Jim’s Quote of the Day:

"We are now experiencing the first truly major crisis of financial globalization. Never before have banks seen such destruction of their balance sheets in such a short time. Moreover, there are signs that the problems are spreading. The risk premiums on commercial property, consumer credit and corporate loans have risen sharply." – Swiss central bank governor Philipp Hildebrand, quoted March 12, 2008

Note from JWR:

Congrats to Stephen H., the high bidder in our recent SurvivalBlog benefit auction. Today we are starting a new auction. This one is for three radios: MURS Alert Base station, a MURS Alert Hand-held transceiver, and a Kaito KA-1102 AM/FM/Shortwave. These radios were kindly donated by the owner of Affordable Shortwaves and MURS Radios. If you aren’t familiar with the Dakota Alert infrared perimeter security system, take a few minute to look at the Dakota Alert web site. These alarms are very reliable and versatile. I often recommend them to my consulting clients–especially those that plan to have lightly-manned retreats. You can easily set up multiple detector/transmitter sensors to provide 360 degree perimeter security for a large area. Instead of just a generic alarm, they will let you know which sensor was tripped, via a computer-generated voice message to a radio that you can carry on your belt. (Such as “Alert, Zone Two.”) The same radio can be used for point-to-point voice communications, on the little-used MURS band. The three radios have a retail value of $210. The opening bid for the combined lot of three radios is just $50. The auction ends on April 15th. Please e-mail us your bids, in $10 increments.

The Ides of March–The Dreaded Margin Calls Have Begun at Banks and Hedge Funds

This week the news wires were abuzz about the Bear Stearns bailout. It all started with a margin call.

An investment banking insider tipped me that there will be perhaps as many as five more “margin calls that can’t be answered” next week. Three names mentioned as possibly getting the dreaded call are Goldman Sachs on Tuesday and both Morgan Stanley and Lehman Brothers on Wednesday–on the same day that each reports their first quarter earnings. The word on the street is that all three may need to be bailed out, to varying degrees. Who is standing in the wings to bail some of them out? Credit Suisse and some other big European banks. At the end of next week there may be even more unanswerable margin call news, for US Bank and Washington Mutual. Oh yes, and rumor also has it that Wells Fargo sold some its tangible assets–including some that date back to the 1850s–in order to meet its margin call on Friday.

To meet these margin calls, most of the troubled banks will in turn be making margin calls of their own, to their hedge fund buddies.This, I believe, will cause dozens of hedge funds to go belly up, since most hedge funds have already been under redemption pressure from individual investors. Many hedge funds are using high leverage with their trading portfolios. This makes them unlikely to be able to meet their margin calls. The end result? Look at least for suspension redemption notices from a good portion of American and European hedge funds, and possibly bankruptcy announcements, soon after. A lot of investors are going to lose every penny.

And if all of the preceding weren’t bad enough, think about one other big piece of fallout: Derivatives. There are hundreds of billions of dollars of over the counter Credit Default Swaps (CDSes) in play, folks. Many of the banks and hedge funds are party to these CDSes. If a an institution goes belly up, then the full value of the CDS contracts on their books must be covered! Remember what I wrote a couple of months ago about Bank of America (BofA) bailing out Countrywide Financial? They didn’t do so because they were nice guys, or even because it was a “good investment.” They did so because that by acquiring Countrywide, they in effect became both party and counterparty to several large CDS derivatives. So magically, Poof! The derivative exposure disappeared. BofA simply “did the math” and realized that it would be less expensive to simply buy out Countrywide and zero out those derivatives, rather than having to fulfill them. Based on this recent experience, I predict that there will be dozens of mergers and acquisitions that come out of this banking and hedge fund crisis. We might even read of some acquisitions that will get us scratching our heads. Why would a major pension fund, an insurance company, or a money center bank buy a controlling interest in a hedge fund or an boutique bank? Watch for such oddities in the headlines in the months to come. You’ll know why…

You may ask, “What does all this high finance news mean to me? I don’t have any money in hedge funds or investment banks.” This bad news means that not only will there likely soon be some big bank runs, but also there will be The Mother of All Bailouts, in which the US taxpayers will foot the bill to bail out boutique investing banks, possibly a few big money center banks, and dozens of hedge funds. We are talking about hundreds of billions if not trillions of dollars that don’t exist. Read: monetization. So get ready for mass inflation of the US Dollar!

