When nearing the top of financial bubbles, savvy people will say to invest in “real assets” or own actual things. But not knowing these critical differences can ruin everything…
We hear it all the time, and it usually goes like this: “Get out of paper assets and get something tangible, like land, gold, silver, fine art, or something that is an actual thing”.
Often times reasons given are that real stuff is not a paper financial asset, like a stock, a bond, or fiat currency in a savings account. Owning real stuff with values that last, can protect against things such as the popping of bubbles, and consistent price inflation.
Of course no one should ever go ‘all in’ on any given asset class in my opinion. But this post argues about why especially today, you need some bullion allocations to be better diversified financially. This is not merely my opinion. Others have backtested +47 years of financial data throughout the fiat currency era. Other proponents of prudent bullion allocations make similar points as well.
Gold and silver bullion are the ultimate in hedges against inflation. They are the ultimate in real assets, real physical things. Bullion packs so much value in so little space, and importantly too, gold and silver are also very portable.
Many experts say “own real estate, productive farmland, an apartment building, a house, or some sort of property as a real asset”. Owning real estate to merely live in is arguably not an asset, it is more of a liability in the sense that month in, month out, residential real estate takes cash out of your pocket (unlike productive cash flow real estate which should be adding currency to your bank account month on month).
Disclaimer time (even though it is at the bottom of every page of the website): These are my personal observations and not recommendations to do anything.
That said, the recommendation many experts make to own property could backfire, and the results could be disastrous depending upon where you live.
The first reason is because of taxes. This should be obvious, but as the “value” of the property goes up due to the inflation of home prices, so often does the tax bill.
Hit hard times and fall behind on your property tax bills, and the city or county, etc, could literally seize the property and force its sale.
That may sound far-fetched, but it is actually happening right now in Philadelphia to homeowners who fall behind on their (PGW) gas utility bill, and not to the tune of thousands, but to the tune of hundreds of dollars.
That is not the main point I want to bring up, however.
The main point is by owning property, it is stand your ground, or run. It is fight or flight, and ultimately, no matter how big or bad people think their survivalist retreat is, how well stocked it is, and how the security systems are beefed up to the point of not being penetrable, standing your ground only lasts so long, and the plan will ultimately fail.
That said, what do you do when the nation is in civil unrest and there are food shortages? Instead of having some gold and silver, one only has some land and a few cows?
And then this happens:
— Ivette Calderon (@ivette1331) January 11, 2018
Hungry, desperate mobs of thieves are no joke, no matter how many rounds of ammo are stored on-site.
But that is not the point I really want to bring home. What I really want to bring home is what is happening in South Africa.
The government there is now literally preparing to take land from white land owners, all in the name of social justice. This policy is what the African National Congress of South Africa calls “land expropriation”. It is a state-sponsored way of making amends for a racist past, as in making amends for apartheid.
Here’s a little bit of what has already taken place:
Local newspaper City Press is reporting that two game farms in the northern province of Limpopo were the first to be targeted for unilateral seizure after negotiations with the owners to purchase the properties stalled.
While the government says it intends to pay, owners Akkerland Boerdery wanted 200 million rand ($18.7 million) for the land. However, they are being offered just 20 million rand ($1.87 million).
The farmers were forwarded a letter earlier this year which stated:
“Notice is hereby given that a terrain inspection will be held on the farms on April 5, 2018, at 10 am in order to conduct an audit of the assets and a handover of the farm’s keys to the state. Akkerland Boerdery obtained an urgent injunction to prevent eviction until a court had ruled on the issue, but the Department of Rural Development and Land Affairs is opposing the application. “
“What makes the Akkerland case unique is that they apparently were not given the opportunity to first dispute the claim in court, as the law requires,” AgriSA union spokeswoman Annelize Crosby told the paper.
The newspaper said employees at the department had been ordered to press ahead with the process at the Land Claims Court. If the seizures go ahead, it would be the first time the state refuses to pay market value for land.
So here’s the question: When the government wants your land, and when the government says it will take your land, what can you do?
You can’t bug-out and take your land with you.
OK, “But Half Dollar, this is the United States, not some 3rd world country, or Venezuela, or South Africa”.
That’s right. The United States is not like that… yet.
It is not just me saying that. Paul Craig Roberts said, in 2004, that the United States would become a third wold country within 20 years.
As a side note, I ask older Mexicans what it was like during the devaluation in 1994, when Mexico slashed three zeros from the peso, and the usual answer I get is, “it was no big deal”. When I press further, the reason it was no big deal was because nobody had any savings, so nobody lost anything. Those Mexicans who had savings, and especially the insiders and those who saw the writing on the wall, did what they needed to do to get their money out of the banking system as the peso was hyperinflating and before the devaluation.
That said, I ask another question: Do Americans, in general, have any savings?
There is a reason Americans have no savings, and in my opinion, it has much to do with the planned destruction of our once robust middle class. Without much average citizen savings, the eventual hyperinflation and devaluation of the dollar will be a smoother process with less mass population backlash.
