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Asset Strategies International

1700 Rockville Pike, Suite 400

Rockville, MD 20852

April 2020 Information Line

Perspective

I had a long conversation a week ago with good friend and client who was doing business with Michael and Glen before I showed up some 26 years ago. (By the way… thanks for your loyalty and friendship all these years, Rudy.)

As I’m sure is the case with everybody nowadays, COVID-19 and its impact on everything dominated our conversation. And, he mentioned how important prayer was right now.

Now, let’s be clear. I am not speaking for the company right now. These are my own personal views. And, I am not trying to convert or disrespect anyone. I have deep respect for anyone who does unto others as they would have others do unto them.

No judgements here… just a story…

I told him that I was a firm believer in prayer as well. I believe they are always answered… just not always the way we would like them to be.

So, I shared something with him that struck me. For the past several years, it seems all we could talk about was the divisiveness in our country, the political chasm, the racial divide, the religious divide, the haves versus the have nots. It seemed like everyone was ideologically entrenched. No room to budge… no chance to compromise.

But now… the eternal optimist that I am sees people coming together as they stay apart.

This despicable, deadly bug is actually uniting us against a common enemy. I just hope we stay a bit more united once COVID-19 is relegated to the annals of history.

Time will tell.

In the meantime, we will do our best to see the possibilities in the crisis. We will do our best to position ourselves for success even though there are more variables out there than you can shake a stick at.

To that end, here are three things I believe can help you succeed in a COVID-19 world…

  1. Buy Gold and Silver Now – Right now, the U.S. dollar is the only currency in which gold and silver are cheap. In other currencies, gold is making new highs on a regular basis. But, the U.S. dollar strength won’t last given the historical stimulus (and there is more to come). Both gold and silver are cheap now. Pounce!
  2. On the Move Webinar – Chris Blasi and I will be welcoming our special guest, Adrian Day of Adrian Day Asset Management, on our upcoming webinar. Adrian is uber-knowledgeable and a good personal friend of Michael and me. In a quarter century, I don’t think I have ever had a conversation with him where I didn’t learn something. If you want to make sense of the current markets, join us on April 22nd. If you haven’t already, register for free here.
  3. Take Care of Yourselves - Do the right things. Use common sense. Keep yourself safe. Only by taking care of yourselves can you then help others.

And, we must help each other through this.

Just an aside…

The entire time I was writing this article, the skies were gray and menacing. As I finished my thoughts, the sun broke through, and it is a beautiful spring day. Maybe I’m on to something…

Keep What’s Yours! Call us at 800-831-0007 or send us an email to explore your options.

—Rich Checkan

 

 

"Michael, Rich and the team are not only my own personal go-to provider for gold and other precious metals, they are wonderful colleagues, friends and experts for discussion and insight into what's happening in the global markets.”

Doug Casey // Founder, Casey Research

 

 

Feature

Editor's Note: Kim Iskyan has nearly 25 years of experience as a stock analyst, hedge fund manager, political risk consultant, and financial commentator in more than half a dozen emerging and frontier markets. To receive his insights and more in the American Consequences newsletter, subscribe for free here.

While You Were Washing Your Hands

There’s a Nasty Oil Price Spill That’s Spreading Faster Than Covid-19

By Kim Iskyan

“It’s like magic,” my Armenian friend Tigran said to me from Yerevan yesterday morning. “We look where they want us to look.”

Like many people from the former Soviet Union – the birthplace of fake news, back when it was called “propaganda” – Tigran has a healthy respect for conspiracy theories and sleight of hand.

And what’s really going on in the world… What really matters while most folks are busy thinking of new 20-second ditties to hum while washing their hands… is oil.

As of last week, a barrel of one of the essential inputs of modern civilization costs less than half of what you’d pay for a same-sized fix of Coca-Cola Cherry Zero.

As political risk media company GZERO Media explained earlier this week…

For three years, Russia and Saudi Arabia, the world’s two largest oil exporters, had a deal to prop up global crude prices by limiting production. They calculated that by producing fewer barrels, rising prices would make each barrel worth more.

Over the weekend, that deal collapsed when Russia backed out, allegedly because it decided that higher prices were also providing an unexpectedly large boost for the U.S. oil industry, which has expanded its market share by increasing production by nearly 50% since the Russia-Saudi (formally, Russia-OPEC) deal began in late 2016. A lot of that increase has come from U.S. shale oil.

Saudi Arabia, eager to show Russia that its market power is not to be ignored, slashed the price at which it sells its own oil and moved to sharply boost production. The expected flood of new Saudi supply dropped global oil prices by more than 30% on Monday, the biggest overnight drop in almost three decades.

The price of oil was already under pressure because closed factories, crippled supply chains, and people FaceTiming instead of flying and shaking hands (thanks, COVID-19) meant less demand for oil. More supply and less demand means a (much) lower price.

But wall-to-wall COVID-19 news is making us look away from what might be – in economic, market, and geopolitical terms – the much bigger story of an oil-price crash…

Here in America, as Donald Trump famously – and correctly – pointed out back in November 2018, a lower oil price is like a tax cut. You pay less to drive your Jeep Grand Cherokee Trackhawk (13 miles per gallon).

But there’s another side to it, too. Thanks to higher production of shale oil, the U.S. produced twice as much oil in 2018 compared to 2011 – and more than either Russia or Saudi Arabia. The problem with shale oil is that it’s expensive to get out of the ground… And at a lower oil price, a lot more shale oil producers will be gushing even more red ink than they already were.

