Financial Survival Kit

What do you need to be prepared for the future financial turmoil? How can you survive?

Should I Buy Gold?

It seems like everyone is a gold bug these days, but is it the right thing for you?

What Are The Chances?

With all this "end of the world" hype going on, maybe we should consider the chances. What are the chances of a civilization threatening event?

How Much Insurance Do I Need?

Insurance is an extremely broad topic. Hopefully this generalization on the different types and amounts will help straighten things out a bit.

Iraqi Dinar: Scam or Scoop?

Some say it's an easy way to make a million bucks! But do you understand currency markets enough to take advantage?

The financial world we live in is just as wild, if not more, than the mountains and woods we walk through. We are told that the fundamentals of our economy are strong, but we can feel that something is wrong. My unique financial background and survival passion make Financial Survivalist and excellent place to learn and share.

Wednesday, May 30, 2012

Gold is a Hedge NOT an Investment

With relatively recent economic turmoil, more and more people are thinking about buying gold and other PM's (precious metals). Gold can be a good hedge against inflation, it can preserve wealth, and it can be a useful means for barter. However, it is not a good investment as it will never pay dividends or real returns.

Gold is a commodity. It's value is derived from it's scarcity and usefulness in industry. It's real price, as with all commodities, is based on supply and demand and the labor required to procure it. Unlike other commodities the supply of gold and it's demand in industry have been and will very likely continue to be stable, and the real price is of gold is equally as stable. Therefore an investment in the real price and value of gold is a terrible investment.

The same characteristics that make gold a horrible investment also make it a great hedge against inflation and preserver of wealth. Because the supply and demand of gold is generally very consistant, the nominal price of gold in a given currency will fluctuate with that currency. If there is inflation or deflation, the price of gold in that currency will inflate or deflate accordingly.

This does not mean that world demand or supply of gold cannot change. I am simply making the point that the real value of gold is not likely to increase significantly. Holding gold over a long period of time will not pay dividends or provide a real return on your investment. The only thing it will do is protect your wealth from inflation.

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Tuesday, May 29, 2012

Sin Tax Causes Sin

Adam Smith, the famous economist and author of Wealth of Nations, wrote that where wine is cheap and easily obtainable it looses it's novelty and drunkenness is not as prevalent as it is in similar circumstances in which wine is rarer and more expensive.

He observed service men from northern France, where wine is slightly more expensive and rarer than in southern France, when stationed in southern France, would take to drinking heavily for a few months due to the inexpensive wine. However, the service men would soon become bored with the cheap wine and would in the end drink less.

It makes sense then, that in Portugal where they have stopped prosecuting drug crimes and all but legalized all drugs, the incidences of drug abuse and addiction have decreased as a result of their drug policies. Not to mention that practically all drug violence has disappeared.

Sin tax doesn't really cause sin. However, it is counterproductive to make a thing more of a novelty and rarity if you desire less abuse of it. By applying strict penalties (financial and or criminal) it increases the allure and novelty of the thing and draws people to it's use.

I am not a sociologist, and these observations may be wrong. I think it is important to point out that Adam Smith also wrote that increasing the price of a thing generally decreases the demand for that thing. However, I feel that it is an important point to consider as we watch the thousands being slaughtered on our boarder over what would otherwise be petty drug use.

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Monday, May 28, 2012

Facebook IPO Fraud Investigation

After the IPO of Facebook flopped, many people are left asking what happened? Essentially, they gave new revenue data right before the IPO that forced them to revalue the stock. In the first day of the IPO, several of the underwriters had to "prop up" the stock's price in order to keep it from crashing.

However, despite their attempts to hide it, the poop floated to the top of the water for everyone in the pool to see. It wasn't a candybar this time. Seriously though, did anyone ever really believe that Facebook was worth close to $100 billion?

Read the article from Reuters.

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Wednesday, May 23, 2012

Multi-Family VS Single Family Real Estate

There are many differences between Multi-Family and Single Family real estate investments. From their valuations to their financing. Below are some unique aspects to each.