Back on track.
So for at least three reasons I mentioned above, real estate can be risky to own because of:
- Tax burden by government
- Roving bands of hungry, desperate looters trying to survive
- Outright seizure of land by government
The level of risk will only increase as basically the entire world progresses to a more totalitarian police state.
Furthermore, I didn’t even mention that the housing bubble has been blown up again since 2009, and in my estimation, for reasons such as:
- Federal income tax law changes including a reduction of SALT deductions
- Rising interest rates which price people out of homes due to higher payments
- Increasing automobile, student loan and revolving credit and other debts that make home ownership out-of-reach
- A housing market that has basically, on average, gone up at a 45° angle since 2009
There is pressure for housing and real estate prices to come down, and it is likely that we see another housing crash in the not too distant future.
Which brings me up to the main point: Owing gold & silver is a better option than owning real estate, or fine art, or other “things”, especially if funds are limited and choices must be made.
In a nutshell, gold & silver:
- Are money
- Are highly liquid unlike a property which takes months to buy or sell if everything goes perfect
- Are portable and can be carried in a bug-out situation
- Can be used for barter
- Are divisible
- Can be used to save a life if we’re talking about TEOTWAWKI
- Can be hidden
Those are just a few examples of why gold and silver are better investments than real estate, in my opinion.
When we wake up and see news like we did today, that South Africa is moving ahead with plans to confiscate land from white land owners for redistribution to black South Africans, it is important to understand these differences in actual, real assets – real things.
Furthermore, nobody needs to be reminded here, but I will do it anyway. Gold and silver have run into a bear market since 2011. Even after gold surged in price 30% in seven months in 2016, and silver surged in price 50% during the same timeframe, gold and silver spot prices today are again at rock bottom prices. You cannot say the same for most real estate here in the USA or in other industrialized nations.
Finally, on confiscation, because I hear “Half Dollar, the government can just confiscate gold” all the time. Maybe, but in attempting to do so the Federal Reserve and federal government would have to offer a much higher price to actually be able to buy private citizen’s gold. For example how about this still deflationary $5,000 oz gold buying spree suggestion from a few years back.
Again, not telling you what to do, just my opinion and observations. If the government tried to nationalize gold again, everybody would have to decide what to do for themselves.
My standard reply to the whole “the government will confiscate gold” goes like this:
Confiscation is a no-go, and it is arguably illegal, it’s immoral, unethical, un-Patriotic, un-American, and again, arguably, Unconstitutional.
Why anybody listen to corrupt Deep State Traitors in Washington?
A bunch of corrupt Traitors knew they would revalue gold (devalue the dollar) in 1934 from $20 to $35 after confiscation in 1933, and they profited from that racket.
IMHO, Patriots and stackers will draw a line in the sand.
Try confiscation and:
- Prices would skyrocket overnight because it is instant government admission that gold & silver are very valuable.
- You can’t confiscate what you can’t find.
- People already gave up their gold (1933) and silver (1965): The saying “fool me once” comes to mind.
- Nobody owns pet rocks and barbarous relics anyway.
- There will always be a black market – gold & silver the ultimate in privacy.
- Government can’t flip-flop on the bullion coin program after pushing it since 1986 (that would be like outlawing home ownership and making everybody give their houses to HUD so all houses could be re-distributed. Seriously).
- The cost to run the confiscation program far exceeds the dollar amount of any gold or silver confiscated.
- The government doesn’t run anything well, but it will all of the sudden be able to run confiscation?
- People who own gold & silver support and defend the Constitution, which specifically names gold & silver as our only Constitutional money.
- People who say “they’ll confiscate gold” 99.999% of the time are disinformation agents or simply don’t understand logic.
- If we ever got to the point of confiscating gold & silver, there are much bigger problems the government will have on its plate.
- What would be actually be seized by government, due to ease of seizure, would be pensions, 401Ks, and savings account balances in excess of FILL IN THE BLANK____________.
I could go on and on, but you get the point.
It is wise to own real things especially today. But know that some real things, depending on the situation, are better to have than others.
There are many reasons why silver and gold bullion are better than real estate and property. If a person is just starting out and deciding what to invest in, the barriers to investing in gold and silver are much smaller.
In late 2018, after a long culmination in which governments and central banks around the world have printed up trillions upon trillions of fiat currency over the last several years to prop up financial assets, there is absolutely no reason a person can’t figure out how to save up $15 increments to buy ounces of silver bullion savings.
– Half Dollar
About the Author
U.S. Army Iraq War Combat Veteran Paul “Half Dollar” Eberhart has an AS in Information Systems and Security from Western Technical College and a BA in Spanish from The University of North Carolina at Chapel Hill. Paul dived into gold & silver in 2009 as a natural progression from the prepper community. He is self-studied in the field of economics, an active amateur trader, and a Silver Bug at heart.