muses of the moment

May 24, 2010

How do I prepare for this financial crisis?

For those that read this blog regularly, you know how to prepare and have been actively involved in doing it for a while. But for those who are just now realizing that something is rotten in Denmark and we are not in a recovery, you may be confused as to where to start. Groovygirl has some suggestions. This is what I have been doing and am continuing to do to protect my family and investments in the face of this Kondatieff Winter cycle.

I will list some basic things that anyone can start doing now. Then I will focus on some more conservative investment suggestions to do ONLY after you have secured your core investments and you have the extra money to do so. The majority of people don’t have extra savings, so part one is for them. These are things to do at any age for any investment income. These are the basics. If you want something more advanced and individual, contact a competent financial adviser.

Rearrange your income to save at least 10% per month. With that 10% plus, do the following:

  • Set aside some cash. Between one month and 6 months worth of monthly expenses. This is for you to live on if you should lose your job or have a major emergency like medical, housing, needing to move quickly, car repairs, additional emergency supplies in a disaster. Have some cash at home and some cash at 2-3 different banks.
  • Next step, buy some extra food and daily household items. You can really go wild with this, or just have enough saved for your family for a few months. There are lots of websites about storing food, look them up. Basically make sure you have at least 1-6 months worth of food, toiletries, and medicine for your family. This is the preparation for some possibly scenarios: you lose your job, you have to move and you don’t have a new job yet, a local disaster (such as hurricane, earthquake, oil spill, pandemic), national supply chains are slow or stopped, you have the essentials to tide you over. In an extended time of no supplies, you can trade what you have for things you need. Note: you can really go crazy with this survival mode and move into solar panels, generators, water filters, bug-out bags, guns and ammo. Save that for after you have secured the next few steps.
  • Third step: purchase some physical gold and silver coins. This can range from a few American Eagles purchased from your local pawn shop to gold bars stored in a vault overseas, depending on the amount of money you have to invest. The main reason to have physical gold and silver is to protect your core savings from hyperinflation or the coming currency crisis in the next few years. This is so you will have some real purchasing power for the next 5-10 years to purchase items you and your family might need to live or to buy an investment very cheap with no debt attached to it.
  • Fourth step: living quarters. Decide if you are going to stay where you are for the next 5-10 years or possibly move to another location. Whether you are renting or buying, make this decision based on the best information you have now. If there is the possibility that you will not be able to pay your mortgage, have a back-up plan of where you could go for 6 months to a year. Downsize what you own. Sell the extras and purchase items listed in steps 1-3. Now start back at step one until you have at least 6 mos of saved cash for expenses, stored food and medicine.

Advanced steps and long-term focus: after you have secured the steps above or you have more resources to protect, start researching these types of investments: physical gold and silver bars in several vaults in several countries, gold and silver mining stocks, and agricultural land. After the threat of deflation is gone, commodities, currencies of countries with natural resources and commodities. After the BRIC’s depression crisis, stocks in those economies.

We will have deflationary and inflationary pressures going forward and moving around the globe, gold and silver are excellent investments during both periods. The advanced steps are very dependent on whether there is an inflationary or deflationary environment. Stay away from all debt-related investments and invest in currencies carefully. This will be fast changing times. If you don’t want to expend energy trying to keep up, buy physical gold and silver.

At this time groovygirl is suggesting not to buy, sell, or update your home, except for preventative maintenance. Only make these moves if you know you will be in the same place for the next 10 years. The focus here is to preserve your purchasing power, have emergency supplies, and be as liquid and mobile as possible.

This is a normal investment cycle in which debt contracts. These are the investments and preparations that groovygirl herself (and her family) is engaging in for this winter cycle.

Research, learn, make a plan, work that plan.

Another important thing to prepare for: your mental attitude. Decide how you would pass the time if you couldn’t go to work for some reason or had no work to go to. What things could you and your family do to be healthy and occupy your mind that cost no money? Make a list of these things. Would you study? Would you jog? Would you plant a garden? Would you build things? Could you make some extra money at these things? Money is not as important as keeping your attitude positive. What would the kids do? Could you get your neighbors involved in a community activity/project?

This a winter cycle and it will pass into the spring cycle. But first we must get through the winter.

4 Comments »

  1. Thank you for that preparation strategy GG. I would add that the best preparation is to prepare to die. If you’re not prepared to die, you’re not prepared, no matter how many supplies or gold and silver you have.

    Spiritual preparations are of first priority imho. This is something anyone can do regardless of money. Faith is more precious than gold. Yes, we have gold and silver coins, and yes, we have stored food and water etc. etc. and a propane generator, wood stove and small solar set up… but looking at our world I have to say that the greatest comfort I have is my faith in God and His Son and in Their promises found in the Bible.

