Aiming For the Economic Sweet Spot

By: Tom Chatham

For those that are preparing for the worst in economic terms there are always the decisions of what to get now and what to get later. Your current economic situation may only allow you the option of buying necessary equipment and supplies at a slow pace. Primary items that you should buy first are food, water, fuel, clothing, household and sanitation supplies and if possible some type of shelter, either a primary structure or an alternative shelter you fully own. Only after taking care of these necessities should you put some of your money into silver or gold for wealth preservation. After these items you will want to acquire any large items you think you will need. If you cannot afford all of the items now that you feel you will ultimately need what are your options?

There is one option that while not perfect or guaranteed may work to your advantage in the near future.

When an economic collapse begins it will likely happen slowly over a matter of weeks or months. As paper assets are destroyed deflation will occur in some areas while inflation will occur in others. The things that are likely to see inflation immediately are those things that people cannot live without like food, water, fuel and clothing. Those things that can preserve wealth such as precious metals are items you should already have in your possession before the bottom drops out of the economy.

Those holding hard assets not considered wealth preserving but more like consumer goods will be liquidating those items to acquire inflating assets they must have like food. For those that have a store of wealth that can be liquidated and used to purchase other hard assets it could be a good time to leverage your limited wealth to acquire those items you could not afford before.

When paper assets begin to fail those that are holding mainly paper will rush to get into hard assets like gold and silver to preserve their wealth. This will rapidly bid up the price of these assets due to their very limited availability. The price of precious metals should appreciate much faster than inflation. Eventually gold and silver will go into a bubble before they drop a significant amount. This grey area between the metals inflated price and the actual inflation rate will give you extra buying power for a short period of time. This is the economic sweet spot. You may elect to liquidate some of your metals at this time to purchase other hard assets you are in need of but were unable to afford earlier.

Any prolonged economic collapse will make many goods hard or impossible to find as time goes on so buying in this grey area will assure you have what you need and at a price you can now afford. As the collapse gathers speed, those that cannot buy metals will shift into other types of hard assets just to be out of paper so you must act before this happens.

What type of hard assets will you likely be looking for? Things like tools, machinery, livestock, land and equipment you will need to care for your family longterm. These are the expensive items you may not be able to afford now but want for longterm viability. While it is best to get them now you may not be able to so a plan such as this may be your only hope. If this situation does not appear for you to take advantage of you will still have some precious metals to barter with at a later date and possibly acquire some of the things you need.

So for those needing to make large capitol purchases but lacking sufficient funds at this time, holding your funds in precious metals may be the best plan. Gold is good but silver may see the most increase over this period and is much easier for individuals with limited funds to accumulate. When trying to gage the market to get the most from your assets, don’t try to liquidate at the top of the market because you are likely to miss it. If you can get within ten percent of the top you have done well so don’t push your luck and try to squeeze out the last little bit. This will allow you to sell some of your PMs and get what you need before the prices begin to decline and panic sets in.

While not perfect this opportunity will allow you the possibility to get things that will be more important to you than precious metals as the crisis unfolds. There are no guarantees for the future so each person must decide for themselves how best to use their limited assets.

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Posted on June 4, 2013, in Economics and tagged , , . Bookmark the permalink. Comments Off on Aiming For the Economic Sweet Spot.

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