Jim Rickards’ No. 1 Rule for Crisis Investing

Dear Money & Crisis Reader,

They are the rules and guidelines I live my life by.

Because of them, I no longer worry about the next big financial crisis. Instead, I enjoy a level of financial security I’ve never had in my life before.

But I can’t take all the credit for these ideas.

To hone and fine tune each of these strategies, I’ve tapped the financial expertise of my colleague and industry legend Jim Rickards.

You might know Jim as the New York Times bestselling author of Currency Wars and The Death of Money.

I know him as the man to turn to when an unsolvable problem needs to be solved.

Today, I asked Jim to talk to you about how to invest when crisis could strike at any moment.

What investment could hold its value in an “end of life as we know it” scenario… and also be a valuable addition to your portfolio?

Jim answers these questions (and more) in his article below.

All the best,

Owen Sullivan
Editor, Money & Crisis

Where Your Investment Portfolio and Emergency Kit Meet

By Jim Rickards

Most everyday citizens don’t think twice about keeping bottled water, a flashlight and extra batteries on hand in case of emergencies.

Many also have first-aid kits and those inexpensive radios powered with a hand-crank that have short-wave reception in addition to AM/FM. People consider these precautions just plain common sense. If a major storm is coming, people will double-down on those supplies; that’s smart too.

But, what about money? Today, most people rely on digital forms of money such as credit cards, debit cards and direct deposits without thinking much about it. If they need cash, they can just drive or walk over to the nearest ATM.

But, there’s one huge problem with those money strategies. None of those forms of money are any good when the electricity goes out as it typically does in a severe storm, earthquake, flood, or other catastrophe. Credit cards don’t work. Debit cards don’t work. Banks shut their doors and the ATMs go dark. No electricity, no money.

Having some physical gold and silver on hand is a smart strategy that will make those digital money worries disappear.

Whether you hold gold or silver depends on the reason you’re holding it. If you want the best long-term store of value, gold’s the way to go.

If you want a form of widely accepted money that would actually be useful in a disaster, silver is more practical because it’s less valuable by weight, which means you can use one ounce for smaller transactions like gas or groceries.

It’s smart to keep 20 to 50 ounces of pure silver on hand in the form of American Silver Eagles from the U.S. Mint. Twenty ounces will cost about $400 at today’s prices including commission from a reputable dealer.

In desperate circumstances where no one’s digital money is good, a pure silver ounce will gladly be accepted by stores with goods to sell. The merchant can easily convert the silver back to cash when the disaster is over.

That makes silver the perfect “medium of exchange” in times of trouble.

Today may also be the right time to begin your allocation to physical gold. For long-term buy and hold investors in gold, this is a good entry point because we’re in the early stages of the third great gold bull market in my lifetime. This new bull market should run for years despite occasional pullbacks.

The first bull market lasted over eight years from August 1971 to January 1980. Over that span, gold gained 2,190%.

The second bull market lasted twelve years from September 1999 to September 2011. Over that span, gold gained 655%.

The third bull market began in December 2015. Since then gold has gained almost 30% and scored back-to-back annual gains in 2016-2017.

This new bull market is just over two years old and should run for five or six more years, possibly much longer. Given gold’s performance in the prior two gold bull markets, a price target of $10,000 per ounce by 2021 is not a stretch.

Gold is such an emotional subject for so many investors, and is so prone to government manipulation, that investors sometimes forget that supply and demand still dominate gold price dynamics in the long-run.

The news on that front for gold investors in uniformly good.

To begin, I recommend buying one-ounce American Gold Eagles from the U.S. mint.

One ounce will cost around $1,400 at today’s prices including commission from a reputable dealer. Do not buy “old” or “rare” coins or other numismatics. The premiums are too high and the gold is no more valuable than the gold in new coins.

I travel the world continually and have frequent contact with firms who handle physical gold. These firms include gold miners, refiners, secure logistics providers who operate armored cars, vault operators, gold dealers, bullion banks, and gold exchanges.

I have been inside gold mines in Canada, South Africa, the United States and Australia.

I have been inside gold vaults in Switzerland, the UK, the United States and Australia.

I have met with gold refiners in Canada, Australia, and Switzerland.

I have met with gold dealers and bullion banks in China, Switzerland, Panama, the UK, US, and Australia.

In short, I have a global network of front line contacts in the gold industry from Sydney to Shanghai, and from London to Lugano and beyond.

Everyone I speak to has the same story – physical gold is in short supply. The supply-demand situation is heavily weighted to excess demand and scarce supply. That’s a recipe for higher prices in general and a super-spike in prices if a major geopolitical catalyst such as war with North Korea should emerge.

Silver will not stand idle. The price correlation between gold and silver is quite high despite occasional divergences. The world of $10,000 gold will be the world of $150 per ounce silver. The two precious metals will rally together.

Whether it’s for wealth preservation, emergency money, or financial gain, gold and silver are a critical part of every citizen’s portfolio – and emergency kit.

Regards,

Jim Rickards

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