Personal Finance Tips From One of The Liberty Movement’s Leading Financial AdvisersMay 11th, 2012
Jeff Berwick, the author of a financial newsletter for free market and sound money advocates called The Dollar Vigilante, has really made a splash lately in the world of libertarian financial and economic commentary and investment advice, especially with the launch late last year of Anarchast, his new podcast for anarchists. It’s not hard to tell because without us coordinating with each other or even knowing, Silver Circle‘s own Megan Duffield and myself scheduled separate interviews with Jeff within a couple days of each other early last week. Megan’s interview was as the featured guest for Episode 24 of Anarchast. Just a couple days earlier, Jeff was the featured guest on my personal online radio podcast.
I was thrilled for the opportunity to speak with Berwick and ask him some serious personal questions about finance for sound money and free market advocates who believe our monetary system is on the verge of collapse. His answers were so helpful and informative that I decided to share them in a blog post here, especially after remembering that on a Silver Underground post I wrote earlier this year about just how bad the economy is, one despondent reader left a comment to vent her uncertainty about how to prepare for the coming economic storm, asking, “What are my options now?” and despairing, “Should I just begin building a decent sized cardboard hut on an abandoned lot or something?”
It’s a despair that I’m all too familiar with, but after talking to Jeff, I feel a little more empowered and prepared. Here’s what he said…
1. Invest your time and attention in economic knowledge.
Sound money advocates already understand the devastation wrought by central banking, but before venturing out into the world of business, finance, and investing, it is absolutely essential that you have a solid understanding of fundamental economic principles. You owe it to yourself as an enlightened and responsible citizen of the world to understand the study of human action. To that end, Jeff Berwick has a simple enough recommendation: Just read Henry Hazlitt’s classic book, Economics in One Lesson. You can’t graduate to applied personal finance until you have an explicit understanding of basic economic principles. Luckily, you don’t need to buy a dozen books or take college-level courses on economics (which would probably leave you less informed) in order to gain this understanding. This one book has all you need for a solid grasp of the fundamentals. The full text of Economics in One Lesson is available online for free here and here. Start reading!
Once you’ve got the basics of sound economics under your belt, you can graduate to applied personal finance.
2. Invest your income in paying off debts.
If you are in debt, it goes without saying that getting out of debt is obviously an urgent financial priority for you. During our interview, we didn’t spend a lot of time on this topic because building wealth and assets, not debts and liabilities, is a pretty self-evident principle of financial success; there are already a number of good non-libertarian resources out there for strategies to get out of debt; and I already understand how to stay out of debt and have never had any financial debts in my life (and I definitely selfishly used all the time I had with Jeff to ask questions that were pertinent to my own personal finances).
If you are already debt free, you can skip to the next step. If you aren’t, it’s important to budget your finances and come up with a plan to get out of debt. If you know that you have a serious debt problem, one of the most widely-acclaimed systems for getting out of debt comes from Christian financial adviser and motivational speaker, Dave Ramsey, who counsels people with debt to aggressively cut expenses to pay it off and “Live like no one else now, so you can live like no one else later.”
3. Invest your spare Dollars in something the Fed can’t print (gold or silver)
Here’s where I really needed to hear some advice from a financial adviser who believes in sound money. If you’re out of the debt hole and have income to spare after your expenses, what is the smart thing to do with it in light of our current economic and monetary situation? I put it to Jeff point blank: “Should I just buy gold or silver?” I elaborated a little first: “Let’s say I have a budding career as a writer and blogger, have enough income to cover the low expenses of my frugal lifestyle, and I never have less than $2,000 cash on hand in my checking account. I need a little bit of that– say $1,000– to stay very liquid as a buffer. I don’t like to have less than $1,000 in my checking account. But after paying my living expenses, any cash I have other than that buffer of $1,000 is just sitting there doing nothing but losing its value to inflation and I even risk losing it all if there’s a major run on the financial system and the banks go insolvent like Peter Schiff and others are predicting.”
I told Jeff that as a sound money advocate, I felt totally dumb asking the question, like I should already know that the answer is yes, but: “Should I just buy gold or silver?”
“Absolutely. If your reason for holding dollars is for savings and you won’t need it for something else in the near future, then put it into precious metals. If you’ve done that for the last ten years, you’ve obviously done very well. Gold has always held up its value against everything. If you price oil in gold, it’s still about $.20 a gallon… in our view, the U.S. dollar won’t exist five years from now, at least not in its present form.”
But where do you go to buy gold or silver, and can someone like me buy it in relatively small amounts without paying too much of a markup (too much “over spot“)? Jeff answered that local coin shops are one way to go and that at many of these there’s not a very big mark up for metals. Find out if there’s a coin shop in your area and compare their prices to the current spot price of the metal your looking at buying. Jeff also said it’s easy and affordable to buy gold and silver online. He mentioned GoldMoney and BullionVault as just two examples.
Jeff Berwick didn’t mention this, but when buying gold and silver, one resource you might find useful is Peter Schiff’s free 15-page report on common scams that hurt unsuspecting investors new to buying gold or silver.
4. Invest your spare spare Dollars in keeping your metal secure
Okay, so buy gold and silver as a reliable store of wealth that will hold its value whether or not the fiat monetary system crashes and burns. But where do you keep it? I’m as likely to lose a gold coin as I am to trade it to a farmer for a few weeks of food in a post-apocalyptic economy ten years from now (or trade it for a piece of junk boat so I can high tail it to Costa Rica). So should I keep my metal in my own personal possession? Stuff it under the mattress? Bury it in a jar in my back yard? Buy a safe to keep it in? Keep it overseas in a vault? Jeff answered:
“I recommend having some metal in your personal possession, but it doesn’t all have to be. People don’t understand owning metals anymore and the media and government make it seem crazy to store wealth in gold or silver, but yeah, get a safe. No one seems to have a problem with keeping a $30,000 car out in their driveway, but when you talk about keeping $10,000 or $20,000 in gold in your house people act like that’s crazy. Well go put it out on your driveway then, because that’s exactly what you’re doing with your car. So it’s just a matter of getting over the mental problem of just not being used to something. People get used to things quite easily, but until you’re used to them, new things can seem strange.
Because of the financial system today with government control of the banking system, you can’t as easily just buy gold and store it at a bank so we’re left to our own devices. I heard about this guy who had his house broken into recently. He actually had some gold and silver coins sitting out right beside his VCR and DVD player, and they stole the VCR and the DVD player and left the gold and silver. That just goes to show your typical criminal doesn’t know what gold and silver even is. He might have thought it was some sort of toy or trinket or something.”
As Jeff said, not all of your metal has to be in your personal possession, and he added that keeping some in overseas vaults (one example he named was Das Safe in Austria) could help diversify your risk and keep some of your metal safe from the reach of the US government itself should the government decide to criminally seize gold from its citizens’ possession as it has actually done once before, not letting them have it again until 1973. Jeff mentioned a report he offers called Getting Your Gold Out Of Dodge, that discusses how to keep your metal safe from government.
5. In case of collapse, invest your metals in business opportunities
My jokes about economic apocalypse aside, Jeff actually said that he believes the collapse of the dollar-based monetary system, while temporarily painful, will usher in a new era of bountiful opportunities to invest, start businesses, and create wealth. He said that those who survive the monetary collapse with the capital to take advantage of these opportunities will be the ones who profit from them, which is why it’s important to keep your savings in the form of reliably valuable commodities like gold or silver, and out of dollars and dollar-based investments where they will dramatically lose value in the event of a monetary collapse. After the dollar crashes hard, instead of trading your metal coins in for some food, you might just buy a whole farm.
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