Investor's Diversified Portfolio
The principle of financial diversification is wise counsel and dates back to King Solomon. “Divide your portion to seven, even eight, for you do not know what misfortune may occur on the earth” (Eccl. 11:2). In today’s global economy, the potential for financial misfortune is very great, and this means that you must be careful in your own financial decisions and personal risk analysis in these uncertain times. Central planners around the world are trapped in loose fiscal policy, debt monetization and currency devaluations that threatened portfolio performance and conventional financial planning. Prudent investors need a defensive strategy for capital preservation, liquidity and growth to minimize risk, and this is best illustrated in the following investment triangle as seen here.
At the foundation of this investment triangle is the precious metals complex that has served as an historical hedge for market risk along with tangible assets. It is also necessary to have cash and liquidity in addition to growth and income strategies that are nimble in changing circumstances. As King Solomon advised 3,000 years ago, “Sow your seed in the morning, and do not be idle in the evening, for you do not know whether morning or evening sowing will succeed, or whether both of them alike will be good” (Eccl. 11:6). This is still good investment advice today, and we invite you to download our Investor’s Checklist & Advisory below for a quick summary. If you would like consultation with precious metals you can also download our Confidential Worksheet.
On the cash side of our investment triangle there are several options available, and what percentage you feel comfortable setting aside depends entirely on your own personal situation. Your biggest concern should be the safety of the banking system in general and your own banking institution in particular. The commercial banking system in the US is thinly capitalized and poses a structural risk to all funds on deposit. It has been estimated that the FDIC only has $25 billion in assets to cover $9.3 trillion in US deposits. Bank operations in the US are over-extended and depositors are being given a false sense of security. Most of the institutional funding for FDIC comes from member banks and the actual amount to cover losses is barely 50 cents for every $100. In other words, the entire system has a risk exposure greater than 99%! The FDIC refers to its sticker prominently displayed at every bank teller window as “a symbol of confidence,” and that is exactly what it is – a confidence game. As events in Cyprus and Greece have proven, depositors can become “unsecured creditors” in the event of a bank bail-in with levies as high as 60% of deposit amounts. According to a recent report by the Office of the Comptroller of the Currency, just six major US banks have $250 trillion in exposure to complex derivatives contracts, and these include J.P. Morgan Chase, CitiGroup, Bank of America, Goldman Sachs, HSBC and Wells Fargo. The Dodd-Frank Reform Act of 2010 (Section 716) states that taxpayers shall not be liable for Credit Default Swap (CDS) derivatives of large US banks. “Rather than relying on public funds to bail-out one of these institutions,” said Robert Young, Director at Moody’s, “we expect that bank (unsecured) creditors will be bailed-in and thereby shoulder much of the burden to help recapitalize a failing bank.” This means that these too-big-to-fail banks pose a major risk to depositors, and you should obtain a bank safety rating of your own banking institution or credit union by consulting independent services like www.bankrate.com, www.weissratings.com or www.veribanc.com
More recently, central banks around the world are proposing negative interest rates for bank depositors, and this means that banks would actually charge you for your savings accounts or time deposits! Why are they doing this? Due to the heavy burden of servicing national debts they have had a zero interest rate policy (ZIRP) and now they are seriously considering NIRP. The Bank of England has made this suggestion along with the Fed, and this is a clear attempt to create a cashless society with digital transactions. At this point we think it might be a good idea to have some cash reserves in your possession in case of bank failures, bail-ins or other emergencies. You should consider small denomination bills and enough to cover a few months of expenses. Most brokerage firms offer money market accounts, but these are comprised of commercial paper, repurchase agreements and so on. It would be safer to have money market accounts that are denominated in short-term treasury bills that guarantee the underlying asset value for safety and liquidity.
One of the best ways to diversify out of US dollars is to open a savings or time deposit account denominated in a foreign currency. Perhaps the most innovative bank in the US that offers the convenience of foreign currency accounts is EverBank headquartered in Jacksonville, Florida. For a minimum of $2,500 you can open a WorldCurrency Access Deposit Account in a single foreign currency. This is strictly a savings account that pays interest on amounts over $10,000, there are no monthly fees, and you get a monthly statement by mail with online access. For $10,000 you can also open a WorldCurrency CD for three to 12 months which provides access to emerging markets. Short-term CDs have marginal yields but account holders can realize capital gains as the dollar depreciates. For $20,000 you can choose among the Economic/Geographic/Commodity-themed Basket CDs that offer a wide variety of global strategies. To learn more about EverBank you can call 1-888-882-3837 or go online at www.everbank.com. If you have an interest in offshore bank accounts please contact our office for more details and suggestions.
