Our economy and our money have reached a turning point. The only sure way to survive unscathed is to seek shelter.
When I wrote about the economic disaster, I cited the government’s own numbers to support the case we are already in a depression worse than the great one.
I don’t write that to scare anyone.
My single purpose is to alert you to the real conditions in which we must operate. I am quite optimistic that you’ll be able to profit in the times ahead.
When I ask family members who lived through the last depression to describe it, they said that if a person had a job, they made out fine. They also talked about how no one would ever think of accepting welfare, or get on the government “dole,” as they called it.
How times have changed.
In the last depression, there was massive deflation, so their comments about having a job make a lot of sense. If each dollar in your wages earned buys more than the last pay period, even if you are not making quite as much, you will sustain.
The savers were rewarded.
The opposite is true when it comes to rising prices. As long as your income increases at the same pace as inflation, the pain is minimal.
Today is different.
It is critical for you to understand this. Our current depression has higher prices and lower wages — a double whammy, coupled with unemployment at 28%.
We’ve argued that we may see deflation, followed by inflation (or even hyperinflation) as a result of our government’s incessant meddling in the market.
Again, everything points to a remarkable implosion of the U.S. economy. But we’re not alone. The EU looks determined to sink itself.
I was speaking with a seasoned debt trader today and his comment was, “It looks like two sinking ships and the captains are arguing over what to serve on the buffet.”
He’s right. Our leaders are more worried about re-election than the destruction of their nations. It borders on treason.
Now I recognize that nothing I’ve said sounds optimistic.
However, I know from experience (professional and personal) that from every disaster, some opportunity of equal significance, and most times greater, will present itself.
We need only look for it.
I’ll ask you to trust me on this; if you’ve not experienced it yourself, it seems very Pollyanna-ish, but it’s true.
We’ve talked about a number of different scenarios to find the profit in disaster situations, and now we’ll examine one of the simplest strategies you can implement to protect your wealth.
We’ve talked about it before, but this is important enough that it bears repeating. It not only can help you sidestep our currency devaluation, but can help make you a tidy sum.
EverBank (with which Taipan has a relationship — the legal team makes me say that) is an FDIC-insured U.S. bank. It is one of the very few U.S. banks that allow you to hold your savings account in currencies other than dollars.
More than a year ago, we recommended you open an account as an easy way to own the Chinese yuan. We knew this Communist government would bow to U.S. pressure and allow their currency to appreciate, which it did within weeks of our recommendation. We also noted that it’s pegged to the U.S. dollar, and that any gain would be reflected in our holdings.
We were right on both and scored a two-for-one return.
For the ultra-conservative, I strongly suggest, again, opening an account with EverBank. I’ve had an account there longer than I’ve been writing for Taipan and can attest to the ease of use and excellent customer service (legal doesn’t make me say that).
This is a savings account, nothing more, and nothing less. However, it has the added advantage of being able to switch to a different currency with a phone call.
In these precarious times, having that flexibility to move from one currency to the next could make all the difference in the world. It costs almost nothing and if the dollar really begins to unravel, you have an option that most will not.
I have Swiss franc in my account (not enough). It wasn’t because six years ago I was planning for the fall of our dollar or the franc’s recent rise or because Michael Sankowski’s followers have been making money hand over fist thanks to the Swiss franc.
It was because the Swiss have had their economic act together for a century. The appreciation was nothing more than dumb luck.
In the first few years I owned the currency, its value moved in a very tight trading range. There was nothing of major significance, but it held its value and that was its purpose. Of course this has all changed and we’ve seen a major increase in its value.
Again, this was luck. But, as they say, luck favors the prepared.
Are you in the least bit prepared for the continued destruction of the dollar by QE3?
For the not-so risk-averse, there are a great many exchange-traded funds (ETFs). These tools trade like equities, and attempt to move in tandem with the currency markets.
There are some added expenses with them, and during the last market meltdown, we saw some blow up. However, for those who are looking for ease of use, and equity-like action, these may be the perfect solution.
I like ETFs, but found that I buy and sell them as if I were trading the currency market. In other words, I was in and out of them several times over a few days. At the end of the day, commissions (even discounted) ate into my profits.
When examining my results, I found that I would have been better off trading my own currency account than using the ETFs. I discovered had I followed the same strategies, and because of the leverage allowed in the Forex markets, my small returns would have been greatly magnified.
Last year I closed my account that allowed me to trade currencies. I thought I had enough exposure with an EverBank account, ETFs and an offshore account.
However, I believe it may be time to position myself back into Forex. It’s easy to see that there is a strong possibility of major moves in the dollar and euro.
I am, again, preparing to be very lucky.
Written by Joseph McBrennan for Taipan Publishing Group. Additional valuable content can be syndicated via our News RSS feed. Republish without charge. Required: Author attribution, links back to original content or www.taipanpublishinggroup.com.