The Golden Years

Posted by admin on Jan 28, 2012 in Blog | 0 comments

The world is now waking up to the fact that gold is not a commodity, but currency with many functions such as performing insurance, liquidity, store of value, etc all because of gold’s absence of counter party risk. In a world awash in liabilities and the “daisy chains” of counterparty risks, very few assets stand outside that realm. Gold, the wealth and reserve asset of the ages, is coming back as more than a safe haven, but as a means of exchange, and will leave many wondering “How did we miss this?”

For thousands of years, gold – and silver – have risen to replace the coin of the realm as the true store of wealth during times of upheaval, and especially during times when empires teeter on the brink of insolvency or political power. The present economic uncertainty is unprecedented, as nations around the world are seeing their credit ratings downgraded and are unable to meet their financial obligations.

It would be wise therefore to look toward historical precedent in your financial planning – and dangerous to ignore.

To meet their obligations, governments have had no choice but to crank up their printing presses, and this process, beginning in 2008, has accelerated. The effect of this dilution has lowered (depreciated) currencies values. This can be seen by the increase in commodity prices worldwide and a significant rise in the cost of essentials, like food and energy.

International trading partners will likely opt for payment in gold (and silver) to settle their accounts, as confidence fades in reserve currencies  issued by near-bankrupt nations.

Readers are advised to consider ownership of physical gold and silver to protect themselves from a possible meltdown of the financial system. A significant portion of your liquid assets should replace paper assets, such as stocks.

Users of the Mortgage Magic System should include a monthly amount set aside for the purchase of precious metals in their monthly expense planning. Although the result will be to extend the repayment of the accelerated mortgage, we anticipate that the value of precious metals will far offset the additional interest expense that will result.