If SHTF… Are You Ready? | How to invest like the Chinese and protect your wealth
Are you prepared for the worst? Have you taken steps to protect yourself and your wealth if the worse case scenario strikes? Read on to see 3 quick ways the Chinese protect themselves from a financial disaster.
The leveraged nature of our financial system makes everyone drastically more vulnerable to a financial collapse than in the past. Just look at what happened to Knight capital last week. They lost USD440 million in 45 minutes. (source)
Protect Yourself From Financial Collapse
In order to improve your wealth protection and hedge against uncertainty and change, an investment portfolio with an international perspective is critical. You need to get your eggs out of one basket and invest like the billionaires of the world.
I’ve discussed before how you can invest in China, now here are 3 ways to invest like the Chinese:
When it comes to gold, the Chinese get it. Many take great lengths to avoid holding their savings in fiat currency. The Chinese appetite for gold has grown so much in recent years that although China is the worlds largest producer of gold, it is actually a net importer of AU.
Those who understand the metal see gold not as an extravagance, but as an investment. Not as a commodity, but as an inherent storage of value.
The prevalence of the Chinese buying gold is surpassed only by India, which is the largest importer of the precious metal in the world.
Unlike government-issued fiat currency, the price of gold cannot be manipulated as easily as Ben Bernake and other central planners do with fiat currency through quantitative easing and twisting.
Some are predicting that China is attempting to build huge reserves of gold to create a gold backed currency to usurp the dollar.
Gold Will Surge Up Again
When the two largest countries in the world by population are obsessed with gold, it creates a demand for it. And gold has a limited supply.
The dollar is losing stature as the worlds reserve currency. When it does, you don’t want to be holding the empty bag. Do yourself a favor – buy some gold. Preferably physical gold in a foreign country. If you aren’t internationalized, and you don’t travel worldwide frequently – buy some physical gold and keep it at home – bury it in your yard if you have to. See the full Guide to Gold.
If you are still unsure of gold as a long term storage of value, consider this:
Although there is still some doubt surrounding gold in the west, the East has several populations of over 1 billion people obsessed with gold as a great stabilizer of value (China, India, Others).
All the buzz you hear about gold is not going to go away. We will never see gold at $800 per ounce ever again; it is really only feasible that gold will continue to appreciate in value.
If a large crash happens within the next decade (which is possible considering the state of the American, Chinese and European economies) then we could easily see gold eclipse $2000, and probably soar higher. In volatile times, gold may be the best investment you can make. Get physical gold and see my guide to gold. If you are not American, consider a gold backed debit card.
Right now, I see a great position to buy gold, as it consolidates across the board in anticipation of another time of crisis. Are you willing to bet that there won’t be another financial meltdown in the next 20 years? I think there will be, that’s why I’m buying physical gold, and gold mining stocks.
Word on the street is that the Chinese government is stockpiling gold in order to create a gold backed currency. If they are able to accomplish this, they will have an inherent advantage in the marketplace for the global trade markets; and could replace the dollar as the world’s reserve currency.
Buy Arable Land
Useful land is becoming increasingly rare. Yes, you will probably always be able to buy a lot in the desert for cheap – mostly because it is undesirable, but also because it is not arable. Anytime land can be used for farming, it becomes exponentially more valuable.
The Chinese government understands there will be a global food shortage within the next century, and this battle will wage as long as humans inhabit the earth. That’s why they are buying raw land in places like South America and Africa, and grabbing every piece of land they can, including some which arguably belongs to the Philippines.
They look to park wealth in hard assets – in investments which will appreciate in value, gain a steady return, and are a safe storage of wealth. If you look at what the Chinese government invests in, you really see what is possible to invest in when money is no longer a consideration, and all of the focus is on long term sustainable growth.
Chinese have a long term view of finance and life, and tend to aim for the betterment of future generations. The Chinese government is currently buying raw land in resource rich areas of Africa and South America.
You can see the importance of land, particularly in Hong Kong – as the price of land skyrocketed over the past decade, and retained its value even during the financial crisis of ’08 – which will seem like a blip on the radar compared to what may arise in coming years.
The best way to hedge against government fiat currency insolvency is to buy physical gold, arable land and also ensure you have the basic necessities of food and water.
Chinese are concerned with status symbols, and a traditional sign of wealth in China is a coy pond in the yard. This is decorative, but if there was ever a stoppage in the food or water supply, at least you have both in the backyard. Think about it: a controlled environment with fresh food and water – coy ponds may seem innocuous, but they actually could make all the difference to their owners someday.
From a higher level perspective, food and water will only become more scarce as the population expands. Because of this trend, agribusiness will be a more important business in the 21st century. I’m not alone in this sentiment – renowned investment advisers like Jim Rogers, Marc Faber both have similar sentiments.
Food is obviously vital to our lives; many take for granted the fact that supermarket shelves are always full. However, if there is even a bump in the fragile supply chain in a crowded city, there will be absolute chaos.
In a worse case scenario, you need the basic necessities of food and water covered.
Then, you need to be able to trade. If you have physical gold on hand, you will be dramatically better off. Finally, if you want to profit and make money in times of crisis, then it helps to look towards hard assets that have guaranteed long term value.
No matter what happens in the world, real assets, gold, and products or goods which are essential to life will hold and rise in value.