Economics & Investing For Preppers

Here are the latest news items and commentary on current economics news, market trends, stocks, investing opportunities, and the precious metals markets. We also cover hedges, derivatives, and obscura. And it bears mention that most of these items are from the “tangibles heavy” contrarian perspective of SurvivalBlog’s Founder and Senior Editor, JWR. Today’s focus is on the implications of a possible resurgence of Fed Negative Interest Rate Policy (NIRP.)

Precious Metals (NIRP):

Simon Black: Reason #437 to Own Gold: The Fed Wants Negative Interest Rates. The article begins: ”

“And just like that, it seems we’re headed back to quantitative easing… After cutting interest rates to nearly zero following the 2008 crisis, the Federal Reserve starting raising rates near the end of 2015 (from 0.25% to 2.5% today).

Following the most recent hike in December 2018, Chairman Powell seemed hell bent on further tightening, saying “some further gradual increases” were in the cards.Then the stock market promptly fell nearly 20%.

Investors were in panic mode and calling for the end of the world. The pain was too much… Last month, the Fed left rates unchanged… and Powell removed any language about further hikes. Already Powell is capitulating.”

(Thanks to H.L. for the link.)

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Gold Forecast: Gold Prices Likely To Test $1360 In February

 

Economy & Finance:

Wolf Street reports: Bond Funds Are “Potential Source of Financial Instability,” after Years of Global QE and Low Interest Rates: Fitch

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At Zero Hedge: Turkish Government Wages War With “Price-Gouging Terrorist, Traitors” As Food Inflation Soars. The article begins:

Food prices in Turkey have been soaring since the lira’s sharp, violent depreciation last summer. The rise in prices is not only a result of the currency’s depreciation which made the Turkish lira one of the worst performing currencies in the world, but is also a result of price gouging that has become a self-fulfilling prophecy, feeding on itself, over the last 6 months. According to Bloomberg, the price of eggplants, cucumbers and tomatoes in Turkey has jumped 81%, 53% and 39% monthly, respectively. Overall, food inflation in Turkey is at 31% annualized.”

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Sweden’s Cashless Experiment: Is It Too Much Too Fast?

Forex & Cryptos:

US Dollar Index moves to 2019 highs around 97.00

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‘Arcane’ SEC Rules May Kill Chances of Bitcoin ETF in 2019: Crypto Mom. Here is a brief selection from the article:

“The approval of a bitcoin ETF is widely seen as the next major trigger for a price rebound. The ETF would provide institutional investors with an easy way to get exposure to the crypto market.

The SEC rejected multiple ETF applications through 2018, including a proposal from the Winklevoss Twins. The Commission repeatedly cites concerns over manipulation and lack of maturity in the market.”

 

Tangibles Investing:

Jussi Askola, at Seeking Alpha: A Warning To Rental Investors.

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I found a great place to find pre-1899 guns. It is GunsInternational.com. They have 21 categories just for antiques. Some of the antiques are high-end specimens, and priced accordingly.  But if your taste runs toward old Winchesters, then the guns on that site will amaze you.

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SurviavlBlog reader Jason X. wrote to mention that Palmetto State Armory has their PA10 AR-10 variant on sale today @$599.99, unitl Feb. 17, 2019. Finding a good quality .308 battle rifle for $600 is amazing. At the Palmetto site, search on SKU: 5165447827.

 

Provisos:

SurvivalBlog and its Editors are not paid investment counselors or advisers. Please see our Provisos page for our detailed disclaimers.

News Tips:

Please send your economics and investing news tips to JWR. (Either via e-mail of via our Contact form.) These are often especially relevant, because they come from folks who particularly watch individual markets. And due to their diligence and focus, we benefit from fresh “on target” investing news. We often get the scoop on economic and investing news that is probably ignored (or reported late) by mainstream American news outlets. Thanks!




12 Comments

  1. There’s a saying in investing: “the day you buy is the day you sell.” It means that you should always understand how to sell, when and why. There’s lots of information available on how to buy precious metals. There’s lots less on how and when to sell them. If you are preparing for a financial crisis that you believe will be temporary, then to maintain — or even increase — your wealth you will have to sell your metals at the right time.

    Financial assets and real estate will have no or low value during the crisis. Metals will have spiked way up. As the crisis ends, however, the metals will quickly spike back down while other assets recover. Ideally, you will have offloaded your metals in the depths of others’ despair and used the funds to purchase hated stocks, bonds, real estate, etc.

    It’s also important to understand the tax laws as they apply to metals sales. Tax evasion can land you in jail, folks.

    If you’re preparing for a permanent SHTF situation, you will need to understand how to sell metals without getting yourself killed. Don’t think you’re going to be able to sell a shiny gold eagle on the street without the buyer thinking you.ve got more of them on you or at home.

    I’d really like to see the experts who post here focus on these problems for us! C’mon, folks!

