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Debt Wall: Gold and Cryptocurrency LIFELINE!
There are various forms of debt in the global economy and all of them are rising right now, which means that any asset class that is priced using the power of leverage and margin is at risk of being severely cut.
In other words, debt levels, which were extremely high for the entire duration of this decade, are now kicking into overdrive and ballooning to record amounts while interest rates are being hiked.
As debt levels rise at the same time as interest rates do, the difficulty of paying off your obligations becomes far more challenging unless the economy grows faster, in which case your income outpaces the bump in interest rates. For the federal government, though, with tax cuts in place, their revenues will be lessened, while their interest payments keep stacking up – that’s a huge obstacle ahead.
As it stands, global debt has risen substantially in Q4 2017. Take a look:
Governments, corporations, and individuals are maxing out the quantities of debt that they can service.
That’s genuinely alarming because we all mostly transact with national currencies, fiat notes that are issued by our respective central banks, and we’re now at a point in which the slightest mistake in monetary policy could ignite a costly chain reaction.
All sectors are deeply indebted. No one is excluded. Put differently, your cash savings that currently appear on your digital screen when you log in to your accounts are also used by a counterparty (be it a government, your own bank, a fellow citizen, or a corporation).
We have been living under this system for over 46 years, so we’re completely accustomed to this and most don’t even know that banks leverage your savings for their own investment strategies. For the most part, most of us have never had a problem withdrawing our savings, but 2008 proved that when this system fails, the ramifications are astonishing. Since then, Greece and Cyprus have been clear examples of the vulnerability of fractional reserve banking.
You can’t trust any institution to bail you out, so as we head into the 2018-2020 period, which will be defined by higher levels of debt, a more noticeable inflation, and expanded deficit spending by virtually all major governments, you need to diversify some of the funds you hold in asset classes that pose high systemic risks into chaos hedges.
Take a look at the U.S. chart above and understand that due to how this capitalistic system is designed, the rich become increasingly better off. 30% of Americans, or roughly 90 million people, have nothing to show for their life’s work – their net worth is negative.
Your competitive advantage when it comes to finance is how much you know and what you do about it.
Our letter is focused on increasing the amount of research you have at your disposal. It’s up to you to take massive action after you conduct your own due diligence and build a game plan, suited to your personal circumstances.
The riskiest asset class to own today is cash because it is guaranteed to lose value.
I personally have cash in my brokerage accounts so I can take advantage of corrections in stocks that are part of my watch list. Cash is important in this regard. You need liquidity with your investment funds.
In my savings account, I keep 3 months of living expenses in cash. On top of that, I stash 1 year of living expenses in various major paper notes that are outside the banking system as an emergency precaution.
Look into how much cash you hold and make sure it’s not too much – inflation will erode it, and a possible systemic meltdown will slice it in half or worse.
Next up in terms of risk levels are bonds. Instead of blindly loaning money to governments or corporations, I use a private lending platform to make small loans with high yields to individuals, spreading the risk among 30 or more loans at a time and for durations of several weeks or months.
The default rate is miniscule, and the yield is between 6%-8%, and sometimes higher.
The best way to achieve higher non-attachment with the monetary system is to own physical gold and silver.
You know that they’ll be accepted anywhere in the world, especially in times of crisis, and their price never plummets too violently compared to other assets.
This is your insurance, and I suggest you make it a priority to own at least 6-9 months of living expenses in physical ounces.
They are speculative trading instruments right now, which we will continue to bank fat profits with, but in 1-2 years, a few of them will become stable and offer a convenient means of exchange with little to no inflation.
Lastly, I want you to think about geographical diversification. Last year, I obtained a second passport and bought offshore real estate. This means more than one government has to implode for my wealth to take a hit. My precious metals are stored in vaults that are spread throughout Europe, North America, and Asia as well for an added layer of protection.
No one has ever seen these types of numbers in human history.
Don’t allow the system to suck you in. Instead, take measures to protect your wealth as much as you can. In a meltdown, all things are at risk, but you can limit your exposure to disaster by making decisions today that will let you sleep better at night.
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