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Financial Crisis Investing

Written By Brian Hicks

Posted March 30, 2009

As I travel around the country right now, meeting and talking to fellow investors, I encounter the same question over and over. . .

"How do I invest during this financial crisis?"

Of course there’s no easy answer to this question. That’s simply because we just don’t know how bad things will get. And while we are hoping for the best, we’d be foolish not to prepare for the worst. 

With this in mind, I have created a list of ten of the best investments you can make in preparation for the worst.  But as you’ll see in just a minute, many of these investments are not financial instruments that will return money. Rather, they are investments that will create other benefits in the future, such as security.

Financial Crisis Investing
Ten Best Ways to Invest During a Financial Crisis

1.  Lower or Eliminate Any Debt
Seems obvious, but it bears repeating. The less debt you have in times of financial turmoil, the better off you will be. Large debt will be like a millstone around your neck as you’re trying to tread water in a very deep lake. Make the decision to pay off any and all debts as quickly as possible. Then, consider never getting back into debt. Do not live beyond your means. Practice moderation. Despite what the media says, you do not need a luxury automobile, designer clothing, or expensive jewelry to be happy. Debt should only be used in the most dire of situations.

2. Use Cash Effectively Now
Look to use cash as effectively as possible over the next 12 months before major inflationary forces kick in and destroy the purchasing power of your money, especially if you live in the United States. For each individual this is going to mean different things. But overall you should ask yourself the question, "What is the most effective use of this cash right now while prices are still low and the purchasing power of money is still relatively high?"

3. Put Together a Food Storage
Media won’t touch this with a 10-foot pole, but the time of easily accessible food at cheap prices may soon be over. The supply disruptions that always attend hyper-inflationary events have the possibility to cause major problems and shortages. It’s best to plan ahead by putting together a food storage of items that store well for a long time, such as canned goods, freeze-dried foods, vacuum-packed food, etc.

4. Get a Safe Haven Location
If things get bad enough, major cities and densely populated areas may experience civil unrest on a scale we have never seen in America. Look at the scenarios painted by Gerald Celente, who says that within the next four years, America will see food riots, tax revolts, job marches, and millions of homeless. Or, consider the social anarchy that took place in the wake of Hurricane Katrina. It doesn’t take much to set off unrest. And what good is our money going to do us if we don’t have a safe place to live until civil order can be restored? You may want to consider purchasing a small cabin in the mountains or a retreat area with like-minded people. You may have relatives who already have such a place. Think through this issue and stock it up ahead of time.

5. Own the Physical Precious Metals and Quality Mining Shares
Taking physical possession of gold and silver bullion coins and bars is essential to surviving any crisis. History has clearly shown that those who held the physical metals during times of economic turmoil and displacement fared much better than those who didn’t. Make sure you own the gold and silver coins of the country you live in. If you live in Canada, then make sure you own the Canadian Gold and Silver Maple Leafs. If you are an American, then own the Gold and Silver Eagles. If you only can afford a small amount of metals, then you should own the silver coins first. Bars are cheaper to buy then coins, but coins such as the Eagles and Maple Leafs will be highly recognizable and more useful for purchasing or bartering for items you may need. Also, adding quality precious metals mining shares can greatly increase the leverage of your gold and silver portfolio, but they should be carefully selected. The combination of owning physical precious metals and mining shares will go a long way towards protecting your hard-earned savings from the ravages of the coming horrific inflation. If you can only afford one of these two suggestions, then you should stick with the physical metals.

6. Consider Buying a Gun
Regardless of your personal views on gun ownership, not having a gun when trouble comes could mean the difference between life and death. A good all-around pistol would be a 9MM or .45 caliber hand gun. You may also want to consider a defensive-type shotgun such as a Mossberg 500 or a high-powered, semi-automatic rifle, such as an AR-15, which I think is the best choice for defense. A semi-automatic rifle is more powerful than any handgun, and has a higher round capacity and longer range capability than a shotgun or pistol. It’s also important to make sure you have at least several hundred rounds of ammunition, along with multiple magazines. The last weapon that you may want to consider is a hunting rifle. The most important thing about owning a gun is knowing how to use it. And practice makes perfect. So, I urge you to consider buying a gun, and practice frequently at a range until you are comfortable using it.