Mulit-Family (2 or more units)

  • rental income more stable because it is not dependent on one person
  • can count 75% of the gross rental income toward your income requirements for financing
  • more heavily valued on the number of doors vs lot and home size
  • commercial financing required for 5 or more doors
  • tenant drama - no we can't all get along
Single Family Home
  • often cheaper to buy
  • more rent per unit
  • tenants are more likely to do landscaping and small maintenance
  • larger market for resale
  • easier to get long-term tenants
  • vacancy can cost a lot when dependent on only one source of rental income (1 tenant)
Not all rental properties are created equal. No matter how you decided to invest you are bound to have challenges. Each property is different. I think single family homes are a bargin right now and a better place to invest. However, I'll take any good deal I can get.


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Tuesday, May 22, 2012

Run on Banks in Spain and Italy Within Weeks

This past weekend Jim Cramer predicted that within weeks there would be a run on banks in Spain and Itally. Spain and Italy aren't even the worse nations. Greece is, but Spain and Italy aren't little economies like Greece. Italy is the 8th largest economy in the world. Jim Cramer also predicted a world wide economic slow down because of Euro woes.

So if the Euro goes what does that mean for us? Well, most certainly the Euro/Dollar exchange would suffer. The Euro currency would experience pretty strong inflation that would in turn cause some deflation of the US dollar, but mostly only in the EU/US trade. This would cause US products in Europe to become more expensive. Europe is the largest purchaser of US exports. If US exports become more expensive, along with economic troubles in Europe being exasperated, there will be a large slow down in the United States.

On top of this financial institutions are severely connected and likewise susceptible to the world economy. Many of the large US banks hold significant amounts of EU debt. Though the actual amount of expose is fiercely debated, it is likely that financial institutions in the United States would suffer significant losses. It would be like 2008-2009 all over again.

One of the largest US holders of EU debt is the cartel known as the Federal Reserve. Due to extreme secrecy of the cartel's financial statements, no one really knows what the affect of a default would be on the Federal Reserve. I would suspect that it would put additional strain on our monetary system. Thankfully our monetary system is not based on any reality, and so any strain can be similarly imagined away within the constrains of human acceptance of a fictional currency. That is, until we the people reject the imagined reality of the federal reserve.

All this would also cause the dollar price of gold to fall as well. Some people think that the EU crashing will cause gold to skyrocket. It may cause the real price of gold to rise, but it is not likely to rise in the dollar price. The EU crashing will cause slight deflation (increase of purchasing power) of the US dollar. That means that $1 can buy more gold. Thus the dollar price of gold will not likely rise much even though the real price may.

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Thursday, May 17, 2012

Romney VS Obama

Romney has a long history of helping companies and governments avoid fiscal suicide. I have no doubt that he would be able to temporarily pull us out of this recession. In fact I hope he wins. However, I do not believe he will and the reasons why I think he will loose against Obama are, 1, he cannot argue the issues against Obama, 2, he cannot outspend Obama, and 3, Obama has no moral limitations.

1. As governor, Romney oversaw many things that Obama has attempted and failed. One big example is healthcare. In fact, Obamacare is modeled after Romneycare, and the only defense Romney has is "state's rights." I just don't think it will work.

2. Obama is soon to have $1 billion to spend on his campaign, more than any one single candidate ever. There are a lot of rich powerful people that want Obama to win. That should put up some red flags considering the class warfare rhetoric of Obama.

3. Obama lies blatantly and un repentantly. He has no shame. I believe he will resort to whatever means necessary to win. I'm not sure Romney would do the same, but then again he is a politician as well.

Of corse this is a very brief argument. Few people are ever interested in detailed arguments of a similar nature. In the future, I may breakdown the individual points into more detailed arguments, however the current arguments are satisfactory to me at this point in time. We have a long election cycle ahead of us and my one hope is that ignorant people with educated themselves from reliable sources. Ignorance is one of the most dangerous plagues flourishing in our fertile country.

Thursday, May 3, 2012

Sorry for the Absence

For all the countless that depend upon me for life and limb, to post useful information I appolagize. I have not been as diligent as possible in maintaining a steady stream of life blood. I have recently had a death in the family, or it would be more accurate to say that my wife has had a death in the family. As my wife is my life, I have spent every moment of very recent time attendending to her emotional and physical need as any loving husband might do. Trust me as I do you, there is much to come. I do what I might, and might do what I do. As we all have lives and must attend to such as so, I continue to spurt nonsense. Tomorrow, I will spout more nonsense concerning marx and the idiots and opportunist that follow. It blows my mind what others believe and do.

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