OBTW, I think Ben Bernanke needs to record a new greeting for his telephone voice mail [Insert imitated voice of the late actor John Houseman]: “Ben Bernanke isn’t here. He’s out making money the old fashioned way. He’s printing it!“

Letter Re: Wait and Buy Farm Ground Near the Bottom of the Market

James,
I wanted to address some of the discussion about buying [farm] ground. I know the situation may be different in the West since the flood of Californians may never result in lower prices than are currently available. But the following is my view of the current situation in the Midwest . Keep in mind that farmland has rarely acted in the same way as housing prices have. For one there is not the mass subsidization of farm land purchasing like housing. (think GI loans, first time buyers loans, Freddie Mac and Sallie Mae, etc)

The perils and pitfalls of land ownership is completely subjective depending on your region of the country and a host of other site or region specific issues. For instance, in the Midwest , good cropland away from metropolitan areas was selling for $2,000-$2,500 an acre in 2001 and 2002. It is now regularly being priced in the $6,000 area (it has roughly doubled) and between 10,000-$50,000 and acre the closer you get to a big city. It seems it has become fashionable for investors in New York and Los Angeles to buy cropland and take advantage of the ethanol boondoggle or the high crop prices. Even trash land that was good for nothing but hunting has soared upwards of $3,000 an acre (you couldn’t give it away for $300 an acre 15 years ago. It seems that everyone is trying to buy hunting ground to go into business as an outfitter or hunt deer. Many of these people live half way across the country (Mississippi, Colorado, Alaska , Pennsylvania, et cetera). It doesn’t help that every hunting magazine encourages this in the pitiful quest to shoot trophy deer (who got that way by eating corn and soybeans off of productive farmland all their life).

On its face you would think that the cost of land would do nothing but go up in price. I happen to remember the same thing around here during the 1970s and 1980s before the price of land collapsed. The commodities bull market of the 1970s encouraged every farmer and speculator to run out and purchase land. The run up started around $500 an acre to a top of around $4000-5000. Then the crop prices collapsed and farm land could be bought for $1,000-to-$1,500 an acre in the mid 1980s. If the current scenario turns out to be a similar multi-decade commodities boom that later collapses as the prices get ahead of themselves, the same scenario may present itself.

The nature of our semi-capitalist system tells us that there will be booms and busts in every market or sector. For many people it may make more sense to purchase a smaller piece of property first for a retreat and plan on buying more later when the inevitable collapse/stall in price happens. You may come across a once in a lifetime deal that throws this whole idea out the window. Many younger people feel like they have to go into debt and struggle to get all they need to “survive”. Your turn will come and at some point when you are more financially secure you may be able to buy a piece of property at a more reasonable price. Many of the people buying now are not even remotely attached to the land/locale and their interest will wane over time. Others will find their debt load too much to handle. At some point they might beg you take farm ground off their hands at a 50% loss to themselves. I know that at least two plots of my in-laws farms where purchased during the Great Depression. Put yourself in the position of having ready cash to buy ground when no one else does. – A.T.

JWR Replies: I agree wholeheartedly with your observations. Please note that I specifically wrote about patience, buying at the bottom, and watching foreclosure listings. That is where folks will find those "50 cents on the dollar" bargain retreat properties.

Letter Re: Recommendation for the Novel “Full Faith and Credit”

Mr. Rawles,
As I watch the meltdown of the Carlyle Fund, of Bear Stearns, and of the credit and derivative markets in general, I am constantly surprised at the the parallels of what I watch happening (via CNBC) with what happens in the novel, “Full Faith and Credit: A Novel About Financial Collapse”, by James R. Cook. [In his novel] huge hedge funds fail, and because they have huge counter-party exposure, the government has no choice but to bail them out. The government pumps money into the markets, causing commensurate inflation. And, as we are seeing in reality, the public gradually recognizes that precious metals are the only safe store of value and purchasing power.

