My Financial Survival Plan 1.0

[rrcamp]

Between now and the next X months I will have an influx of USD as some projects get done. My plan is to invest these dollars across three "safe" instruments to preserve or grow the wealth during the collapse:

-Gold Mining via "GDX", ETF covering PM mining companies. With an ETF you own the underlying stocks.

-Commodities via "RJI", an ETN from Jim Rogers which is the single broadest commodity index available. ETNs are debt instruments, so you will lose everything if the entity backing it up fails. In this case it's a quasi-government Swedish Export company... I am betting it won't fail, but I could be wrong.

-Hard currency via "MERKX", a Mutual Fund - the only one recommended by Peter Schiff - which is a basket of currencies from countries with sound (relatively) monetary policies (EUR, Swiss Franc, etc) + some gold.

-If I'm extra worried, some GoldMoney deposits.

Once the collapse near the bottom (who can tell? anyway, somewhere near the bottom) I will cash out this protected (and quite possibly larger) wealth and plan on purchasing high-dividend paying foreign stocks, mostly in developing markets. I assume I will be purchasing them at bargain prices, since the Asian/world markets will be down A LOT during fallout from US collapse.

I may mix this in with some developing market/foreign company ETFs, since investing in indexes generally outperform picking some stocks. This is especially true since I really am inexperienced in stock analysis. By betting on "Asian small-caps ETF" I reduce the risk of me screwing up, while still following the advice in Crash Proof that Asian economies will recover and prosper after the initial shock. I will modify this second phase after reading Peter's new book in October.

Now, for people who think the collapse will be REALLY REALLY bad... the weak points in the plan are many: The MERKX is vulnerable because it's based largely on fiat-currencies. I consider it a short-term investment: these currencies should get a boost from a USD collapse in the short term as investors flee the dollar, before succumbing to the same problems all fiat-currencies face. The commodities ETN could easily fail if the Swedish government, for whatever reasons, decides not to back up the Swedish Export company. The ETF should be okay, but the US Government could simply quadruple the tax on capital gains and dividends in an effort to raise cash and effectively wipe out any earnings.

 

[jonahtrainer]

If you really want safety then you need to make sure to get paper share certificates by getting your investments out of 'street name' or your broker's name. Keep in mind that mining companies are not bullion. Mining companies, GDX, etc. are subject to all the Counter-Party, Payment and Settlement risks the general market has. If you want real safety in this economic meltdown, which hasn't even really started yet, then you should have at least 5-15% in bullion and GoldMoney is a great option. Anyone who doesn't have 5-15% in bullion is not appropriately valuing the risk in the system. If you aren't extremely nervous of the current system then you are either naive, ignorant or crazy

 

[sirellyn]

I'm actually more concerned about how to get your electronic money. For example if you were a member of indymac and you had all your account info rigged to that bank. For example you had your dividends from your online broker going there, as well as your bank wires from gold money what do you do then?

Well you use another bank. But if a large wave of banks collapse and you don't have access to money for a little while (perhaps even a week or two) then what do you do?

It's not just the banks that can do down but also the brokers. I'm still trying to figure out how I can claim my stocks (or dividends) if the brokers and the banks that deal with them for me go bankrupt.

 

[muzzled dogg]

GoldMoney is a great option.

not if you want the gold under your mattress for when the revolution comes

 

[raystone]

this looks solid, however, I agree with Jonahtrainer on getting 5-15% in gold/silver bullion/coins. I think you need to physically hold them, however. International Rarities is great.

 

[Apparition]

is it just me... or is every thread that jonah makes all about GoldMoney.......?

 

[jonahtrainer]

I'm actually more concerned about how to get your electronic money. For example if you were a member of indymac and you had all your account info rigged to that bank. For example you had your dividends from your online broker going there, as well as your bank wires from gold money what do you do then?

Well you use another bank. But if a large wave of banks collapse and you don't have access to money for a little while (perhaps even a week or two) then what do you do?

It's not just the banks that can do down but also the brokers. I'm still trying to figure out how I can claim my stocks (or dividends) if the brokers and the banks that deal with them for me go bankrupt.

