-powercube

    It has be refining their gasification plants for years, the above link allows for distributed generation. Can be used as a heat source for a greenhouse, which would allow for year round food production in robotic greenhouses. Which also might be the investment opportunity.

    The Mormon church has an investment in a fodder system which sprouts grass robotically. If also has the ability to grow lots of other plants, when a rep visited my cheese facility to look at my cheese processing facility. To see the panel walls that a company sold me that are impervious to mold a problem grow facilities in co have.

    • expiration of the federal 30% tax credit for solar energy is going to put a huge cramp in the U.S. PV business.

      • Yep, that may be why the epa is coming down hard on coal. To many pensions that moved money to solar panel makers. without that the pensions could face large losses

  5. On best investments: Haven’t read the other comments so this may have already been said. I believe what I say below should be the practice of every person always. The end of the world as we know it happens to someone every single day. Preparation is not just for world war, financial collapse, or tyrants taking control of distribution lines.

    Food, the means and the tools to produce it on a personal level. Second a social support structure. (No man is an Island.)

    I read an article about Venezuelan bartering yesterday. The country is experiencing rolling shortages of just about every thing, Right now soap, deodorant, baby diapers and formula as well as chickens are topping the list. If one is particularly enterprising one would be setting up a bartering website for your local community right now.

    As for financial gain if “normal” hangs in there, I still think food, water and energy related industries will be the best investments for the future. Without a new what’s it techy type marvel for the masses, technology and retail will be the worse.

  6. This works if the internet is intact for the full year and cell phones are still the most used mode of social communication.We did this last year,so $5000 start and the speed of turnover would net a modest $25000 at years end.The market for phones is huge to put it bluntly.The speed of turnover does all the rest and we are thankful to all for that.Enjoy!

  7. It easier to explain what not to do. I actually made money on a Chinese stock! I lost a bunch of money on a bunch of mining juniors (like Northern Dynasty). One I have to sign a form called valueless security form (San Gold) to get it off the monthly statement. My theory was it was better to have shares instead of physical, no storage. (Really bad idea) As my wife’s retirement pensions kick in next year, I pulled some out of the market as we will probably have to pay higher taxes on the total income next year, so dragged it into a low income year. Like you I’m 66. No debt, paid off condo, moved to small town of 11,000. eat well, fairly healthy and just bought a Drake R4B radio to fix up, (lusting after a TR7) to hell with investing. Spend it. Still have gold investments Agnico, Goldcorp, etc., but drained the junior swamp. Also selling off gear I used during my working years. I expect something out of left field that no one is expecting. My advice is to be adaptable and keep informed by reading your missives. Stay the hell away from Canadian junior miners.

  8. You have it backasswards…

    Inflation isn’t a way for a person to ever build wealth as the prices change faster than their pay. Even Keynes the dolt understood this and is why he pushed for inflation as a means to steal from the unwashed.

    “By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”

    DEFLATION is when you have growing prosperity…and how we were able to accumulate so much capital.

    • Sorry George, but I think I have to agree. If I’m paying less for gas than before, I have more money to do other things with. If all prices go down (ha) then I am better off and am “wealthier”.

      • Oh, and as far as an investment, it needs to be transferable across more than one market if you’re planning for the possibility of financial market failure. You can’t eat gold, but someone might trade you some for something else, like a burrito. To be safe, consider the desirability of your investment a year from now to a potential “buyer”.

      • Okay, so I’ve just read a story that tells of India’s plan to remove gold from the hands of the people, and now the temples, making sound like an investment opportunity, which I found most amusing, until I thought about how many suckers there must be to actually trust in such a ploy, if such a disingenuous plan is in fact a real thing. And then that lead to a question about the rules of this “contest”. If you were to invest in a commodity or other tangible good, and the government decided that all such named goods/things/stuff should be removed from the hands of the populace, what should be the valuation for the purposes of your evaluation ?

  9. FOOD FOR STORAGE. There’s NO possibility of losing money on this investment because the price of food never goes down, so at the very least you will save on future grocery bills as food prices inevitably rise. Due to extreme weather conditions ruining crops, that savings could be far more than would be made from other types of investments.

