Monday, September 26, 2011

Investing in a World of Inflation, Gold & the Declining Dollar

Dear Friends,

Many of my friends are frequently asking me about my thoughts on the financial world, stock markets, gold, investing etc. I have been sharing my thoughts and research with my close friends for years. I thought it might be useful to share this with my greater community.

I started receiving guidance from the ascended masters in the spring of 2005 that we were headed towards:
  • Declining Dollar
  • Rapid Inflation
  • Serious decline of the financial markets worldwide, and
  • Restructuring of the world monetary and financial systems from "fiat" currency to "real goods/real asset/gold" based systems between 2007 and 2013.
I had most of my liquid assets in the stock market at that time in the spring of 2005. I spent months, and eventually years, studying all the fundamentals of the economic, financial and monetary systems of the world. I came to the conclusion that all fundamentals were pointing to a need for rapid re-valuation/de-valuation of financial markets/stocks/bonds and assets. The more I educated myself, the less I found myself trusting my Wall Street advisors to manage my personal and family portfolio. I learnt back in 2005, via some friends who worked on Wall Street, that no matter what Wall Street says, it is almost NEVER working for its clients or the public. It is almost ALWAYS working for itself. i.e. maximizing its own profits and bonuses.

After months of deep and anguished discussions with everyone in my family and advisors, I decided to pull out all my assets from the financial markets in the summer of 2005. I decided to move and invest them in a manner that was 100% in alignment with my values, and beliefs. Upon research and digging deep, I found that even most of the so called "green or socially responsible investment options" offered by the mainstream investment world was in fact mostly green wash, and very little real options that I considered in alignment with my beliefs and values.

My beliefs at that time in summer 2005 were:
  • A complete and 100% lack of trust in the financial system/Wall Street advisors.
  • And a deep trust only in assets of real value.
My conclusions about our financial/monetary systems were:
  • By 2005, the fundamentals were all against long term stability of financial markets, stocks AND bonds.
  • Past rules of investing, and wisdom widely held by the experts around investing guidelines, while held true for the last 50-70 years of market stability, were NO longer applicable; and a completely un-reliable guidance system for the future coming years.
  • True inflation was many times higher than the official numbers reported by almost all western governments. e.g. U.S. routinely reports, what are laughable man-made inflation numbers, that always remain in the 2-3% range, when the real inflation was in fact more like 10-15% a year specially since 2000. How is this done, you say? By changing the basket of goods that is used to calculate the numbers. Whatever consumer items start costing more are dropped, and whatever items start costing less, get added to the bucket for calculation. Thus, inflation numbers reported from year to year are apples and oranges and have no comparative value or relevance. e.g. when energy prices started going up since 2000-2001, energy was dropped/reduced in the measurement bucket; as if people stopped using energy. So, the rules of measurement are constantly changed, unbeknownst to the un-suspecting public.
  • The stock markets had become nothing more than gambling casinos; and did NOT reflect the true value of underlying assets. e.g. the mortgages were re-packaged and re-sold in funny ways. As of 2006, for an approximate value of $10 trillion of all mortgaged real estate in the U.S., there was paper/contracts outstanding for approximately $60 trillion - due to this paper derivatives game created by Wall Street that is the real source of real estate collapse in the last few years. Essentially, in plain English, there were $60 trillion worth of contracts backed by only $10 trillion worth of real estate. If a small business kept their books this way, it would be called criminal accounting fraud.
  • While many public companies were real and running very good businesses in the real world, their stocks on the stock market DID NOT reflect the real value/market conditions AT ALL. The price of the stocks was simply too manipulated by too many computers, day traders and parties in the financial system, to actually reflect the true market conditions/value. Therefore, I felt that the stock market was, in fact no more than a gambling casino. And therefore, while I loved many companies and their offerings in the world, e.g. Apple Computer, it was too foolish to own their stocks simply because the financial system was a house of cards/casino. I believed in Apple's future. But I did not believe in the financial system where Apple's stock is traded/owned.
  • The price of real financial assets like gold/silver and commodities was going up rapidly. (e.g. Gold price has gone from about $250/oz in 2002 to $400 in 2004 to $900 in 2008 to $1700+ in 2011.)
People say that the Gold price is going up. It is not Gold that is going up. It is the dollar that is going down. And the Euro. Gold has the same value. It is the US Dollar/Euro that has decreasing value. Ditto for most commodities.