Meixler Investment Management, Ltd. is located in northern Arizona and their independent trading platform and RIA designation allows for objective financial advice and estate planning that will exceed your expectations. Mike Meixler has been serving a discriminating nationwide client base for almost 25 years, and their firm would be glad to assist you with your personal investment or retirement needs. Mike is a long-time student of classical free market thinkers like Ludwig von Mises, Carl Menger, Friedrich Hayek, Murray Rothbard and other luminaries that comprise the Austrian School of Economics that is based on individualism and sound money. In addition to creating an Austrian Global Macroeconomic Portfolio for clients, his firm also applies the strategies and techniques of deep value investing based on the principles of Benjamin Graham and David Dodd (Security Analysis, 1934), that have also guided Warren Buffet’s successful investment strategy. Mike has served as an Army officer and supports traditional American values (along with Dr. Ron Paul and a libertarian philosophy). In 2009, Mike was recognized in Barron’s annual list of Top 1,000 Advisers and was ranked 24th in Arizona, the 16th largest state in the US. These top 1,000 advisers represent the elite 1% of all advisers in our nation. If you would like to arrange a confidential consultation with Mike Meixler you can email his assistant Janice Martinson at firstname.lastname@example.org for an appointment, or call toll free 1-866-537-4044.
His expert staff can answer questions related to insurance, retirement, estate planning and finance with professionalism and integrity. This information is provided for informational purposes and should not be considered an offer or solicitation to buy or sell securities. If you would like more information regarding financial diversification, and this investment triangle, we recommend our book America’s Financial Reckoning Day. All new clients of IDP Consulting Group, LLC will receive a free signed copy along with company literature.
Precious metals represent a necessary component for asset protection and financial privacy. For millennia gold and silver have both served as a trusted medium of exchange and its intrinsic value has survived wars, revolutions, inflation and currency devaluations. As a consistent store of value, precious metals are scarce, durable, divisible, fungible, convenient and its production has been limited by nature itself. According to the World Gold Council, all the gold mined in history would fit into a cube measuring just 67 feet on each side. According to the Silver Institute, a majority of all silver mined in the past century has been used in various industrial applications, and it has been estimated that a mere $25 billion would buy all the available silver in the world today! Silver has actually been more plentiful throughout history as money, but during the late 1800s the banking cartel on Wall Street sought to limit silver and created a single gold standard. The Gold Act of 1900 eliminated a bimetallic standard for our currency and helped consolidate power among the bankers, which soon led to our own central bank in 1913 with strict legal tender laws that has created monetary inflation and boom/bust cycles. Real money, such as gold and silver, is always readily accepted and never needs the force of legal tender laws to assign value or worth. Due to the growing risk in capital markets, equity funds and fixed income assets we strongly recommend that investors consider moving 30-50% of their liquid assets into precious metals for safety, protection and potentially significant gains as a foundation for their investment portfolio or IRA accounts. As far as tangible assets that can preserve wealth these would include collectibles, antiques, rare art, stamps, documents, oriental rugs, silverware, fancy guns and real estate. The best position for property owners is to own your own home free and clear, lower your exposure to leveraged property and pay down debt. If you are currently renting, or leasing, you should wait to purchase real estate that will likely be acquired at adjusted prices in a contracting economy.
Growth & Income
On the growth side of our investment triangle it is important that you adopt a contrarian investment strategy and work with a firm that shares your individual goals, values and concerns. These are challenging times for investors who are realizing low yields and returns in an era of central bank intervention, financial repression and persistent market manipulations. In order to navigate these stormy conditions and chart a safe course you need to be cautious and keep an eye on global events. At IDP Consulting Group we are closely monitoring and reporting on geopolitics, macroeconomics and financial trends, and our firm has entered into a strategic alliance with Meixler Investment Management, Ltd. to better assist clients with professional portfolio management and estate planning.
Meixler Investment Management Ltd. is an independent SEC Registered Investment Advisory firm that specializes in growth and retirement income portfolios for discerning individuals, families and closely-held businesses. Their firm has been founded on the premise that the conventional financial planning industry has been based on mass-marketing to investors with high expense ratios and commissions that are structured to benefit agents and brokerage firms at the expense of their clients. As a fee-based management service, they focus on customized accounts for each client that are consistent with individual financial goals based on their deep analytical research and a “value investment” approach to achieve growth and income while protecting investor’s principal. Their goal is to build wealth over the long-term while managing downside risk in volatile markets by anticipating market trends and allowing large margins of safety for their clients. Portfolio management fees are calculated as a percentage of the overall market value and performance of your account, and this incentive provides maximum return for your investments based on personal attention, diversification and discretionary trading within your account. This is a good strategy for contrarian investors.
The Investment Triangle
Precious Metals & Tangible Assets
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