    Aside from ever-rising food prices, there are good reasons to believe that food’s value will increase even more because of the following possible events:
    1.) EMP. We have had many warnings that an EMP is invevitable due to natural causes or terrorist attacks. In short order, there will be no food in grocery stores, so your stored food will be worth more than a mountain of precious metals. You can eat it and barter it.
    2.) Natural catastrophes. They’re increasing in number and destruction. Access to food may be minimal or zilch. Think “Katrina.”
    3.) War. At present, this is not at all unlikely. Read about the value of food from survivors of past wars.
    4.) Pole/crustal shift. Naysayers ignore this one, but it has happened before and it can happen again. Food will be invaluable for the same reason as in #1.

    In general, stored food is the best place to park your money. It’s a win-win situation, unlike any other type of investment.

  10. 250 $20 bills or five $1,000 MMA certificates at 1.5% from a credit union somewhere (see PFCU). You did say you wanted to guarantee getting at least the basis back after one year? Anything less liquid is only worth what others will pay for it and if everything goes south quickly in one year, the only thing people are going to want (need) is food, shelter, and safety (in groups). Review Maslow’s Hierarchy.

  11. “Money” originated when villagers were given a marker or chit made of bamboo, wood, or metal for the amount of produce they put into the village treasury/warehouse or contributed in labor to the ruler so they could withdraw what they needed later. The games and trades and exchanges they made amongst themselves with the markers became ‘the economy,’ and any losses to rats, moths, floods or fires to that treasury represented ‘devaluation’ of their shares. Prosperity for all depended on honest evaluation, free exchange, trust, and social cohesion, not to mention hard work, planning, and shared sense of ownership. Since little of that remains in our society today, the future of ‘money’ is bleak.
    My investment last year was to have an old 65 dollar used guitar I’d stored for 30 years restrung and renewed at the local music shop, purchase of a couple hundred dollars in accessories (picks, stand, shoulder strap, tuner, extra strings, music books) and a payment of about a hundred dollars to adult education for class lessons.
    I’ve had hours of really enjoyable entertainment, made some other people smile, met some interesting people at the class that I will get to know better, have increased my IQ and memory and musical abilities and probably extended my life a bit, and find that the guitar is quite well valued, as it was a 1962 Gibson.
    If I had $5,000 this year, I might start looking for a vintage baby grand or grand piano, have it refinished and tuned up, and start hosting piano parties and renting practice time on it, and take some singing lessons myself.
    If the economy goes really south, I think that this might be a time for the revival of old time singing groups, choirs, and locally made acoustic music.
    Even if I don’t get a fair cash return, I believe that music itself can replace mental therapy, cure ailments, and relieve all kinds of pain, and even make life worth living even when that might seem impossible. It’s a channel for education and skills, passing on values, and helps with social growth.
    So music, and quality musical instruments, would be my 2016 investment ….

  12. Gold ,silver,food,ammo,guns and what ever other hard assets with some shelf life one can safely store may provide some level of appreciation.

    I do think that a real estate development that incorporated common crop land,grazing land for herds,an area for chickens,wind and/or solar generation,some gated access and a management plan for the common use areas would have an appeal to many in the prepper community. Whether or not the planned development is actually sustainable would depend on the inputs of the residents of the community and what they individually bring to the group. I think that if developed in an area with good growing conditions and climate and marketed correctly the return on the initial investment could be substantial. Realizing that the niche for this is most likely small but seems to be growing with every Paris,San Bernadino event.

    I view the creation of this agricultural commune as being like a condo association with the addition of an agricultural component to make it a somewhat food and energy independent entity.

    The condo bylaws could be structured to allow an owner to sublet his portion of the agricultural property to the association or a third party if the owner had no desire to participate in the agricultural aspect of the development. Or maybe the entire agricultural operation is contracted to an operator and the community shares the proceeds?

    I don’t know very much about the economics of agriculture or agribusiness in general so I will defer to any subject matter experts on the viability and sustainability of this type of operation.

    Probably lots of ways to calculate the return on the investment. If excess food or energy is produced that would be an obvious profit . If just peace of mind and some sense of security is gained that is probably harder to quantify in a tangible ROI.

