Sunday, July 10, 2011

Inflation Buffalo Trap

It is said that native Indians would trigger a stampede and herd the American Buffalo towards a cliff to their ultimate doom. This is what happens when you "follow the herd."  Many in North American financial circles advise clients NOT to hold savings in CASH, because inflation will eat away at it. They say you're better off putting your money in a "balanced and diversified" portfolio for the long term?
Are these advisers not admitting that the government issued currency is not a good "store of value?" Are they not admitting that inflation is always present? Are they not admitting that they have NO confidence in the government to manage its finances? If your "balanced and diversified" portfolio is denominated in the currency of the realm, then you will ultimately perish aswell, because no matter what the "NOMINAL" performance of the stock market is-- it's always a function of a currency losing "REAL" value. 
This is the illusion folks, because once a currency loses its function as a "store of value," it will also fail as a stable medium of exchange. As the currency shrinks in value, the cost of living explodes! Why? Because when the government has the power to create and issue money with no restrictions, inflation is never ending. To store REAL value, you want something that cannot easily be duplicated or created. Something that requires hard work, innovation and time to develop and distribute. Gold fits perfectly into this category and history is filled with evidence of this. 
Is it any wonder why Gold has returned over 300% in the past ten years, while government debt has sky-rocketed out of control?
Don't let your fate be the same as the once popular American Buffalo, learn about protecting your wealth with assets of true value and historical significance. Gold and other precious metals are only one section of the many physical assets one can acquire to preserve their wealth. Education, critical thinking and an open mind are the keys to your financial future. Be PERSISTENT!   BK