Leif Peterson

How the U.S. Financial Crisis Resembles Japan’s 'Lost Decade' - And How to Play It, Part II

This is wholly true. However, there is really no safe haven for hedging and being *totally* removed from the ever-reaching tentacles of the dollar. Worst case is that having a cache of gold at home would be confiscated (remember, I said "worst case"). In the 1930's, the US monopolized the gold price and set it at something like $23/Oz. Certainly, if you think you are fully hedged in gold and the price will sky rocket, and 2-3 years from now you can cash in and will be on "easy street," you are probably making bad assumptions. If things get really bad, there will be frag everywhere, and you will need to be able to side-step a lot of landmines. Developing a good strategy for gaining financial and economic intel (self-study) will go a long way, and in spite of the above being in gold now at the 20-30% level is a very good idea.

Investing in European equities (e.g. growth stocks) will be profitable, as well as in Brazil and/or Japan. It is possible that telecom companies (cellular providers) in Japan (DCM, NTT) and EU (DT, TEF, ERIC, NOK, VOD) will do well due to explosive population growth, popularity of cell phone usage, and little dependence on oil. (For example, it is not expected that Verizon has huge transportation costs requiring gas/oil expenses, of for buying construction/building materials -- all of which are hinged to commodities whose prices are up 50-78% in the last year).

Regarding a free economy (free commerce), it would be logical that the markets operate perfectly like a well-greased machine. In addition, you would expect that each new day, on average, brings growth to a variety of sectors. But we now find ourselves amidst a system where there is lost trust where there are players who care and those who just don't care. The Fed is almost at the point of saying "uncle," so you need to do you own due diligence on what to play next.

For gold, you can always purchase bullion on line with a credit card from the Perth Mint, in Australia -- if you don't have a way to purchase via your brokerage account or transfer funds electronically . Perth is owned and backed up 100% by the Australian government, and gold owned there can't be confiscated. (I actually have never purchased at Perth -- but it is a hip-pocket move that I know of if I see things going poorly). There are risks with owning bullion through etf's or at home, so be aware of the Perth route. Don't store gold in a bank safety deposit box, since the banks took ownership of boxes when gold was confiscated by Presidential Act in 1933 (www.the-privateer.com/...). You can own gold in the form of historical coins (Eagles, Canadian Maple Leafs, Austrian Philharminics) and these *likely* would survive , but watch out for Krueggerands, since I believe they're not protected. Last, there is no law that states you can own gold bullion in the US, since owning gold is a privilege, not a right. You can gain some extra insurance by owning pre-1964 silver coins ("poor-mans gold") if you need to barter for something using US currency. At this point, paper dollars wouldn't be worth much. All of the above regarding gold and the extreme doom & gloom is anyone's guess on what might happen in the future. As you retire, and bring your off-shore profits back into the US, you will be supporting your local economy -- so *anything* you do for asset protection will be meritorious service.