  13. The two best places to put money is Bit coin and silver coins. Bit coin will allow you to leave the country with your money and silver is (according to the webots) going up shortly.

  14. A hundred viable cannabis seeds, 6 1000watt bulbs and a nice airy space to grow in. I can turn your investment into 100k….

      • Only if you put your land up for potential confiscation by the gendarmerie. Or if you have the license to grow in the right states. Good idea though.

    • No guarantee of getting your principal returned however. You could also buy a kilo of coke and cut it for street sale, but no guarantee of ROI either.

      • However, this one does get you a government pad vacation if it doesn’t work out. 5-10 years worth…a very solid and competitive ROI

    • Great idea, IF electricity is available and IF you’re in a place where you can legally sell it. I wouldn’t invest in anything that requires electricity.

  15. purchase avxl on nasdaq currently approx. $6.00 per share.
    It is a bio-tech with promising product currenty in human trials to treat alzheimers. huge market if successful.

  16. I’d say buy a top of the line mattress, pillows, and some good sheets. You won’t be able to get a better payout to your health from getting the best night of sleep ever.

  17. George:
    Find some tech company connected to war on terror or internet of things company that has a bunch of patents everyone else must use or is a take over prospect. Another area is High tech medicine developments, many penny stocks or just getting posted at exchanges so valuations in millions. Companies with the owners or managers heavily invested and producing real product. your knowledge of investing will show you where and in whom to invest. then forget about it till next year.. don’t fiddle.. LOL

  18. All I can say to these complex suggestions is that when the bail ins start, not only of bank holdings but also brokerage accounts you can end up with ZERO. The laws making this legal, making the small guy last to collect in a financial failure, have been in place for years. You are all holders of unsecured loans to these institutions. All retirement accounts will be exchanged for “Patriot treasury bonds” with a severely restricted redemption policy.

    Cash is a joke, you lose at least 3% per year, more when interest rates go negative. Buying and storing anything for future sale is futile with the overpriced goods in the USA. Wanna survive? Guns and ammo, that is metal that will always get you whatever you want, but you gotta be willing to use it.

    There is a time to seek a return, and a time to just insure you can keep what you have. Failure to determine what time it is will be most disastrous. I’ll give you a hint. Financial institutions have been fined almost $1 trillion for fixing markets in the last 10 years. No fine has exceeded 2% of that firm’s annual profits. Profits derived mainly from small investors, I might add.

    Welcome to the country where there are only optimal decisions in a bad environment, not good decisions you can feel good about.

  19. George you mention putting money in US Treasuries. More or less parking it there. Why??

  20. Double, double toil and trouble;
    Fire burn, and caldron bubble.

    What a mass of complexity over finances. Made me feel tired just to read it.

    You see, the problem with pricing anything in the USA is that the real price is never upfront. There is always insurance, fees, taxes, everybody in your pocket for something. It’s called overhead in a country whose major source of employment is services. The whole country would change overnight if it was required for every salary to be quoted net after taxes, insurance and whatever. Someone with a $50k salary might bring home $3 grand. It’s like the lottery, the government says $10 million, but the winner will never see even half of that. The actual cost of medical care in the USA is about 10% of what everybody gets billed. What this does, is infect everybody with the disease of optimization. It’s a wonderful mass distraction, trying to find a “deal.” But it’s like sitting in a rocking chair, gives you something to do, but doesn’t get you very far, and if you rock hard enough, you will actually feel tired at the end of the day.

    You can try what I did. Find yourself a place to live where you can do well on $1500 a month or less. Get yourself a source of income that covers that, like an apartment building. CD’s in Ecuador are paying over 9%, guaranteed to $33k per name per bank by the government. Put everything else into metal, store it in three places, three countries is even better. Keep cashing those social security checks, and stacking metal. Silver is best, for the past few years industrial consumption has exceeded world output.

    Or, just go all in on Apple stock, pays a regular dividend, the company has almost zero debt and over $200 billion in cash reserves, they will be paying dividends for a long time into a rough period and apple has complete control of their product from manufacture to obsolescent recycling. Take possession of your stock certificates.