7. Think Globally with Your Money
The more money you have in a crisis environment, the bigger problem you’ll have trying to protect it. Business as usual is simply not going to work. Keeping your money in U.S. dollars inside the United States looks like it will be a disaster at some point. You should consider legally getting some of your money outside the country. While this strategy can get somewhat complicated, it may be prudent for those with a large enough net worth to spend the time and money doing so. For smaller-net worth individuals this would not be necessary, but you could keep some money in other currencies such as the Canada’s, Hong Kong’s, or Singapore’s. In the end, though, I think physical holdings of gold and silver will be the ultimate safe haven currencies compared to anything else the world has to offer.

8. Find Other Like-Minded People
No single person is an island unto themselves. It will be important in the coming months and years ahead to surround yourself with other like-minded people who are prepared and have various skill sets. Banding together in groups will become essential in the trying times ahead. You should learn as many new skills as possible such as canning food, growing vegetables, rasing livestock, shooting a gun, etc.

9. Share Your Knowledge with Others
Some people will not be willing to listen under any circumstances. But if you approach people in the correct manner, you can be a big influence in getting others to prepare while they still can. This is something all good people should be willing to do. In that conversation, you should inform others that the way back to economic prosperity is getting back to our Constitutional values. "We the People" are going to have to take our country back from the greedy, power-seeking political types who exist in Washington and New York. Everyone should read the Declaration of Independence, the Constitution, and the Bill of Rights so they know what our government is and should be. As more and more people come to the realization that we have all been had, more will be willing to stand up and fight for what is right and what the founding fathers created for us. The system of liberty given to us in 1787 is what created this great country and the prosperity it has seen. Unchecked greed and corruption are now destroying it.

10. Have a Good Communication System
In cases of severe and long-standing civil unrest, communications systems and the grid may be down for indefinite periods of time. With readily available methods of communication no longer operating, old technology such as "Ham Radios" could become an absolute lifeline. Handheld portable "HT" radios, as they are called, would be incredibly valuable. These do require a license, but the license is very easy to get. With a couple of weeks of study, you could easily pass the 30-question multiple choice test required to get a "Technicians License."  Purchasing several of these small handheld radios for family members would be very valuable in such a crisis. The best model out there is the Yaesu VX-6 for around $250.00. You should also look to purchase the high-performance antenna for this model, manufactured by Diamond Antenna (Model number SRH77CA), for around $30.00.

While these are some of the most important things to consider for the coming economic meltdown, this is by no means an all-inclusive list. I will continue to provide information about the best things to consider in my Mining Speculator newsletter each and every month as I find other good sources or ideas to consider.

Kind regards,

Greg McCoach
Editor, Gold World
Investment Director, Mining Speculator

P.S.  On a more positive note, members of Luke Burgess’ Secret Stock Files have winning returns on 10 of the 11 recommendations made during the first quarter… and those include two stocks that have returned over 100% in just a few weeks! Not only am I a member of his service, but I am also an active investor of his recommendations. Secret Stock Files has provided me with several new investing ideas and has made me a lot of money, even during this economic recession. In fact, I wouldn’t be surprised to find his portfolio beating 95% of the advisories on the scene right now. I strongly urge you to check Luke’s Secret Stock Files out.

P.P.S. Gold prices are coiled to skyrocket, and this may be one of your last chances to own the yellow metal for under $1,000 an ounce. So I urge you to buy right now! Throughout human history, gold has offered safety amid crisis. Fortunately for us, there’s a new money-making phenomenon that can actually double your gains in gold. Thanks to this unique tool, every time gold gains just 1%, you make 2%. . . a 25% gain pays 50%. . . a 100% gain pays 200%. . . a 500% gain pays 1,000%! Click here to learn more.