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Back in 2005 I commented in an article that
“my investment portfolio is almost exclusively invested in a basket of
commodities (gold, silver, potash, uranium and crude oil) of which the bulk
is precious metals. A third of my investments are in gold and silver bullion
and a range of individual commodity-related stocks, from the very large
producers to the very early stage small junior exploration companies, or
their long-term warrants where they exist. Two thirds are in precious metals
ETFs.”
It
is now 2011 and my rationale for doing what I did back then has stood the
test of time and, I expect, will continue to do so for many more years to
come.
Let
me explain why I still think such a basket of commodity-related assets
is the only way to go. I also encourage you to read my recent article
entitled “Confessions of a Conservative Investor” here in which I explain why I
believe there is nothing speculative about investing in commodities and why,
in fact, they are the ideal investments for cautious investors.
From
my perspective the economic and political risks on the global horizon are
even more serious than they were a few years ago. Therefore, I still believe
that the best way to preserve my equity,
and secondarily, to grow it, is to invest in precious metals,
energy and agriculture. Other sectors like the stock and
bond markets are currently either overpriced by historical
standards and/or highly vulnerable and, as such, the downside risk of
precious metals, energy, agriculture and even most base metals is far less
than those alternatives.
What Will Continue to
Make Investing in Commodities a Winner?
Many events and circumstances could be
the trigger that causes the system to implode, explode or go off on some
tangent, It will probably be a sudden factor which will trigger yet others
such as a leveraged hedge fund or sovereign debt collapse, unexpected
military aggression or major terrorist activity (such as the sinking of a
petrol ship coming through Hormuz or Malacca straits or perhaps even the Suez
Canal.) Whatever unfolds will definitely cause currency gyrations
and imbalances which will all cause public opinion and confidence to shrink
dramatically. It is that last component which is the truly ugly part for
which manipulation by the power brokers will be ineffective to counteract.
There
is virtually nothing on the economic and political horizon to tell me that
any country – anywhere - is changing course. The U.S. with
all of its current policies, practices and scary economic and financial
realities continues to operate as if it is business as usual. Moreover, there
is absolutely nothing in terms of facts to suggest that the system will get
any better. U.S. politicians, for example, only have a time horizon
spanning to the next election – 6 years for Senators, 4 for the
President and 2 for Congressmen - with the calendar always shortening. Their
goal to is to be reelected, not make waves, always bribe the voter with their
own, or borrowed, money and never ever tell the ignorant masses, or the fifty
percent who actually vote, the ugly truth because they are sure to turn on
the messenger.
Denial
always trumps an acceptance of the truth even when one is endorsing a system
designed to leave one’s kids with bad values and worse circumstances
than we have now. The public will always opt for the pleasure of the moment
rather than deny themselves to ensure a better
future for themselves and/or their children. Proof of that is everywhere you look – home
“owners’ with no equity in their homes and mega-sized debts to
the banks, credit card debt often in the tens of thousands of dollars, leased
cars in the driveway, expensive holidays they can’t afford, shopping
sprees with money they don’t have, little or no savings in their bank
account and either no retirement savings plans at all or ones
that are totally under-funded - all topped off by a major aversion to paying
their fair share of taxes to maintain the benefits their various levels of
government provide. Ah, the good life!
Conclusion
So
how do I end this rant? Economic and political realities are grim and getting
worse. There is scant evidence of any serious and realistic policy
initiatives. If there were the public would reject them because it would
invariably entail sacrifice and deferral of an enhanced lifestyle until some
unspecified future date.
My
best advice is to put all (or almost all) your investment eggs
(dollars) into a basket of precious metals (gold and silver),
agricultural (potash) and energy (uranium and crude oil) assets including a
mix of bullion, individual stocks and/or their associated long-term
warrants (where available) and ETFs. Doing so will preserve what monies you have
and to make the most of the dire circumstances many “first world”
nations find themselves in today – and will to an even greater degree
in the months and years to come. The U.S., the UK, and most of Europe for
that matter, get all the media attention but smug Canadians and
Australians, and others too, are not immune to the political and
economic/financial uncertainties that abound. Remember, many people hatched
their future fortunes by judicious acquisitions in the 1930′s when
everything looked bleak so it is not too late for you to take both protective
and profitable action today.
I
conclude this rant by asking two simple questions: “Have you invested
to the maximum in precious metals, energy and agriculture
assets and, in particular, in gold and silver based
investments?” and “If not, what are you waiting for?”
Arnold Bock
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