In Cook’s novel, the calamity is initiated by rapid slide in the stock market. In our reality, it is the credit and derivative markets are failing, catalyzed by the failing real estate markets that are causing the recent problems. The book does not take the scenario into such a complete grid-down environment as in your book, and foreign currencies and precious metals are the antidote in “Full Faith and Credit” where bullets and beans are the means of survival in your novel “Patriots: Surviving the Coming Collapse” I’ve read both books, and taken from each in preparing myself and my family for the future.

In this mess we are in, may the innocents (John Q. Public) be blessed and protected, and may the greedy, amoral thieves of Wall Street that have profited so handsomely from these financial shenanigans pay for their moral hubris — very publicly. – Tango in Utah

Odds ‘n Sods:

Chester noted that Gold-Eagle posted some commentary from Chris Laird that nicely sums up the global economic crisis: Gold Says that Central Banks Fail to Stop World Deleveraging

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Bear Stearns exposed as a bank saddled with toxic sub-prime debt

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What went wrong? The story straight from the Plunge Protection Team

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Reader “RS” purchased the “Survive Martial Law” e-book, available for download for just under $20. The author, Harold Williams, claims to be prior service “Special Forces” in Vietnam, but both his writing style and some key details quickly show that his “combat experience” is an utter fabrication. Most of this slim 44 page “book” is just a re-hash of material that has been floating around since the early 1970s. RS recommends: “Don’t waste your time or money.”

Jim’s Quote of the Day:

“We’ve got a blind date with Destiny — and it looks like she’s ordered the lobster.” – William H. Macy, as “The Shoveler” in Mystery Men, 1999 (Screenplay by Neal Cuthbert.)

Note from JWR:

The current SurvivalBlog Benefit Auction ends at midnight tonight (Saturday, March 15th), eastern time. The high bid is now at $220. The auction is for a combined lot of five items: a 120 VAC/12 VDC BedFan Personal Cooling System (a $99 retail value), kindly donated by the manufacturer, a Thieves Oil Start Living Kit (a $161 retail value), the book “Healing Oils of the Bible“ by David Stewart, Phd. (a $19 retail value) the book “When Technology Fails“, by Matthew Stein (a $29 retail value)–all donated by Ready Made Resources, and a copy of the latest edition of “The Encyclopedia of Country Living” by the late Carla Emery (a $32 retail value). The auction ends on March 15th. Please e-mail us your bids, in $10 increments.

Credit Collapse: The Depression Countdown Begins

SurvivalBlog includes plenty of gloom and doom, but I do my best to not be a ranting and raving alarmist. The recent torrential flood of bad economic news, however, has led me to now urge greater preparedness. Don’t quit your job and head for the hills yet, but by all means redouble your efforts to get ready. In my estimation, we are now on a short countdown to economic depression. Back in early 2006, I first warned about derivatives trading. Since June of 2007, I have been warning about the larger implications of CDOs. In January of 2008, I pointed the finger of blame at exotic debt repackaging instruments that are “marked to mystery” and causing the credit market to collapse. Now, these manifold dangers are apparent even the mainstream media. New bank accounting rules go into effect on March 31st, so the Fed is pumping liquidity frantically. This will likely exacerbate the problem. Please take the time to read the two following linked articles about the ongoing collapse of the global credit market:

1. Meltdown Looms Larger as Credit Markets Freeze. Here is a key quote: “As for Bernanke’s Term Securities Lending Facility (TSLF) it is intentionally designed to circumvent the Fed’s mandate to only take top-grade collateral in exchange for loans. No one believes that these triple A mortgage-backed securities are worth more than $.70 on the dollar. In fact, according to a report in Bloomberg News yesterday: “AAA debt fell as low as 61 cents on the dollar after record home foreclosures and a decline to AA may push the value of the debt to 26 cents, according to Credit Suisse Group.”

