Tuesday, September 29, 2009

All this talk of the recession having come to an end can be confusing to people and also quite deceptive. They now think that it may be time to start that ol' debt ball rolling again. Use the credit card, borrowing off the house. Get in on those cheap airfares and start my housing portfolio maybe.

But wait. What of the fundamentals. Unemployment still rising. I mean who is going to drive this recovery if jobs are disappearing? What of the commercial property price crash coming because people aren't buying as much stuff and because stimulus has created a false dawn? And what of the toxic paper still in the system, just hidden for now with clever accounting practices?

Be careful that what growth you see isn't government funded through stimulus packages. If it is, we are only in a temporary heavenly high. The devil is in the debt still languishing in the system.

Saturday, September 26, 2009

Paper and Hard Assets

Recently, I was trying to explain the concept of gold and silver as hard assets to someone who knew very little. I often get a 'glazed over eyes' reaction. Is it because I am being too detailed or is it because we have never been taught about what real money is?

So what I try to do now in these situations is take out of my pocket two things. A 1/10th oz medallion (available at www.youniquewealth.com/christinesmith/) and a paper money note of, say, $10 or so. I place these on the table in front of them and say, "One of these is paper and one of these is an asset; which one is worth more". Of course it's a loaded question and the answer is always, the GOLD!

So how is it that we have been duped to believing that printed paper, backed only by the faith we have in our governments, has any value whatsoever? Especially in these times when Reserve Banks are trying to 'save' our financial system by printing more, thereby debasing the value of the already nearly valueless. This is why we had a confidence crisis last October 2008. If the people lose confidence in the monetary system, then they will all want their money back. And you know what? It ain't there...just ask your Bank.

I hold the gold and know it has no liability attached. It's mine and it has been recognised as money for 5000 years. I sure will not swap it for bits of paper anytime soon.