By Silver Shield,on July 8th,2011
“You can fool some of the people some of the time,but not all of the people all of the time.” –Abraham Lincoln
We are in a major paradigm shift that like a tsunami starts slowly and ends with the landscape wiped clean. The paradigm shift is from paper assets to real tangible assets. This shift happens every generation or so,where one asset class dramatically outperforms the other. The 40′s and 50′s paper assets like stocks and bonds were the place to be. In the 60′s and 70′s real assets like oil,cattle and precious metals were the best performing assets. In the 80′s and 90′s paper assets once again reigned supreme. Since 2000 there has been a real rush form paper assets to real assets once again. This paradigm shift will be much more dramatic than anything we have seen in our life time. This asset shift is going to coincide with a major shifts in demographics,politics,and world power.
The collapse of paper assets will not only include stocks and bonds,it will be the collapse of the entire basis of our society,the dollar. The dollar is the nexus of all commerce and is our way of life. The almighty dollar has terminal cancer and it will not recover to live to see the next paradigm. This shift from paper assets and real assets is driven by money/debt creation. Since our dollar IS debt,it is necessary for more debt to be created every year in excess of the debt AND interest accrued the year before. The majority of this debt was created during boom times when no one feared debt. When the inevitable slow down came,the Elite created more money/debt to keep the system going. This new money/debt creation,relative to the amount of real goods and services in a slowing economy,produces more inflation which naturally boosts the value of real assets.
This cycle has been successfully managed by the Elite in the past with the creation of Bretton Woods,the closing of the gold window,the Petro Dollar,Paul Volker slaying the inflation dragon in the 80′s with 22% interest rates,the banker bailout and QE 1 and 2. This time around,there is no way out except for a default. How that default plays out is still up in the air. I believe that we will get another deflationary shock to scare Congress and us into more money creation and then it is off to the hyperinflationary printing presses. The ONLY way to protect yourself from this mathematically inevitable disaster is to sell all of your paper assets now and buy real tangible assets. (Please read the ground breaking the Silver Bullet and Silver Shield for a better understanding of this concept.)
One of the most common misconceptions of real tangible assets is the thought that Real Estate is a real tangible asset. After all,it is called REAL Estate. Real Estate is much more a paper asset than a real asset and it will suffer tremendously during this dollar collapse. The Real Estate question is the biggest question I get in my Strategy Sessions. Real Estate is such a huge and personal investment,so it is hard for people to think rationally and unemotionally about this. If you can not only grasp the idea,but have enough courage to follow through on your idea,this will prove to be one of your most important decision you will ever make.
I want to lay out as many reasons as I can on why you should divest all of your investment Real Estate portfolio right now. I would have preferred you sell your real estate and buy real tangible assets like I did in 2005,but we are on the verge of another leg down in Real Estate and the name of the game is wealth preservation. Beyond wealth preservation,I believe that those that hold their wealth in real assets will see a massive increase in their real purchasing power. So here are all of the reasons why you should flee the investment Real Estate market while you still can.
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