2. IMF tells states to plan for the worst.

Clearly, the global credit collapse is getting much worse, but ominously, it is also now clear that the collapse is just in its early stages. I now have a high level of confidence that the credit collapse will trigger a global economic depression that may be as bad, if not worse than the Great Depression of the 1930s. At this point, it seems almost inevitable. The Federal Reserve lowering interest rates will not prevent it. At best, this will forestall it by a few months. To borrow an old Wall Street aphorism, Ben Bernanke is “pushing on string.” Without financing, the global economic machine is grinding to a halt. Helicopter Ben and his cronies can’t re-start it until after a lot of bad debt has worked its way through the system.

If you’ve been reading SurvivalBlog for several months, then you know what you need to do. And if you have been hesitating, then I strongly suggest that you get busy immediately: and actively prepare. Get the food and other key logistics, get the training, team up with like-minded friends and relatives, and if possible, buy and fully stock a retreat in a lightly-populated region. Get OUT of your dollar-denominated investments and re-invest in practical tangibles that you can barter. Companies with derivatives exposure and hedge funds will be the first to go, followed soon after by a stock market crash. Eventually, even erstwhile “safe” municipal bonds will be wiped out.

In the short term, please follow my advice on preparation for surviving bank runs. The recently-announced bailout of Bear Stearns is indicative of how quickly a bank’s fortunes can turn. Here is a key quote from a recent Financial Times article on the Bear Stearns bailout: “One problem with the credit crunch is that banks’ solvency positions can change overnight. As banks force fire sales of assets to recover their loans from hedge funds, the prices of those assets fall. But as the prices fall, the amount of capital that the banks need rises. Lena Komileva, a Tullett Prebon economist, said: ‘This is what is fueling the vicious cycle. Things can deteriorate very rapidly and banks can reach insolvency almost overnight.'” In my estimation, bank runs are now imminent.

Am I being an alarmist? I don’t think so. Just look at the US Dollar Index and the spot price of gold. Pray hard, folks. There’s a storm coming.

Letter Re: Battle Rifle Recommendations for a Californian

Mr. Rawles,
I am a resident of the People’s Republic of Kalifornia (PRK). I’m looking to buy a main battle rifle (MBR). My rifle collection currently consists of a few .22 rimfires and a [Federally exempt antique Model] 1893 Mauser, which I purchased on your recommendation from The Pre-1899 Specialist. It seems as though most of the [firearms design] features one would look for are restricted (if not outright banned) here [in California]. My question for you is, what would you suggest for a California resident’s MBR?. Thanks, – C3 in CA.

JWR Replies: California does have some almost unbearable “assault weapons” restrictions. OBTW, I’m fond of saying that the only “assault” going on is against our Constitutional rights.

Unless you plan to move out of the state soon, I’d recommend that you buy one or two FN49 rifles. This was a very robust post-WWII semi-auto rifle design. Most FN49s have fixed 10 round magazines that are filled from the top, via stripper clips. The ideal choice would be the detachable magazine Argentine Navy variant chambered in 7.62mm NATO. These are presently around $1,200 each. But if you are on a budget, FN49s were also made in several other calibers including .30-06, 7.65mm Argentine Mauser, 7x57mm Mauser, and 8x57mm Mauser. The latter were made for an Egyptian contract are the least expensive variants. These can sometimes be found for around $750. An 8mm Mauser, would of course also give you cartridge commonality with your Turkish contract pre-1899 antique Mauser. Regardless of what you buy, be sure to inspect the bore and chamber condition carefully before purchasing a military surplus rifle. Many of the Mauser cartridges and most of the older lots of .30-06 were made with corrosive priming, which causes bore pitting.

OBTW, up until a couple of years ago, I would have first recommended getting an M1 Garand rifle. Unfortunately, they have recently become quite collectible and prices have jumped up to the $1,000 to $1,500 price range. Spare parts have also become quite expensive. My advice to Californians: If you can find an M1 Garand with a nice bore for under $900, jump on it!

“Official” Statistics on Population, Employment, Income Levels, Money Supply, and Inflation?