    Faith is more precious than gold according to Peter and I would simply encourage everyone to get connected to God as your Father and Jesus as your Savior, Lord and Great Shepherd. “The LORD is my Shepherd, I shall not want.” And “His goodness and mercy shall follow me all the days of my life and I will dwell in the house of the Lord forever.”

    I am not afraid of death because “even though I walk thru the valley of the shadow of death, THOU are with me.”

    Isaiah 41:10 reminds us of God’s Promise to not be afraid or dismayed because He will be with His people in the days ahead.

    Heb. 13:5,6 promises us: “For He Himself has said, “I will never leave you nor forsake you.” 6 So we may boldly say: “The LORD is my Helper; I will not fear. What can man do to me?”

    And for the poor, God promises that their bread and water will be sure.

    Isaiah 33: “ Who among us shall dwell with the devouring fire? Who among us shall dwell with everlasting burnings?” 15 He who walks righteously and speaks uprightly, he who despises the gain of oppressions, who gestures with his hands, refusing bribes, who stops his ears from hearing of bloodshed, and shuts his eyes from seeing evil:
    16 He will dwell on high;
    His place of defense will be the fortress of rocks;
    Bread will be given him,
    His water will be sure.”

    See also Psalm 46 and 91 for God’s promises to sustain us thru what is coming. Without faith, I have no peace or security that I will make it thru what is surely coming.

    Do what you can physically, but put spiritual preparation at the top of the list. It could be that we have reached the end that Jesus told us about that will see His return. His wise counsel was to “watch and pray” in order to have the strength to endure what is coming and to stand before Him. (Luke 21:36)

    peace to all,
    Bob Brown, Chaplain

    Comment by BB — May 24, 2010 @ 10:21 am

  2. BB

    I completely agree. If there is one thing that gg thinks is for certain, this winter cycle will test the worldly securities for everyone. We will soon find out who we are at the core and what we truly rely on for strength.

    gg

    Comment by totallygroovygirlfriday — May 24, 2010 @ 12:02 pm

  3. Thanks for all the advice. I have really learned a lot from all your posts, especially with introducing me to Martin Armstrong. Clearly I think the precious metals are necessary for monetary protection in this winter cycle…and should be the foundation of wealth preservation.

    One thing that I have been trying to reconcile is how the stock markets will be performing in this environment. MArtin Armstrong is very clear that he thinks equities will be in a bull market moving into 2015…outperforming bonds and currencies as people lose confidence in governments and fiat promises (the public vs private argument). He really seems to like the commodity producing countries (i.e Australia) and sees capital fleeing into Asia. He seems to see this crisis as purely a monetary crisis but not a stock bubble.

    Again, thank you for all the great work. LS

    So, there will be massive volatility but it seems that in a hyperinflationary environment the stocks will be alright. Ayh thoughts on how equities will perform in this environemnt? Any thoughts on the breakdown of physical metal vs mining companies vs equities?

    Comment by LS — May 24, 2010 @ 5:10 pm

  4. LS,

    I think Martin Armstrong has said that in general stocks will rise (vs. the alternative of falling like in the 1930’s) and I think he has also said that all global currencies will be in crisis. That doesn’t necessarily mean that all stocks will do well all the time. He wrote a letter calling for the DOW at 30,000. The point of his letter was not that the DOW made a huge gain, but that the confidence in the dollar will collapse. Company stocks that have large debt or leverage their accounting may implode, those in the financial industry or banking may go bankrupt from investors suing them. Chose your stocks very carefully. A high price in stocks doesn’t always mean value. In this environment you will have to be able to read a income statement, balance sheet and all the foot notes on the financials of each company (including mining stocks) you invest in. Things will move very fast from one polar opposite to another and back again. This is to be expected in the K-wave winter cycle. It will not be possible to pick one investment class and stay with it through the next 10 years, unless, you invest in physical gold and silver. The reason for this prediction is a collaspe in debt and unavailibity of credit and the loss of confidence in all global fiat currancies. We have never seen an investment environment in our lifetime like the one we are observing now.

    Even Martin’s recent letter on the “land down under” calls for a contraction first, then expansion, after Asia has experienced a contraction. This is what I mean by polar opposites, now is not the time for investments in Asia, but soon it will be one of the best investments.

    Basically, groovygirl is saying be very careful of your financial assumptions. What you have experienced in the past, may be harmful if applied to the future because of the loss of confidence in all currencies. Whatever your investment is valued in (dollars, euro, etc) that will impact your investment return like it never has before. Up to now, only forex traders cared about currencies, soon everyone will be concerned about currencies.

    Thanks for reading,
    gg

    Comment by totallygroovygirlfriday — May 24, 2010 @ 6:24 pm


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