I shared my thoughts and concerns with many friends throughout 2005-2007 time frame. Feeling strongly that a crash will come between Fall 2007 and Dec 2008. Many felt the same and moved their assets out of stocks/bonds to real assets like gold and silver. And we have all done well in protecting our assets through the last 4 years by staying in the real asset world.

In spite of my own beliefs and lack of trust in the market, I was enticed by the markets in 2008 to actually put some money back in the market, only to lose a large portion of that bucket when the down turn came in the fall of 2008. Including some friends, who also lost money in that time frame, because we made the mistake of putting a little back in the market in 2008. We failed to walk 100% in alignment with our own talk. Expensive lesson learnt in late 2008.

Fortunately, as per the guidance I had received, and based on the research I had done, I had vast majority of our portfolios out of the financial system. And that was the saving grace. After the Fall of 2008, I exited the market 100% again; and remain 100% outside, in real assets of value.

Real Assets of Value

What assets have real tangible value? That's an important question. After much contemplation on all kinds of assets, here's what I believe :
  • Land and real property. Specially property that can produce food, energy or provide shelter. And rental income if one needs an income bucket.
  • Real physical Gold and Silver as monetary instruments. (As opposed to fiat/paper currency, stocks/bonds or any instrument that is paper again).
  • Resources/commodities that can produce or provide the 5 fundamental needs; things of true value (food, water, shelter, energy, transportation); specially those that are also eco-green and good for the environment. e.g. Fossil fuel companies - NO good. 100% Clean green energy related companies - YES.
  • Valuable private companies that produce goods and services that satisfy the 5 fundamental needs of humanity. (as opposed to valuable public companies whose stock/bond ownership is inherently unstable simply due to the unstable financial system; not because of a lack of their intrinsic value)
So, a friend just asked me today. Do I think that the price of gold and silver will go up or down? Here's what I told her...

As far as gold/silver price futures, obviously I have NO idea where it may go.  I am no investment oracle or financial advisor. But I will continue to invest in gold/silver/real assets all that I can. And plan to hold for the next few years.

My best take is that while we've had huge inflation in the last 10 years, it is going to be even higher in the next 2-3 years. That’s my best take. While the gold/silver prices will fluctuate, as always, overall they are probably going to go much higher since the U.S.Dollar is going to continue to weaken. Until the current financial systems and monetary systems are re-engineered and re-formed to be designed for the highest good for all; and not for just the benefit of the top 1% of humanity.

I DO believe that with the rapid rise of consciousness on Earth, humanity is waking up. And our financial/monetary systems WILL BE reengineered and redesigned in the next few years. But it may be painful for us all meanwhile, as we go through the transition. The collapse of the old rotten outdated systems and the birth of the new ones will happen. Have no doubt. This will take place. It is only a matter of time. The ascended masters have confirmed this over and over for the last 6 years. And I believe that in every cell in my being.

Meanwhile it is a good idea to be practical. Prepare a bit for any hiccups, that are most likely to come:
  • Have some cash on hand for emergency needs. Ideally enough to cover your expenses for 3 months.
  • Have some extra food, water and basics stored at your home. Just to cover 10-15 days at the least. But 1-2 months ideally.
  • Think deeply where your assets are. Are they in alignment with your deepest beliefs. If not, correct the situation. Invest where your heart and beliefs are. In places, projects and people that support the regeneration of our planet.
  • Create community with your neighbors
So, that’s my take friends. But do your own research. Make your own decisions. I am NOT a professional investment advisor or financial advisor. I am just a friend sharing his research and ideas with friends. I invite your ideas, sharings and take on the future of investing, financial markets and gold.