James:
In a recent Odds ‘n Sods item, you cited a article published by The New York Times: You stated: “A key data point mentioned in the article: ‘The median household [in the US] earned $48,201 in 2006, down from $49,244 in 1999, according to the Census Bureau.’ “

That’s from changing population dynamics and more careful surveys of low-income families. For comparable populations, income has risen as you ought to expect.
Consider the results for “Worked Full Time, Year Round, Both Sexes, White”…
For 1999 income:
Persons in this group: 81.7 million
Mean income of all persons in this group: $44,854
For 2006 income:
Persons in this group: 88 million
Mean income of all persons in this group: $55,176
The 1999 figure, adjusted for US retail price inflation to 2006, is equivalent to $53,781.
Adjusted for US wage inflation, the number is $53,622.

This is only barely better than staying even, but that’s a lot better than the conclusion you drew from the New York Times article, which is that the median income has somehow declined 23% in constant dollars. Since when did you start trusting everything you read in the New York Times? In this case, the [New York Times] author went out of his way to make a clearly false claim: “Most American households are still not earning as much annually as they did in 1999, once inflation is taken into account.” Based on the actual facts he presents as his source data, that just isn’t true.

From the CIA World Factbook, the US GDP was $9.26 trillion in 1999 and $12.98 trillion in 2006, a 40.1% increase. Tom’s price-inflation calculator says $9.26 in 1999 is equivalent to $11.10 in 2006, so the real growth was about 17%.

According to the Census Bureau, the population of the United States grew about 7% in those seven years, leaving us with roughly 10% of growth in per-capita GDP. So that’s consistent with the other Census data, and it’s reasonable to conclude from these analyses that average individual income did in fact increase faster than inflation during this time. – PNG

JWR Replies: Like you, I am dubious about statistics complied by governments. Journalists with an axe to grind–such as the New York Times writer that you mentioned do indeed distort statistics even further, so this is cause to distrust press accounts of “official” statistics.

In many cases, government statisticians are solving equation with multiple missing variables, so their results are an admixture of mathematics, conjecture and voodoo. Inflation statistics are case in point. The official figures on consumer price inflation have become almost laughable. The “core” inflation rate excludes “volatile” food and energy costs. This makes the “official” consumer inflation figure just about useless to me, since my family’s three biggest budget items are insurance, groceries, and gasoline.

Money supply figures cannot be trusted. The figure for electronic “bankers” dollars are perhaps fairly trustworthy, ut figures for printed paper dollars are unreliable, at best. There is no way to account for how many dollars are squirreled away in mattresses, or are in the hands of foreigners. (Although if foreigners have half a brain, they are currently scrambling to exchange into a more stable currency.) One key statistic, the M3 Money Supply Aggregate, got so embarrassing that in 2006 the government stopped publishing it. At least one web publisher, ShadowStats, has attempted to reconstruct the M3 figure, independently. (They charge for access to most of their data and reports.)

Government unemployment figures are also highly suspect. By their own admission, the Bureau of Labor Statistics undercounts the chronically unemployed. Once someone has been unemployed long enough to have their state unemployment insurance benefits run out, they simply drop off the radar. The unemployment statistics also do a poor job of accounting for underemployment. For example, they would in the aggregate count an out-of-work stockbroker (that formerly made $250,000 per year) as “full time employed” if he out of desperation takes a full time job as a waiter, for minimum wage, plus tips.

Census figures cannot be completely trusted. The US Census has become a political football. Most notably, it has become a cause celebre for both homeless advocates and illegal alien advocates. These advocates can be found both inside and outside of government. They have attempted to manipulate data for political ends. How many illegal aliens are there in the US? Nobody really knows. The estimates that I’ve read range from 10 million to 22 million. But again, it is guesswork.

The bottom line is that “official” statistics are not be trusted. I’ll close with an unattributed quotation: “Most people use statistics the way a drunk uses a lamp post, more for support than enlightenment.”

