Elizabeth Asks:

Dear RB,

I’m sixty years old and my husband Bob recently passed away unexpectedly. I have a substantial portfolio of stocks and bonds, as well as a good pension, so even though I’ve been temporarily cash strapped while sorting things out, I know I’m going to be just fine.

We used the same financial planner for years and he’s done a good job, but last year and so far this year, the portfolio has taken some direct hits in commodities, energy, high tech and biotech. I know these sectors have their issues, but after talking with my advisor, I’m still not sure he’s fully up to speed.

Mom drifted into ‘conspiracy theories’ after dad died a few years ago and says there is a financial collapse coming. I hope she’s wrong, but a couple of her predictions have come to pass. She says gold and silver are the place to be.

I’m selling the house and am going to travel while I figure out what I want to do, but am planning on returning to the area to be near mom and an unmarried daughter who lives several hours drive away.

At my age, I can’t afford to lose everything, so I naturally want to be careful.

I’m a bit nervous. What do you think?


RB Answers:


Sorry for your recent loss, but glad to see you are financially secure and landing right side up.

Everything in the cosmos follows cyclical wave patterns including stocks, bonds and precious metals. Let’s tackle the issues one at a time.

Travel sounds like a great plan. You might discover new friends, new passions, a new ‘self’ and even a great new place to settle in and call home. You might want to postpone committing to return to the area. We know folks who’ve tethered their future to the past to care for aging family members, etc. and most ended up wishing they hadn’t. Consider the needs of others, especially those close to you, but follow your own path.

Stocks, Bonds, Gold & Silver

What really matters at the end of the day is what’s left in your pocket (not your brokerage account) after inflation and taxes. Official government statistics have zero correlation to the real world, and credible private estimates put actual inflation far above what the government would like us to believe. If you’ve been to the supermarket, paid property taxes, bought a new car or purchased healthcare during the last few years you know what we mean.

Few things are more important to your financial health than understanding the dramatic effect inflation will have on investments. If your financial advisor hasn’t discussed this with you or worse yet, doesn’t understand just how destructive inflation is; it may be time to consider your options. Dan Amerman (see below) has a great Free series on inflation, its effects and how to invest so you come out on top.

Stocks have had a good run the last several years and appear to be nearing a top. That being said, with our Federal Reserve and other Central Banks employing heavy handed monetary policies like QE, ZIRP and NIRP, no one can predict when the current cycle will finally be all played out. We have several investment advisory sources (see below) that you may want to consider tapping. John Mauldin’s team is especially strong when it comes to stocks.

GAAP Price/Earnings ratios (PE) and other historic metrics indicate stocks are seriously over valued and could experience a significant sell off. A 35% correction would be required just to restore values to historic norms, but keep in mind that markets often severely over correct as they seek a reversion to the mean.

Bonds, especially sovereign bonds, are by any measure at all time historic highs, so it’s virtually baked into the cake that Risk going forward is to the down side. The correction, when it comes could be brutal and sustained. Yes, energy and some other high yield bonds have already taken a beating, but it’s nothing compared to what could lie ahead.

No Debt Super Cycle has ever ended without a massive blowout crash and burn. The panic, when it comes, could be big, and you won’t want to be running for the exit at the same time as everyone else. Unfortunately, as with stocks, massive Central Bank manipulation means no one can predict when the day of reckoning will arrive for bonds. Beware, Danger Ahead!

Gold and Silver (not including paper gold, derivatives, ETFs, etc.) have a 5,000 year track record of preserving value, as measured in real, inflation adjusted purchasing power. That’s an extremely impressive record.

Unfortunately, maintaining value isn’t the same as growing value. If you’re trying to keep your head above water during a fiat currency death spiral, precious metals will work, but if you are looking to grow your portfolio in real terms today, it’s good to know that while precious metals and some derivatives can play an important and positive role, there are risks.

Powerful behind-the-scenes forces depend upon the current financial system remaining in place and are doing everything within their considerable power to manipulate precious metals as part of a strategy to keep the Dollar and other fiat currencies alive. This won’t work forever, but it will work until it doesn’t. Tread carefully, but don’t be afraid to get your toes wet here.

Physical gold and silver should be stored in a secure (preferably off-shore) facility for safekeeping. This costs money and can be tricky, especially when it comes time to redeem your metals. Will they still be in that ‘secure’ facility? Probably, but hypothecation, re-hypothecation and plain old theft are real dangers, as some have discovered the hard way. See to learn more.

Desperate governments think nothing of heavily taxing or confiscating assets, including precious metals, using the threat of stiff fines, brute force and imprisonment. If you purchase precious metals with a credit/debit card or rely upon the convenience of UPS or FedEx for delivery, you’re leaving a trail of bread crumbs that lead right to your front door.

During a real economic collapse what guarantee is there that the parties you are trading with won’t just grab your precious metals and blow your head off? Are you prepared for that risk? Sprott Global (see below) understands the ins and outs of precious metals better than anyone we know.