    1. Excellent. I’ve gamed this in my mind a few times. I think that you are right. How to realize the store of value that gold can be remains tricky. There is a note of further caution I would add, while selling gold and buying another soft or hard asset you must convert to dollars (or similar) in the interim. That’s why, in an inflation gone wild scenario, when you need the value of gold most, it’s useless because the risk to convert to a failing fiat is too high when at any minute nobody will take, or it gets re-valued or replaced as the State tries to save itself. I suppose at the other end of such a crisis if one had held gold for the entirety, they would have retained their wealth by use of gold as a store. Always remember that gold doesn’t actually go up in value all that much, as you can still buy a good men’s suit in NYC for an ounce of gold, same as 100 or 200 years ago, it’s fiat that is going down in value. This is not to say that gold doesn’t go up some but it’s very slowly over decades. The ‘value’ of gold is reported against the dollar but a much better and actual measure of the value of gold is against a basket of hard assets. Against land, gold is a horrible investment return, but as you say, there are sometimes ‘blood in the streets’ opportunities but they are usually only once or twice in a generation. Interesting points, thanks, Doc.

  2. When purchasing precious metals for use after a SHTF situation I follow this philosophy. Small is good. At one time I had several 100 oz. silver bars and 1 oz. gold coins. After reading Survival Blog for awhile it dawned on me that while large denominations of precious metals are convenient, they are impractical. Once again a good example is if I am selling bread at a local farmers market after SHTF I would likely ask 1 silver dime for a loaf or 5 lbs. of potatoes that I have grown. You show up and have a gold coin of what ever denomination I will be unable or unwilling to take your gold eagle and give you change. I may give you 3 loaves of bread but that is about it. Your large denomination coin will be severely discounted and I am not going to take the hit. With this in mind I reevaluated my PM’s. I traded all my gold and 100 oz. silver for 1 oz silver and pre 1965 US coins. While you pay a larger premium for smaller denominations you hedge your bet against much higher devaluation of large denominations of PMs and have greater liquidity for purchases. Just my thoughts.

  3. I am thinking about sale strategies that avoid taxation and maximize personal safety. One friend has suggested avoiding gold coins and using gold jewelry so it appears you’re selling family heirlooms, not out of a store of wealth. Selco suggests using gold wedding rings, which you take off your hand one at a time (later replacing from the bag of rings in your pocket), Any online sales will be tracked and taxed. Coins from other countries may be reported while US Eagles and Buffalos may not. A lot depends on the quantity and quality of the S that has HTF.

    People believe that junk silver coins will be the best way to go. I believe it will take a while, perhaps a couple of years, for exchanges to be set up and for people to begin to be willing to accept them. Maybe it’s best to pay the small premium and focus on 1/10 oz gold eagles, at least for part of your stash.

    I would really appreciate an authoritative discussion of the following:
    1. Under current laws, how are precious metal sales taxed?
    2. What transactions are reported, and by whom? What quantities?
    3. What suggestions do people have for remaining safe while trying to realize the value of one’s metals?
    4. would like a discussion of this from a coin dealer’s point of view?

  4. Precious metals, silver dimes and quarters, just enough to smooth the edges of a real SHTF event.
    Brass and lead more than enough to smooth the edges of a seriously real SHTF event.
    Prayer every day, regardless of situation.

  5. Big chunks of PM are not for stroking your ego or surviving a crisis.

    It is for those that have real wealth to protect. Not the best choice if your ever going to need it for your daily survival.

    There are families with that kind of wealth and most of us know some of those surnames, thinking long term is one of the reasons they have it.

  6. JWR- I am curious as to your thoughts on buying the complete AR-10 from PSA. While I agree that the $600 is a great price for a .308 Battle Rifle, it seems you usually recommend buying through a private sale to avoid a paper trail. What would be you reasons for recommending getting this through an FFL?

    Thanks for your work on this blog. It is a daily must read for me.

    1. If you are worried about paper trails, then consider your papered guns short term investments. Your unpapered guns bought with cash can be your long term “buy and hold for future generations” guns. Whenever you sell or trade a papered gun, be sure to keep a bill of sale. That way you can later prove that you sold it. The proceeds from selling papered guns can of course be turned into buying unpapered guns–including pre-1899s.

  7. Agree with Aubrey… I can purchase a plot of land or a garage full of tools, some livestock, or… with my Bullion. Or spend a lot of time counting pre-1965 dimes.
    I think a combination of options would be best. Bullion purchased in today’s currency will protect a vast sum of wealth (perhaps even appreciate), whereas smaller denominations will facilitate exchange and trade. Even 1-oz. silver bullion will likely hold greater value than 1-oz of silver in ‘junk’ coinage.
    I would acquire gold for protection of my assets, and silver (bullion and ‘junk’ coins) for barter and exchange, but a combination should be in your plans

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