Odds ‘n Sods:

Eric spotted this summary article at Bloomberg: Subprime Losses Reach $195 Billion; German Banks Get Hit

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DB found us this: Dollar losing clout around the world. Here is a quote: “Hit by a free fall with no end in sight, the once-mighty U.S. dollar is no longer just crashing on currency markets and making life more expensive for American tourists and business people abroad: Its clout is evaporating worldwide as foreign businesses and individuals turn to other currencies. Experts say the bleak U.S. economic forecast means it will take years for the greenback to recover its value and prestige.”

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Kyle D. sent an interesting piece of conjecture on “upside down” US homeowners, posted over at The Bear Ridge Project blog. Kyle’s comment: “The housing market is currently going down in value, and it will continue to do so at least 10-20% more. There are going to be so many foreclosed homes on the market, its going to take a very long time for the market to reach equilibrium. After we near this bottom, it will be even more of a buyers market than it currently is. At this point, its almost better to currently rent your home, as anything you buy will be upside down shortly.”

Jim’s Quote of the Day:

“I do not have a new message here; we have known for a long time that advance preparation and a strong balance sheet are the keys to riding out a financial storm. As I have emphasized before, the Federal Reserve can deal with liquidity pressures but cannot deal with solvency issues.” – William Poole, President of the Federal Reserve Bank of St. Louis, February 29, 2008 (as recently quoted by Dr. Gary North in his Reality Check e-newsletter.)

Note from JWR:

The current SurvivalBlog Benefit Auction ends tomorrow (Saturday, March 15th) at midnight. The high bid is now at $210. The auction is for a combined lot of five items: a 120 VAC/12 VDC BedFan Personal Cooling System (a $99 retail value), kindly donated by the manufacturer, a Thieves Oil Start Living Kit (a $161 retail value), the book “Healing Oils of the Bible“ by David Stewart, Phd. (a $19 retail value) the book “When Technology Fails“, by Matthew Stein (a $29 retail value)–all donated by Ready Made Resources, and a copy of the latest edition of “The Encyclopedia of Country Living” by the late Carla Emery (a $32 retail value). The auction ends on March 15th. Please e-mail us your bids, in $10 increments.

The Four Gs Update: Have You Got God?, Groceries?, Guns?, Gold?

In the next few paragraphs I’ll be tackling four issues that for many years, I’ve labelled “The Four Gs.” One of my contemporaries, Richard “Doc” Sweeny, even made the concept into and acronym: GGGG, for “God, Gold, Guns, and Groceries.”

God.
I consider faith in God the cornerstone of my family’s preparedness. Faith in God’s sovereign control of the future gives my family hope and peace in these troubled times. If there is no hope, then why prepare? Our hope is in Christ Jesus.

Groceries.
 There are continuing reports of shortages around the country of wheat flour, corn meal, rice, and cooking oil at some of the “big box:” stores such as COSTCO and Sam’s Club. This phenomenon is not uniform. Some readers tell me that it is “business at usual” at their local stores, while others report “one bag per customer” rationing signs have been posted, and a few report empty shelves. With galloping wholesale prices and shortages at the wholesale level, I expect these spot shortages to continue.

I’ve had a half dozen anxious e-mails from readers in the past week, complaining that their storage food orders have been delayed, that they can’t get a firm answer on delivery dates from the vendors, or that the vendors won’t even return their calls or e-mails. In nearly all of these instances, the companies in question are not SurvivalBlog advertisers. I’ve heard from several vendors that the big packing and canning outfits like Mountain House and Alpen Aire are essentially sold out of stock on hand, and that their order backlogs are at least 30 days, and growing. The problem is that in “normal” times, these companies serve a “niche” clientele. They just aren’t scaled to handle the order volume when more than 1% or 2% of the population places orders. I witnessed a similar situation back in 1999, just before the Y2K rollover. Some good news that I can mention is that several of our advertisers such as Ready Made Resources actually still have some storage food on hand. It is actually on the shelf (“in captivity”) and ready to ship. For any of their items that are back ordered, just be patient. You may have to wait four to six weeks. The other good news I can offer is that our advertisers all have good reputations. (If they didn’t, then they would not be allowed to advertise on SurvivalBlog.) The most reputable food storage vendors will not bill your credit card until the day that your order is actually shipped. Beware of small “fly by night” vendors that don’t keep any inventory on hand and that will bill your credit card weeks ahead of when they know they can ship. If you buy from a vendor that is not a SurvivalBlog advertiser, my advice is simple: pick your order up in person only from stock on hand, and pay cash on the spot. If you are taking delivery personally, then there is no need to leave a paper trail. Buying with a credit card is advised, in instances where immediate delivery is not promised. In that case, your credit card’s “charge back” buyer protection policy could protect you if you are defrauded. Keep in mind, however, that a charge back complaint often must be made within 30 days of the time of purchase.