    Start partying where a beer costs a buck, and filet mignon is $8 and where it takes two people to carry $40 of food out of the market. Medical care is 10% of USA costs. Pat yourself on the back and make new friends with other expats who were smart enough to really get out of the rat race. Sleep soundly under a government that is so disorganized they really can’t effectively screw with you. Where every day is a holiday, and every night a party.

    That’s how it looks from Ecuador.

    • Sounds like an ideal situation, for you, the American expat with more money to spend than the locals.
      My fear of moving abroad would be the tendency for grouping up with other like expats in a sort of ingrown walled off community that doesn’t interact in a real way with the locals, outbidding them for land, housing, food and employing them only in menial housekeeping/cooking/gardening tasks.
      I’d fear that I’d age and enervate in place playing cards on a veranda, not having the energy to overcome barriers to really participate or contribute to the community in any helpful way. Being the creature of comfort that I am, I’d probably devolve into some sort of poor man’s Marie Antoinette serving cake and waiting for a tumbrel and guillotine.
      I’d be interested to hear how you are able to interact and ‘go native’ or if it might be as hard as I would expect?
      But that’s me, quiet old recluse that I hope to be, at least until I get completely priced out of my comfort zone by all the wealthy, very well educated techies from all over the world overbidding the price of living in my locale. There may be a point where my personal living standards get to a point of minimalism that moving to third world locals would be a ‘step up.’

  21. Here’s a weird one for you. As we are working on setting up a rock and gem museum here in town, I have been pouring over a set of rock and gem magazines that were donated to us. As I have several lbs of a mineral known as Pietersite, I noticed its price in 1994. I could buy a lb of it for $55 Canadian. Today, I can sell this tomorrow on Ebay.ca for $136 lb. That’s over 10% per year increase. There’s something I never realized existed as an investment, collectible display minerals.

  22. take a flyer on some Iraq dinar. a hunderd bux gets you 100000 of em. they were once worth $3.22/dinar and many expect a price rise soon. in fact, since the chinense yuan has now been included in the currecny basket, the dinar has moved up against the dollar the last few days.

  23. Cash flowing real estate. 5k is a bit weak for that but even a good REIT might do. You have hedged for inflation and its hard to steal.

  24. I would buy stock of ammo and or gun manufactures. Trust me with more and more mass shootings they will try to restrict guns which will have people running to buy more of each.

  25. Straw hats in winter – precious metals – gold/silver in particular. China and Russia will announce their respective currencies will be backed by a basket of precious metals and expose the Fed as not owning any – – Oh there may be gold in Ft Knox – but its been sold a number of times – anybody’s guess as to who the real owner is….

  26. The question you ask determines the answer you get (from law school). I think you asked the wrong question (how to get outsized returns).

    Let me start with what the Automatic Earth calls a “Four Quadrillion Dollar Debt Barge”. Who is that obscene amount of money owed to? Why, the rich and powerful, of course! Do you think they will agree to write it off, no matter how unpayable? Hell NO!

    As David Stockman has noted, finance and debt has grown much faster than GDP. And nevermind unproductive GDP in China and everywhere else that useless production has been “invested” in (soon to be worthless). These “assets” will have little value for years to come as new capacity comes on-line and producers struggle to just survive.

    So let’s knock precious metals out right away. Only a fool would miss that buying (or holding) is catching a falling knife almost daily. All those struggling miners with new capacity will pump out metal like frackers just to survive. Sure, some people are buying more physical coins. But the hedge funds are record short. And, as Martin Armstrong argues, money is what people think money is and what they use for trade. It might be as foolish seeming as sea shells, rice, paper or pet rocks, but you have to trade with it (as Mozilla said, you have to dance when the music’s playing). So for all the “market is manipulated, look at the paper metals” people, if traders treat paper metal as money-like, that’s what it is (until it isn’t, but when?).

    So, since the time horizon (the question you ask, again) is a year, do you really think the “Four Quadrillion Dollar Debt Barge” (U.S. dollar, BTW) of the rich and powerful will sink in 2016?

    The problem is everything is overvalued because of the massive monetary distortions of central banks. The fan boys and girls have bid the FANG stocks to the moon. That’s railroad futures (the fan boy and girl stocks of the past). The non-fan boy and girl stocks are already weakening. And at current valuations stocks will go nowhere for a decade (as Mish has argued well).

