In Jim Cook's Archive


An older woman complained to me about the huge loss she and her husband suffered holding a bank stock.  After they sold, the stock rebounded.  This took a big bite out of their retirement money.  They no longer got the dividends and the loss altered their plans for the future.  They were considering the sale of their winter residence in Florida.

They thought they had a safe investment.  Unfortunately, truly safe investments are few and far between.  In fact even the safest investments may be in for a rough ride.  Retirees who rely on bonds or annuities for security and income may be in for a rude shock. That’s because the monetary authorities and the U.S. government have openly embraced a policy that was unthinkable in the past. They are creating money (a procedure known as inflating) at a record pace.  They are paying the government’s bills with newly created dollars.  Furthermore, they want to see inflation and rising prices.  Heretofore, inflation was considered evil because of its insidious effect on savings.  It erodes the purchasing power of dollars held by retirees and makes everything more expensive for them.  It lowers their living standards.

The government’s ruinous spending on social programs makes inflating a necessity.  To them a little inflation would be good.  They have endorsed inflation as beneficial to the country.  No matter that it hurts people on fixed incomes and retirees who have saved and planned ahead.  There is great danger in such a policy.  Apparently the monetary authorities believe they can control inflation.  They think they can maintain a moderate level of inflation by tampering with monetary policy.  They think they can withdraw money if need be or push up interest rates to slow an overheated economy.

These are monetary experiments that have never been tried or have failed elsewhere.  High inflation is a way of life in today’s world.  The U.S. is engaged in the most aggressive inflating on earth.  This will likely translate into major price rises in commodities and eventually everything else.  A falling dollar means higher prices.

To offset the outbreak of inflation consider owning silver with 10% of your net worth.  If inflation hits double digits your retirement income will shrink perilously.  The value of your so-called safe investments will go down.  Get silver into your possession.  Store it in a safe place.  Plan to hold it for the long term, perhaps for the rest of your life.  The many unique characteristics of silver make it a good bet for price appreciation.  It has offset the ravages of inflation in past periods of high dollar debasement.  Over the past eleven years it has been one of the best performing asset classes.

We’re talking about the strong possibility of some seriously damaging economic trends.  The politicians have made a mess of things.  Inflation is a hidden tax.  It steals your money.  Compounded from year to year it can put you in financial peril.  It’s crucially important you consider a defensive strategy with 10% of your money.  Washington and Wall Street have a lousy record of protecting your finances.  Who are you going to trust in the future?  It’s time for careful thought about future financial trends.

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