The Quickest Way to Build a Paper Fortune in the Coming Years
By Porter Stansberry
Thursday, April 23, 2009
"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
Editor's note: Porter Stansberry is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments.
Sign up today to read more investment ideas from Porter Stansberry.
|
THE EASIEST WAY TO MONITOR INFLATION
A special supplement to today's essay... our "pocket guide" to knowing if inflation is brewing.
We realize the inflation-vs.-deflation argument is a great cure for insomnia. A lot of folks believe we'll experience deflation (falling prices) in the next few years... A lot of folks believe we'll experience inflation (rising prices) in the next few years.
Regardless of which side you're on, you can monitor the situation with the action in the popular Market Vectors Gold Miners ETF (GDX). This investment fund holds the top gold miners in the world... miners that will soar in price if their product moves higher in response to inflation.
As we mentioned in December, gold stocks are an excellent "inflation hound." If this problem really takes hold, our hound will start barking and run past $50 a share.
 |
|
 |
 |
Millions of lost jobs mean billions in lost tax revenue for the U.S. government, and billions in additional Treasury debt to fund a federal budget deficit that may soar to more than four times last year's record $454.7 billion.
Employers cut 3.7 million positions from their payrolls in the six months since the fiscal year began Oct. 1, and the unemployment rate reached a 25-year high of 8.5 percent in March. That suggests receipts for April – the biggest month for tax collection – are likely to come in well below April 2008, analysts said.
At the same time, government spending has climbed 33 percent in the fiscal year through March, as relief programs such as unemployment benefits expand. Labor Department expenditures have more than doubled to $52.7 billion and payments by the Department of Health and Human Services have risen by $40.6 billion, or 12 percent. Spending by the Agriculture Department, which runs the food-stamp program, is 18 percent higher, or $9.9 billion more than in the same period a year ago.
- Bloomberg
Texas Gov. Rick Perry is saying that Texas could secede from the Union if it wanted to. But 75 percent of the people who live there say they want to stay part of the United States.
Of course they do.
After spending all that time sneaking across the border to get here, why would they leave?
- Jay Leno
|
 |
|
|
America Is Still the Best Place to Make Money
Wednesday, April 22, 2009
Hong Kong Is About to Skyrocket
Tuesday, April 21, 2009
An Income Portfolio that Yields a Safe 13%
Monday, April 20, 2009
My Top Inflation-Fighting Stock Ideas
Saturday, April 18, 2009
Do This, And You'll Never Suffer Another 2008
Friday, April 17, 2009 |
|