You need to remove the layers of risk between you and your assets. That means getting paper share certificates if you are going to actually hold shares; or becoming a book entry with the transfer agent (but that is even more risky). Also, I would recommend having multiple bank accounts at many different banks and if appropriate in many different countries (the US banking system as a whole is insolvent).

The SIPC has about $3.5B in assets which is much smaller than the FDIC's $53B.

More chaos is on the way and more institutions will collapse. This is a crash of epic proportions. All I can recommend is GET OUT OF THE WAY!

Why do I mention GM? It is the only credible alternative I am aware of to the current system. It is independent from the current financial and banking system. Being an entrepreneur who owns several businesses I am extremely worried about Counter-Party, Payment and Settlement Risk. GM should allow national currency payments sometime this month and then some of my larger counter-parties will deal with me through GM. I will also be offering employees the option of receiving their paychecks via GM. There are businesses who banked with IndyMac waiting in line to get their $$ from the FDIC so they can make payroll. If you have ever had to make payroll then you understand how the current situation could be a little stressful for business owners.

The cash-flow problems from this collapse are going to destroy industry. Usually when a country's banking system collapses it costs 8-20% of GDP. I would not be surprised if this mess costs 25-50% of world GDP before it is done.

 

[jonahtrainer]

this looks solid, however, I agree with Jonahtrainer on getting 5-15% in gold/silver bullion/coins. I think you need to physically hold them, however. International Rarities is great.

$5-10k is enough to hold on hand but if you have anymore than that you may want some outside the US, guarded and insured to reduce the risk of theft from either government goons or regular criminal goons. If it gets really bad here you'll probably just want to leave anyway .... so (1) where do you go? and (2) how do you maintain your standard of living?

 

[rrcamp]

So I have a question... it sounds like people are recommending that I get paper share certificates.. get the stocks out of the broker's name... but how does this work with an ETF like GDX, where you own a basket of stocks? What would you get in your name with an ETN or Mutual Fund? I use Scottrade to purchase all of these...

 

[jonahtrainer]

So I have a question... it sounds like people are recommending that I get paper share certificates.. get the stocks out of the broker's name... but how does this work with an ETF like GDX, where you own a basket of stocks? What would you get in your name with an ETN or Mutual Fund? I use Scottrade to purchase all of these...

The SIPC is grossly under-financed compared to potential claims with only about $3.5B in assets. Get all your money out of financial entities now before you have to stand in line to get it. Screw interest rates.

You should have a good nest egg of at least 5-15%, I know lots of rich people with 30-50%, of your LIQUID net worth in gold or silver. If you have several hundred thousand or millions to move GoldMoney is one of the easiest and safest ways. Do not trust the bullion banks as a lot of the 'allocated' and 'unallocated' gold out there is fictitious. JP Morgan may be paying $4.4M for a class action settlement where they charged 'storage fees' on 'allocated gold' when they did not even have any bars!

You better know your gold or silver is there. The scramble for physical bullion has not even started yet and there are about 100 ounces of paper gold for every 1 ounce of physical.

The secondary insurance held by brokers (I use IB and they have a $30M/account insurance) is written to them for you, but not for you.

There are a few ways you can protect your securities:

1. Have your shares delivered to you as paper shares registered in your name.
2. Have your shares put in direct registration as a book entry at the transfer agent of the company you are invested in.

Call up your broker and demand the paper certificates. There is usually a reasonable processing fee. Failing to do this because your broker disagrees or makes a fuss is you becoming complacent. Discount brokers seem to be the worst at dragging their feet. Getting this taken care of should only take a couple days; but I have heard stories of it taking a few weeks ...

I do not deal with ETFs or mutual funds; just more layers in my opinion.

The basic thesis is to remove the layers of risk and institutions between you and your assets. As the collapse continues and intensifies there will be a lot up for grabs all at once.

 

[bander87]

Yeah, physical bullion I think should also be added. I personally think you can go higher than 15% of your investment in silver... maybe upwards of 33%.

Deversifying within silver is good too (junk, 1ounce, 10ounce)

 

[FindLiberty]

ftp://radio.harrybrowne.org/04-12-05.mp3 last few minutes - store gold offshore.

and/or

DIY or Permanent Portfolio (PRPFX) ? http://permanentportfoliofunds.com/