What should I do with my savings?

Economics Economics Questions
1

Hello. This is my first post here at Mises.

I have money sitting in the bank. I am unsure what is the best way forward. If we are to enter a time of hyper-inflation then precious metals (gold coins, silver coins etc) might be a good way to go, especially since these are in fact an alternative “currency” (should the dollar bust). I’m also thinking of investing in some gold mining companies. Would it be wise or foolish to pay off my mortgage?

I’m just not sure what the future holds, will it be massive inflation, or will it be massive deflation (should all hell break loose)? It seems to me that we already have an excess of dollars (although, it’s mostly “theoretical/electronic” dollars).

My brother (not very knowlegable about economics and trusts Keynesian economists) says that gold might be too risky - but I disagree.

What books would you point me towards that might help me in my decision making?

What are you all planning on doing with your savings?

2

Put a small percentage (I’d say no more than 20%) in gold and silver coin and keep them in a vault at your home. I tihnk we’ll be in a deflationary environment for some time so cash is still king.

3

Gold should protect you in a deflationary or inflationary environment. It is clear that Bernanke has chosen the inflationary path. I don’t doubt it for a second. My gut says we’re in for an inflationary depression.

Like Byzantine said, I do have around 20% in gold. It’s difficult to get bullion right now. I like Central Fund of Canada, ticker CEF. I prefer it over the American GLD or IAU exchange traded funds. I however own some of all three. As for gold mining companies, I believe gold will continue higher in 2009 and on therefore these companies will have increased profits until the price of oil comes back. Not sure how oil will affect these stocks. Mining stocks are leveraged to the price of gold so if gold goes un 10% the stocks may rise 20% but keep in mind the down side also has the same leverage. Also keep in mind that Gold mining stocks will tank with the rest of the stock market if there is a sell off. I sold all my mining stocks mid-January anticipating a sell off. I’ll probably pick up some more if/when the S&P breaks 740 again.

As for books to buy, I don’t know of any on the Mises.org site that tells you how to invest or protect wealth. You can pick up a copy of Peter Schiff’s “Crash Proof”. He has a second book “Little book of Bull moves in bear markets”. http://www.europac.net/ He follows Austrian Economics and his investment strategies rely on Austrian fundamentals. I read both books. I suggest the Crash Proof if you’re to read only one. The second book is much the same as the first. The strategy is to buy low risk high dividen yield stocks in foregin countries that do not have a currency crisis. In such a strategy it doesn’t matter if the stocks go down as long as they pay you to own it. You take your dividens and buy more of the same stocks, the cheaper the stocks the better. The first book Crash Proof does have a flaw that Peter addresses in his second book. That of assumed decoupling between American and other markets. The first book was written before the October/08 bust. The assumption was that the American market would tank while the rest of the world wouldn’t. Many are pissed because of this error. However, if the US dollar does crash at least you own stocks in more stable countries in that case.

There are other books as well. James Turk has one on the dollar collapse (a red & white cover) and Jim Rogers has a couple on investing in commodities and investing in China. I haven’t read the Jim Rogers China one, but the other two books are good.

4

It depends on how much youve got. If you can afford it, I would first make sure I have:

Shelter

Defense System (weapons, ammo, alarms, friends)

Food enough for 10 yrs and also seeds for planting, how-to-farm books, etc

Water

Tools for being self-sufficient - farm implements, chain saw, wrenches, hammers, nails, etc

Drugs for conditions, potential conditions and for pains, infection, fever, etc

Transportation - cars, trucks, street and dirt bikes, bicycles, planes, boats, planes

Precious metals and maybe others - gold, silver (copper? tin?steel?)

Popular money - if a fiat currency is still in play and still fairly popular, its good to have to expedite trading

Jesus

After all that, you can invest the rest in the markets with the most promise. DYODD.

5

pairunoyd,

You sound just like a friend of mine who lives in the Smokey Mountains! He’s doing just the same as you advised.

I am going to be trying out those new LED lights to see if they will work for me in my home. I already burn firewood to save on heating bills.

6

I have a bit of savings as well (and plenty of ammunition). I’ve been thinking of maybe giving Peter Schiff’s firm Europacific Capital a try out and see what comes of that. Anyone here have any investments with Europacific Capital?

7

I just started the book Crash Proof by Schiff. Good so far.

8

I believe investing in preicous metals is your best way to retain capital. Paper assets are not money, they are mearely the “ghost of money.” If you are interested in investing in bullion/coins, contact me, i can assist you in a few different ways. You may reach me on my cell phone at 954-815-0989 or email me at Maxxsocher.spykermetals@yahoo.com

9

Agree on that. Get some gold and silver coins, but not tons of them. Consider them long-term insurance “just in case” or as something to pass on to your grandchildren. Coins are not very hard to get around here, you just need to find the good connections. 1oz Kruggerands, Canadian Maple Leaves and Mexican 50 pesos are the best you can buy but also consider Chilean 100 pesos. As for other investments may I suggest investing a tiny bit in companies specializing in “exotic metals”, like palladium, rhodium etc? Despite the current crisis they are always in high demand and short supply.

For the rest I have cash and all the money I have invested is in short term, sure yield stuff I can sell at any moment: they do not give that much but it’s enough to pay the bills allowing me to save some money and allow me some little pleasures. I have been considering investing something extra but it’s really not the moment.

10

I’ll vouch and second every single recommendation Pairunoyd has made.