The Quickest Way to Build a Paper Fortune in the Coming Years
Stock-Markets / Investing 2009 Apr 22, 2009 - 05:29 PM GMTBy: DailyWealth
Porter Stansberry wites: "How can I protect my family's finances from the reckless government spending we're sure to see in the next decade?"
Of all the questions an investor should ask himself (or herself) these days, this is by far the biggest one. I provided the answer to it in the most recent issue of my Investment Advisory.
Why has this become such an important topic? Because the current administration's economic strategy could create the greatest economic disaster in recorded history.
Not only is the administration planning on enormous deficit spending this year, but the current plan calls for increasing deficit spending for the next decade – spending that will more than double our entire national debt during Barack Obama's presidency. At the same time, Obama plans to extend federal control over vast and critical sections of our economy, promulgating new and extensive rules and taxes over both the power industry and the health care business.
These are probably the two most important engines of our economic growth. Producing huge amounts of inflation while severely restricting the most productive sectors of our economy is a recipe for catastrophe.
I don't have room for the all of the details in this space – and you hear enough bad news in the newspaper. Just know that, by 2019, our government's financial profligacy will saddle every family in America with around $800,000 in debt and unfunded liabilities. That doesn't include state or local governments, and it doesn't include any personal or corporate debt.
The government will pay for this debt by increasing taxes and inflating away the value of our currency. This will create a disaster in the coming years. I can't tell you when it will happen... but I can tell you it will happen. That's why it's critical you take precautions right now. That's why we must answer the question I laid out at the beginning of this essay.
The first thing you should do, if you haven't yet, is buy gold bullion. It's easy: You just call a few coin dealers, find out who's offering the lowest premium on bullion, and wire them the money. Once you have the coins, they're easy to hide, easy to store, and easy to transport. This is how to hold wealth the government cannot easily get its hands on.
The second thing for the average investor to do is make sure to own America's most important economic assets: energy, communication, and transportation. I realize it's paradoxical. But the coming crisis will make lots of people rich. It's not hard to generate a paper fortune in a huge inflation.
Yes, keeping the profits from these assets away from the government might be difficult. But in the early stages of this crisis, the value of these impossible-to-replace assets will soar. So the thing to do right now is buy the assets you know the government has to have for the economy to function. These assets will remain in private hands, and their values will increase the most.
I've been telling people to own the best communications company in the world – Verizon – for more than three years. I even tell readers that,"If you don't own Verizon, you shouldn't be allowed to call yourself an investor." I believe Verizon has one of the most valuable assets in the United States, a $40 billion fiber network to the home that will dominate the flow of data in this country for at least the next 50 years. The stock has held up well, despite huge losses in the stock market. And it has paid a very safe and steady dividend (it is now yielding 6%).
As for energy, you might recall during the big inflation of the 1970s, oil was the top-performing asset. It did better than gold (No. 2). Imagine how big the gains might be, in dollar terms, if the world's major oil-producing nations begin to price oil in something other than U.S. dollars? As our new stimulus spending kicks in and as many of the world's governments crank up the printing press, there's no doubt in my mind the price of oil, as measured in dollars, is going to soar. Own some oil.
For transportation assets, I want you to own America's largest railroad concerns. I know they've been killed in the past year, but in real terms (measured in gold), the rails are very cheap.
I think inflation and currency debasement is going to take hold by 2011. If you make sure to protect yourself with gold and the other assets I've just described, there's no reason you shouldn't prosper if I'm right.
Good investing,
Porter Stansberry
The DailyWealth Investment Philosophy: In a nutshell, my investment philosophy is this: Buy things of extraordinary value at a time when nobody else wants them. Then sell when people are willing to pay any price. You see, at DailyWealth, we believe most investors take way too much risk. Our mission is to show you how to avoid risky investments, and how to avoid what the average investor is doing. I believe that you can make a lot of money – and do it safely – by simply doing the opposite of what is most popular.
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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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