You’ve worked hard all your life. You’ve saved, bought a house, invested, planned for the future.
There’s only one problem. You thought you were climbing the stairs to a higher and better future. Instead, you were climbing the down escalator. You’ve been going up, but not as fast as you thought you were.
You see, the dollars you’ve saved for your retirement and to leave to your family have been going down in value. If you started saving for retirement in the mid-1970s, a dollar you saved then is worth only 20 cents now.
The decline might not be quite as bad for younger savers, but the worst of the devaluation has occurred in the 21st century. The sad fact is, everyone is subject to the ravages of inflation.
If things continue in this way, what will your children do? How about your grandchildren? The money they depend on for food, education, and living could become almost worthless.
Doubtless they will do much to help themselves, but is there anything you can do to help them?
Is There Any Cure for Inflation?
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There is a cure for inflation, but it has to be put in place by the federal government. It’s called the gold standard, and it’s what we had in the U.S. during the 19th century. It meant that every dollar was worth 1/20th of an ounce of gold, and the government was required to make no more dollars than it had gold to back them with. That kept inflation in check.
There’s no chance of going back to a gold standard any time soon, but the good news is that gold confers the same benefits on individuals as it does on nations. It stabilizes things by backing them up with value. Any gold you own retains its worth relative to other items you might want or need, such as food, clothing, or housing.
Because of this tendency for gold to retain its value relative to other things, we say it is a store of value. Also due to this tendency, gold is able to fulfill a unique role among your assets. It acts as insurance for your investments.
Your house might lose value. Your insurance company might go bankrupt. The stock market might crash and take your investments with it. But gold retains its value.
Who’s Got Your Back?
This is an important aspect of gold. It often has its greatest value when things go bad. That’s because the gold you hold in your hands has none of what we often call “counterparty risk.” That term essentially means dependence on other people. Consider this:
- What happens when your money is devalued by over 90 percent? Will anyone restore that value to you?
- What happens when your overall tax burden increases by 50 percent, as is likely with many city, state, and federal tax changes being proposed?
- What happens when the value of your house collapses by 50 percent, as happened to many people in 2008?
Clearly, in each case, other people have made decisions or taken actions that affect your bottom line. That’s counterparty risk.
Will your insurance company make things right for you in any of these cases? Unfortunately, these are not events for which any insurance company offers coverage. That’s also counterparty risk.
How about a currency devaluation? Hyperinflation? Regulatory destruction of your company? Stock market collapse? Bank failure that traps both your deposits and the contents of your “safe deposit” box inside? Each of these situations is both caused and controlled by other people. Again, counterparty risk.
A Foundation Must Be Strong
For years, ICA has advised on the benefits of precious metals for the foundation/insurance leg of its investment triangle. Why? Because they’re the strongest, most stable portion of your portfolio, and because they insure against every single one of the above developments.
But the good news is that just because insurance must be strong and reliable doesn’t mean it can’t be dynamic as well. People don’t view precious metals as dynamic, but they can be—with ratio trading.
Here’s how it works. When the government removed the peg between gold and the dollar, gold was free to move. It could convert to more dollars when demand for gold was high, and fewer dollars when demand was low. The same is true for silver; each metal is free to move compared to the dollar. (So are platinum and palladium.)
Gold and silver often move in the same direction versus the dollar—but not always. Many times one of them appreciates in dollar-cost more than the other. And that’s the key!
Let’s say you buy silver, and the price when you buy it compares to the price of gold in the ratio of 80:1 (say, for example, silver is $25/oz. and gold is $2,000/oz.). If over time the price of each metal changes so the ratio becomes 40:1, you can trade your silver for about twice as much gold as you could have originally bought.
If you then wait till the ratio becomes 80:1 again, and trade your gold for silver, you will have nearly four times as much silver as you started with.
These are realistic ratios for patient traders, and lesser spreads occur more often. In short, you can stay in precious metals, some of the most stable assets in the world, and still increase your portfolio significantly.
This strategy requires extensive knowledge of the metals markets and constant, careful attention—or it requires an expert to advise you. The latter is much more realistic for most investors and happens to be what ICA provides. Just call 1-800-525-9556 to talk to one such expert and see if this strategy is for you or download our free guide to learn how you can double your gold and silver ounces, even within an IRA.
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Once you’ve done that, call ICA at 1-800-525-9556 and talk to an advisor. They can help you develop a plan if you need help with that, or implement your plan if you’re already clear on what you’d like to do.
Insuring Against the Limitations of Insurance
Think about the parallels between gold and a whole life policy:
- You might benefit handsomely from your life insurance policy’s cash value, but the policy is not really for you. It’s for others.
- The policy won’t demonstrate its full value unless things go badly wrong.
- If you pay off the policy, you can hand it down to your heirs.
But think about the differences, too:
- There are no limitations to what gold will “pay out” for. Anything that happens is fair game. You can use your gold for whatever you want or need to.
- There is no delay beyond what it takes to sell your gold (which can happen fast) or use it for direct payment.
- No other person has the payout decision in his hands. It’s entirely your decision.
- If the company that sold you the “policy” (the gold) goes bankrupt, your gold retains every bit of its value.
These points confirm the value of having zero counterparty risk. No one else needs to make a decision, do their job right, stay in business, or release or deliver funds to you. Gold held personally will be there when you need it. Period.
How Much Gold is Right?
Today, the investment triangle’s full one-third of one’s investment portfolio—or more—would be rational to have in the metals given the extremely overbought and perilous situation in the stock market.
Your goals, your situation, your preferences, and your concerns all play a part in that, as do market conditions. Begin with our free guide to learn how you can double your ounces without investing another dollar.
Call ICA at 1-800-525-9556. Talk with a knowledgeable advisor who can help you with what you’d like to do or help you develop your plan.
Don’t delay. Things in America are not getting calmer and more stable by the day. A decision for gold could well mean the difference between poverty and plenty for you and your family.