Guns.
The next presidential election is huge question mark: Will the Democrats take the White House? And if they do, will another so-called “assault weapons” and “high capacity” magazine ban be legislated in the US? (Something similar to the 1994-to-2004 Federal ban.) At present, these possibilities are difficult to predict. But even if the “worst case” (namely, another ban with no sunset clause) doesn’t come to pass, I still consider battle rifles, full capacity magazines, and ammunition to be good investments and excellent barter items. If nothing else, like other nonperishable tangibles, they are good hedges on the falling dollar. Stock up, but do so quietly. If it is legal to do so in your jurisdiction, make all your gun purchases from private parties with no paper trail. Keep your eye on the local newspaper classified ads, as well as ads from sellers in your own state on GunBroker.com (on-line auctions) or GunsAmerica.com (fixed price sales–usually more expensive) Search only for sellers from your own state. That way, you won’t run afoul of the Federal law that prohibits the transfer of a modern (post-1898) gun across state lines, except through a FFL dealer. It might also be worth your time to drive long distances to some of the larger gun shows in your own state. Once there, you should of course buy guns only from private parties.

The upcoming Heller v. US supreme court decision should be interesting. I suspect that instead of striking down all Federal gun laws–which they rightfully should–the supreme court justices will pen a decision that is tightly worded and hence will only apply to just that one gun ban in the District of Columbia.

OBTW, for any of you that think that my advocacy of gun ownership and training is somehow un-Christian, all that I can do is direct you to Christ’s words in Luke 22:36.

Gold.
 I’m addressing gold last, for a reason. You’ve undoubtedly seen the recent headlines like this one: Gold at $1,000 on Weak Dollar, High Oil. Keep in mind that $1,000 is a psychological barrier. This might trigger some profit taking that could push the spot price of gold down as far as $920 per ounce. Take advantage of such dips. However, don’t get caught up in precious metals buying fever. Your key responsibility is to provide for your family, not to be a speculator. Don’t even think about investing any of your money in precious metals until after you have all of your crucial “beans, bullets, and Band-Aids” preparations well in hand. If you don’t have an honest one year food supply, then stop wasting your time hitting reload at the Kitco web site! (You probably won’t get the web page to load with any regularity anyway. The recent spike in gold and silver prices have generated so much web traffic that it has nearly crashed Kitco’s server. You might have better luck at the Swiss America web site.)

Remember: You can’t eat gold! There may come a day when you need to barter for day-to-day essentials. In such times, barter goods like common caliber ammunition or one-gallon cans of kerosene will be more sought-after than gold. Recognize precious metals for what they are: storehouses of wealth and hedges on the dollar. Think of them as a “time machine”. They can be trusted to preserve your wealth from one side of an economic collapse to the other.But do not expect them to keep your family fed in the midst of a socioeconomic collapse.

An afterthought: Perhaps I should add a fifth “G””, for Ground. I have long been a proponent of buying productive farm land. The nationwide market for real estate is clearly in a tailspin, and probably won’t bottom for several more years. But I firmly believe that the price declines will not be nearly as significant for good farm ground. Just be sure to be a wise buyer. Study local markets thoroughly (including soil surveys), and don’t feel rushed into making a purchase. In today’s market, time is on your side. I now recommend keeping a close eye on foreclosures, using services like Foreclosures.com or RealtyTrac.com.