    Real estate is doomed in the US (as Harry Dent has argued) just based on demographics. Geezers will want to downsize, and next generations don’t want and can’t afford their old junk.

    Foreign assets are risky because of the malinvestment led by China, and the loans in dollars. There just won’t be enough dollars to pay the loans with all the “assets” producing losses. That will continue to bid up the dollar.

    So, I agree with Jim Rickards that a barbell strategy is best. Some inflation hedging, some deflation hedging, and a big honking pile of cash for optionality. I also agree with Bill Bonner that since cas is less than 1% of the “money” in use, a loss of confidence in being paid could create a crisis where you must have CASH to trade.

    Anyway, to cut to the quick, I am personally already hedged. Going forward, I have gone as cash-centric as possible, but will change as needed. IRA in the credit union to let it sleep. 401K is ridiculous because of required investments in over-diversified funds of funds (to generate excessive fees). But necessary to avoid confiscatory tax rates that would assure a 50% loss. I picked the least stinky fund tat is 2/3 fixed income with (apparently) little dodgy alphabet MBS, CDS, ABS crap. When enough is in place, I plan to move to self-directed and keep my head down (treasuries) until the stock market tanks. Then when it’s been beaten hollow, on to Vanguard to keep fees down. I think the future in stocks is bright because technology is producing awesome things (Q-Carbon)(Regenerative Dentistry)(and so on). But valuations just are too high now. So I wait patiently and watch carefully.

    And keep in mind Doug Noland’s view that “moneyness” can be a fragile thing.

  27. George,

    My investment advice for 2016 is very simple. Just buy the Gold Miners ETF (GDX). GDX has a low downside risk since we are near the lower cost floor of mining gold. A 2016 rebound in gold and other commodities because of increased inflation will cause GDX to soar disproportionately higher because of its natural upside leverage. That’s an ideal situation for any investor.

    The current trajectory of government spending is toward bankruptcy with entitlement spending and the geopolitical course is toward war and even more huge spending. Inflation will take off as the digital dollar printing press pays for even greater government debt.

    Sadly the Fed erroneously plans for a linear future with their obfuscated Excel models. The world is really very non-linear.To make matters worse political pressure (kicking the can down the road) causes moderate economic problems to grow and to become highly catastrophic.

    One more thing….. After you have made your profit target on GDX convert your proceeds to Gold Eagles and plant them deep in the back yard in a plastic container until things quiet down in the world :)

  28. George,
    This is pretty simple….

    Fellow feet on the ground in Liberia report new cases of Ebola, expect serious free outs by Q2. The disease cycle continues, biotechs anywhere around a cure will sky rocket by years end. My money would be in AEMD, already been used once in Germany. CTSO or EDTXF, addresses the core issue of sepsis…..

  29. I have a mutual fund for long term investing. Had it eight years.

    PRPFX Permanent Portfolio. Diversified by buying gold, silver, Swiss Francs, govt. bonds and equal amounts of stocks. Has grown 8 % a year last 8 years. $1000 min investment, automatically reinvests growth in more shares. No load.

    Or would buy silver eagles at today’s prices. Or just food and ammo.. Not sure.

  30. The stake dinner is subsidized by gov, the stake dinner in 1913 was not gov subsidized.
    I would spend the $5k on converting my truck to burning wood, like on driveonwood.com

  31. Tough question, George, where to put a newfound $5000 for big payout in one year. My portfolio is already fairly diversified but too heavy in cash because I can’t find a reasonable place to put money right now. As long as the dollar is going up, inflation is low, and conservative investments are in the tank, I’m not taking much of a hit on cash. And when things change, I’m more flexible and liquid than I normally would be. But NEWFOUND money! OK, I’ll go full out speculative. I have a penny gold mine stock I’m invested in. I think the odds are better than 50:50 for a 10X return in the next year with odds less than 10% of going to zero. So I would role the dice and put it all in that one penny stock. This is not investment advice.

    • Consider investment in small or backyard food production. A greenhouse for 5K would provide payback for the rest of your
      life. Food the “ultimate commodity”.

      Thanks,
      Chris
      Retired airline mech.