Defend Your Wealth | Protect Your Financial Future

Middle Class Meltdown: The New Reality

Posted by Allan Schieman

You’re being lied to. There’s a well orchestrated game being played with your money that not only threatens your pocket-book, but also your freedom. Whenever your wealth is threatened, your future is at risk.

Everyone with money today, even those with just modest wealth, need to beware. Their wealth is secretly being taken by banks that want it and governments that needs it. Both of whom, are getting it. Together, like partners in crime, the government and the banks are confiscating the wealth from the middle-class.

The middle-class meltdown is in full swing. Regular people of all ages are being squeezed by a government with lots of promises and an over-due credit card … and the banks who operate a banking system that is designed for the benefit of the ultra-rich.

The government has the power to take their wealth through taxation and printing presses. The financial industry takes it in exchange for bogus investments. So, the wealthy get wealthier, while the number of the poor grows. The middle-class pays the price for all of it.

History provides several examples of economies that made the mistakes we’re making and followed the same path we’re on. And each time the middle-class not just paid the price but almost disappeared completely. People either became wealthier or poorer. Unfortunately, when the middle-class melts down, most people become poorer. But it doesn’t need to be that way for you.

While the stakes are high, the opportunities have never been greater. If you consider yourself to be middle-class and you want to stay that way, or move ahead, the decisions you’ll make in the few years will determine your future. This middle-class meltdown will be the biggest transfer of wealth ever. It’s up to you to decide whether you fall on the giving, or the receiving end.

Surviving, even benefitting from the situation involves more than just buying good investments. It involves understanding how the system works, knowing a little history and understanding what to do to protect yourself.

Unfortunately, most people can’t see what’s coming; most people become victims. The fact is, the deck is stacked against you. But the good news is that we’ve seen this all before. And history does repeat itself. A blue print exists that lets you build an impermeable wall around your nest-egg. You don’t need to re-invent the wheel, you just need to follow the plan.

Get Ready For A Greek Default

Posted by Allan Schieman

By: Allan Schieman

It’s starting to look more and more like Greece will default on its debt. A sovereign default like this one would likely throw the financial markets into turmoil and erase trillions of dollars of wealth worldwide. If you haven’t already taken measures to defend your wealth, the time has come to do so.

You might remember that Greece needed a bailout several months ago. The bailout package it received from other European nations included a series of payments made to Greece over time. To get the bailout payments, Greece must meet certain requirements including reducing government spending and increasing taxes – neither of which have been popular with the Greek people. As a result, Greece hasn’t kept its end of the bargain and has failed to implement all of its agreed upon austerity measures.

Greece has a big chunk of debt coming due soon and is relying on the cash from the next bailout payment to pay back those lenders. The question now is whether they’ll get the next bailout payment or whether Europe will finally cut Greece loose and let them sink … something Germany is now threatening to do. The German government has started coming up with a plan to shore up their own banks in the event Greece defaults.

All of this has caused the European bank credit risk to surge to an all-time high last week.

- according to the Markit iTraxx Financial Index of credit-default swaps on 25 banks and insurers.

Without the payment, Greece will surely default. If this happens, look out! Things will get ugly in a hurry. The fear is that a Greek default will cause more weakness in the global financial system and a renewed round of fear about another global meltdown.

Banks in Europe and in the U.S. have begun sounding the alarm bells that the risks to the system are extremely high. Many banks are looking for additional cash to help them weather the coming storm. The $5 billion that Bank of America just got from Warren Buffett is just one example.

The yield of 2 year Greek bonds is over 100%. Anyone looking for a high yield on their investments might consider this until they realize that they’ll likely never see their money again.

The latest developments in Europe should act as your wake up call to build a wall around your wealth soon.

How can you prepare your portfolio from the risks in Europe?

There are some simple yet prudent steps to take to defend your wealth from what’s happening in Europe. Here’s what you should do:

examine your portfolio and sell any European stocks or mutual funds
sell all European bonds you own and mutual funds that hold European bonds
get out of the Euro
sell any North American bank stocks you own that have significant exposure to European debt
raise the level of cash in your investment portfolio to at least 20%
add gold (or silver) to your investment portfolios

Hopefully, Greece won’t default on the latest round of debt re-payments. And hopefully, the financial system dodges another bullet …. but I’m betting otherwise.

Is It Too Late To Buy Gold?

