Resolve to Exchange Paper for Gold
January 14, 2010 by Dr. Michael Cutler
It is that time of year again—time for reflections on the year gone by and resolutions for the year ahead. Last month you were generous in your gifts to others. Now, let me suggest that you give a gift to yourself. Resolve in the New Year to take some positive steps to protect the financial future of yourself and your family.
The most popular personal resolutions, we are told, are always the same: To lose weight, to reduce debt, to exercise more, to save money and to spend more time with family and friends. Rather than attempt all of these at the same time, I recommend spreading them out over the course of the year. Otherwise, we are also told, some 88 percent of New Year’s resolutions end in failure.
On the financial side, do plan to pay down debt and save money. Also, resolve to protect yourself from the steady erosion of the United States dollar’s purchasing power by owning gold and other precious metals. If you haven’t already done so, make 2010 the year you establish an offshore financial relationship to protect yourself against the prospect of foreign exchange controls.
Forecast: Inflation Ahead
I don’t need to tell you that the past two years have been tumultuous indeed in the financial markets. During the past two years gold has been one of the few investments that protected your savings. Meanwhile, the two-year performance of the Dow Jones Industrial Average is down 21.29 percent, the S&P 500 is down 24.46 percent, and the NASDAQ is down 16.79 percent. No wonder most Americans have seen their savings shrink!
In contrast, precious metals performed very well over the same two-year period. Gold is up 36.3 percent, silver up 19.39 percent, and palladium up 1.62 percent. The only laggard is platinum, which dropped 4.9 percent. And let me point out that this excellent performance by precious metals occurred during a period of price deflation.
Looking ahead, I urge you not to put your faith in Time magazine’s Person of the Year, Federal Reserve Chairman Ben Bernanke, who says that "inflation could move lower from here." There is no doubt in my mind that the Obama/Bernanke fiscal policies have primed the country for inflation. The question is not if, but when. The massive monetary inflation of the past two years is already beginning to be seen in increases in the consumer-price index. I am afraid inflation will become more obvious, and more serious, in the months and years ahead.
Ignore what our officials say and look instead at what they do. The evidence is unmistakable that it is their deliberate policy to make the U.S. dollar weaker, not stronger. The nation’s monetary base has ballooned in the wake of the U.S.-inspired financial crisis. This sharp increase in the money supply points to higher inflation. You will see it in higher prices at the gas station and supermarket. You will feel it in the steady decline of your purchasing power.
Foreign Exchange Controls
The likelihood that some sort of exchange controls will be imposed on us is greater today than at any time during the past 30 years. The U.S. dollar is no longer “as good as gold.” Today, central banks no longer want to sit with just dollars in their reserves. In addition to U.S. dollars, they want to own gold or even a basket of foreign currencies.
If the U.S. continues down the path of fiscal irresponsibility, a “run” on the U.S. dollar is inevitable. When this happens the president could impose exchange controls just by signing an executive order. This would make it illegal for Americans to move assets outside the U.S.
Today it is perfectly legal for Americans to invest abroad. As we’ve written many times before, you can own precious metals in Australia, through the Perth Mint Certificate Program. You can own a Swiss annuity, denominated in the currency of your choice. You can transfer funds to a European money manager. The only requirement is that you report any holdings over $10,000 and pay taxes each year on any realized gains.
If you have not yet established an offshore relationship we strongly recommend doing so this year. Do not wait until this window has been slammed shut! Resolve now to protect your assets against erosion and exchange controls in 2010 by investing in gold and other precious metals. And by moving some of those assets offshore.
My own company, Assets Strategies International, has been helping clients switch paper dollars for gold and other precious metals for almost 30 years. We can also show you how to move assets abroad, safely and legally. See our website, www.assetstrategies.com, for more information.