Pensions are one of the most important assets Boomers have, and we’re glad to hear you have a good one. A word of caution is however in order. In addition to being ‘adequately funded’, pension funds require steady returns (about 8% annually) on their investments (mostly stocks and bonds), plus the miracle of ‘compound interest’.

Many funds have not been adequately funded, and due to ZIRP and NIRP, most funds have not received the necessary 8% return for quite a few years. It’s hard to ‘compound’ nothing. Dan Amerman (see below) has a great Free series that walks you through the details and explains how current pension issues are likely to affect eventual outcomes. Quite frankly, it’s a real wake up call to anyone who depends on a pension.

Your mother’s concern about a coming Economic Collapse while difficult to fathom, may not be as far fetched as you think. Nations living beyond their means, employing reckless fiscal and monetary policies, sooner or later come to a bad end. America has so far been spared the consequences of its many abuses only because the U.S. Dollar remains the world’s Reserve Currency. Unfortunately, other nations are tired of being on the losing end of this deal and are working to do a ‘work around’. Success has so far eluded them (just ask Mohmar Gadhafi), but they’re nevertheless chipping away at Dollar Hegemony day by day. The reckoning could arrive suddenly and with full fury. Americans won’t like the piper’s new tune.

Genuine Social Unrest hasn’t visited our nation since the depths of the Great Depression which began when the Fed withdrew credit following the Wall Street Crash of October 1929. The closest Boomers have come were the massive Vietnam War protests. Today, there’s a growing awareness that major systemic problems threaten our future. These include the fact that wealthy banking families control much of the planet’s assets and resources through a myriad of large, powerful corporations. Economic and social bifurcation, plus the knowledge of what causes it, could prove to be an extremely explosive mixture. The masses are stirring and it’s anybody’s guess where this will lead. We recommend you factor this into your plans.

Massive Technological Disintermediation is also occurring, as rapidly evolving technologies put long established paradigms under severe stress. New technologies present tremendous opportunity for mankind, including Baby Boomers, but there are some disturbing and frightening aspects that must be considered. The pace of this technological revolution can only be expected to increase, so make sure your seat belt is securely fastened.

The future is guaranteed to be very different from the present and Boomers must decide whether they want to risk being left behind or embrace change. It’s not any easy decision.

Now is a great time to become your own financial expert. Who understands your wants, needs and desires, or watches out for your interests better than you? Below is a short list of financial gurus we’ve followed for years. Most have products they hope you’ll purchase, but each offers excellent Free email newsletters.

Dan is a great human being who offers the best Free series on pensions and inflation. His Paid programs offer concise plans for those ready to take the reigns and manage their financial future. Either way, you can’t go wrong with Dan. There’s no hype or sales pitch here.

Eric Sprott and Rick Rule are self made billionaires who love sharing their incredibly awesome knowledge and experience. The Sprott team focuses on mining stocks, precious metals and resource extraction funding. No one knows more. Their Free newsletter is extremely valuable. If you want to be part of the club, you’ll need to prove you’re an ‘accredited investor’ with at least $300k to invest. We have the greatest respect for the Sprott team and their integrity.

Marin Katusa is one smart dude and in our opinion, the world’s foremost expert when it comes to Oil, Gas and Uranium. He’s also one hard ball negotiator when it comes to picking up distressed assets. His Free newsletter is jam packed with great stuff. You can follow Marin all the way to the bank.

John Mauldin is a hard guy to figure out. We don’t agree on a lot and think he’s too cozy with DC Beltway insiders, Intelligence Services, Wall Street and the rest of the 1%. He appears totally unaware of the day to day issues most Americans face and not at all concerned regarding the social costs or long term consequences of the top 1%’s machinations. That being said, John’s Free newsletters, paid services and books offer tremendous insight, education and value.

Chris Martenson is a good guy on a great mission. His Free newsletter offers high quality articles and valuable interviews. He offers a Premium Service for those wanting more.

Wolf Richter’s newsletter and podcasts provide high quality, cutting edge information from a multitude of sources, and his sophisticated commenters usually offer valuable insight as well. It’s a great Free source, and while there are ads, they’re not in your face or in any way obtrusive or offensive.

Doug Casey is a self made billionaire whose team has in the past provided excellent value. His Free newsletters were great too, but unfortunately have degenerated. There are still scraps of red meat, so check them out, but don’t bother clicking on anything from affiliates Porter Stansbury or Jim Rickards. They are smart guys, and though they have some really great products, it’s hard to get through their constant fear mongering and sales hype.

Doug built and promoted his rich man’s village, La Estancia de Cafayate, in Argentina’s wine country, but this utopian dream turned into a nightmare when several wealthy investors discovered they couldn’t sell their properties except at a severe loss. There’s bad blood, and it’s fair to say the whole thing didn’t help the Casey team’s reputation.

Here’s a few awesome videos for those who really want to understand finance and get a better appreciation of how the world really operates:

‘The Money Masters’ (full length version) by Bill Still

‘Century of Enslavement’ by James Corbett

‘Why Americans are Losing Their Rights’ – featuring Jordan Maxwell

Hope this helps, Restless Boomers

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