Posted by Allan Schieman

By: Allan Schieman

I just got off the telephone with a client who asked me several questions about investing in gold. While I’ve been preaching the importance of including gold in your investment plan for a few years now, I’ve received more question about gold in the last few weeks than I ever have – likely because the price of gold recently broke $1,900/oz. The higher prices go, the more attention gold seems to get.

If you’ve ever heard me speak publicly or read my book, you know I’ve been urging people to add some gold to their nest-egg since March 2008. Hopefully you’re already defending your wealth with a position in gold. If you still need to take a position or even add to an existing one, you’ll learn a lot from this post.

Is buying gold today a smart move?
In our opinion: YES. The reason to own gold isn’t to make a lot of money – but unfortunately you probably will. The reason to own gold is to defend your wealth from inflation, a government debt crisis and economic uncertainty. The price of gold is rising because economic conditions are deteriorating. Let’s look at where we’re at today.

Inflation: Ask yourself: ‘are prices higher today than they were a year ago?’ You better believe they are … and they’re going higher. As governments continue to weaken their currencies, the purchasing power will continue to fall. As long as governments have printing presses, you’re going to see inflation.

Debt Crisis: Government debts have (and are continuing) to skyrocket in North America and Europe. The US national debt is above $14.5 trillion and counting. It is being increased by about $1.5 trillion annually. The United States government has no hope of paying back its obligations, short of printing the money – which I believe they will do. If you think inflation is bad now, just wait until then. The US debt crisis is already here.

Economic Uncertainty: The economy is extremely weak and many analysts including me, think we are already back in recession. Clearly, the economy has been on life support with the incredible stimulus spending over the last 2 years. The trouble is that stimulus spending is unsustainable and is now drying up as governments are being forced to cut back. The real problems have been covered up for a while and now the economic indicators are beginning to show how bad things really are.

For all these reasons, gold is essential to protect yourself.

How do I buy gold?

There are two types of gold: Paper gold and Physical gold.

Paper Gold
Paper gold is any paper investment that tracks the price of gold or any other document that promises you gold in the future. Paper gold comes in many forms. Here’s a quick explanation of each of them:

Gold Bullion Exchange Traded Funds (ETF) – A gold bullion ETF is a pool of money that buys large amounts of gold and then sells units of the fund to investors. The price of each unit of the fund will track the price of the gold closely.

Gold Mining Stocks – buying shares of gold miners isn’t actually investing in gold, rather it is buying equity in a company that produces gold. Typically, mining stocks lag the price of gold and carry much more risk.

Gold Stock ETFs & Gold Stock Mutual Funds – with both of these investments, investors own units of a fund of mining stocks rather than a store of gold. Like with individual mining stocks, gold mutual funds and gold stock ETFs carry more risk and typically lower returns than the underlying metal does.

Gold Certificates - A gold certificate is a certificate of ownership of gold. It is simply a promise, usually made by a bank, to deliver gold to you when you redeem the certificate and request the gold. The certificates aren’t actually backed by any gold, rather they are backed by other assets of the bank. Like any promise, they are only as strong as the entity making the promise.

Physical Gold
There are two ways to own physical gold. You can either buy gold bullion or coins and hold the metal directly in your home safe or your bank safety deposit box, or buy the physical gold and pay a third party to physically store your gold for you – in exchange for a fee of course. Typically, when an institution sells you gold and then charges you a fee for storage and safekeeping, it is called an ‘allocated gold account’.

What’s the difference between buying gold coins & gold bullion?

While both bullion and coins are the same gold (99.9999% pure gold), coins are fancier, often with beautiful artwork and involve higher costs to manufacture. Bullion is typically a bar of gold with minimal or no polish and costs less to make. While the cost of both depends on the spot price of gold, there can be a considerable premium to pay when buying coins. Typically, bullion is what investors are after and collectors want the fancy coins.

Who has gold for sale?

Physical gold is available from major banks and several gold dealers. Paper gold and allocated gold accounts are available through brokerage firms and investment dealers.

When the time is right, how do I sell gold?

Paper gold can be sold through your investment dealer or your broker with a phone call, similar to selling any other investment.

Physical gold can easily be sold back to the gold dealer or bank that originally sold it to you.

I prefer owning physical gold over paper gold because of the additional security it has. I don’t need to worry about the institution that sold me paper gold not making good on their promise. However, owning gold today in whatever form, is critically important to defending your wealth from the economic chaos we’re living through.