That’s bad news for the people who work for those companies… the banks that lent money to shale oil producers… investors in those banks and companies… and the economies of the cities and states where shale oil producers are an important source of jobs and tax revenue.

Saudi Arabia, in turn, is happy to show Russia who’s boss… and put those pesky American shale oil producers out to pasture. But it comes at a steep cost, since Saudi Arabia is now making a lot less money from its main resource.

There’s also the problem of state oil-producer Aramco, which in December sold a 1.5% stake for $25.6 billion in what was the world’s biggest IPO. To help get that deal out the door, nearly 5 million Saudis – of a population of 33 million – bought shares in the deal. But with the decline in the oil price, Aramco shares are now trading at 9% under the IPO price… and falling. That’s going to make a lot of dumb-money Saudi investors very unhappy, which is bad news for Saudi leader Crown Prince Mohammed bin Salman.

Meanwhile, Russia has an economy that’s addicted to hydrocarbons – where over the past few decades a collapse in the price of oil has crashed the economy.

My hedge fund I was running was collateral damage in the 2008 oil-price collapse during the global economic crisis – when the Russian stock market fell 85% and the economy contracted almost 8%.

Russians are used to a good crisis… And this one won’t be a surprise.

But here in the U.S., most of this happened while you were sleeping. A few days ago, under the cover of the oil-price crash, Vladimir Putin and the Russian parliament endorsed plans to lift or lengthen term limits so he can stay in power as Russia’s president as long as he wants. (“Everyone knew it was coming,” my friend Tigran said to me.)

Another big loser of a lower oil price is Nigeria, Africa’s biggest economy. There, oil accounts for around 6% of GDP and 90% of export revenues. Perpetually unstable, Nigeria – with 190 million people – is the biggest country that no one wants to think about what might happen if it implodes. And now the likelihood that it will is a whole lot higher.

Finally, Venezuela is often overlooked as the country with the world’s biggest oil reserves. It’s barely getting by – and the only way it does is thanks to oil revenues. With those in free-fall, pressure for political change in Venezuela (and the flow of migrants into Colombia and elsewhere) is going to increase sharply.

However, it’s not all losers in oil…

This morning, I rode over to the beach close to where I live here in Singapore. All across the horizon were enormous oil tankers…

Over the past few days, the cost of renting a very large crude carrier (“VLCC,” as they say in the industry) has spiked around 30%. That’s because after the collapse in the price of oil, big oil traders want to keep their product off the market – in anticipation of prices rising – rather than sell it.

Right now, renting one of those floating Molotov cocktails for a day – with enough space to store 127 Olympic swimming pools-worth of oil – will set you back around $38,000. It was less than half of that a month ago.

Unknown Unknowns

One of my favorite quotes is from former U.S. defense secretary Donald Rumsfeld… “There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.”

All of those unknowns are what’s the problem just now.

The answer to those unknowns? Another of my favorite politician quotes is from Viktor Chernomyrdin, who was Russia’s prime minister during much of the 1990s. “We wanted the best, but it turned out like always.” (It sounds better in Russian: Хотели как лучше, а получилось как всегда.)

The danger now is that the unknowns turn out… like always.

The Secret to Singapore’s Success

As I mentioned a month ago Singapore had the second-most cases of coronavirus of any country. Now it has dropped to No. 20. No one in Singapore has died of coronavirus.

COVID-19 has been a lot easier to get under control here because the entire country of Singapore is only a bit bigger than Columbus, Ohio. It has as many people as the Washington, D.C. metropolitan area. That it’s so small makes it a lot easier to control.

Along those lines, it helps that Singapore is an authoritarian state. Don’t get me wrong, it’s a Disney-fied steel boot… But it’s a hard and unforgiving boot nevertheless. When Singapore says “jump,” the only question is how high you jump. That’s useful in a time of crisis.

Also, it’s rich… which means that Singapore has the resources to protect its people and implement measures that wouldn’t be economically feasible in poorer countries.

But maybe most important, Singapore’s government is extremely competent. Government ministers are paid like CEOs, and government employees at every level are compensated well. People here aspire to work for the government (“It’s good enough for government work” isn’t an expression that people use here). So most government policies are data driven, thoughtful, and carefully implemented.

For example… during the height of the mini-panic here in Singapore in early February, the country’s prime minister, Lee Hsien Loong, released a message (see it here) that’s reassuring and measured and hits all the right notes. What’s more, the prime minister made similar statements in three languages… English, Malay, and Mandarin. Forgivably, he doesn’t speak Tamil, Singapore’s fourth official language.

That compares to other countries, where the leader struggles to speak even one language.

But that’s not where they want you to look, as Tigran would say…

May you find your way through the chaos.

 

"Whether you believe international diversification is a necessity because the U.S. dollar is headed for collapse, or you just want the added security of owning physical gold, Asset Strategies has the knowledgeable staff and the resources to meet these needs."

R. Hughes // Satisfied ASI Client

 

Hard Stuff

Editor's Note: Omar Ayales is the Senior Trading Strategist & Editor at GCRU (Gold Charts R Us). if you have any questions, you can reach him at oayales@adenforecast.com or visit www.goldchartsrus.net.

 

What is the 11-Year Cycle in Gold Telling Us?

By Omar Ayales

For the past 18 months, gold has been running hot. It got even hotter in the last 6 months as global fear and uncertainty propelled gold higher.

Geopolitical hype after the killing of an Iranian army general and fears over a spreading virus known as COVID-19 have driven demand for gold more recently.

Despite attention on gold’s recent strength, it was already on a solid uptrend after reaching a significant low in December 2015.

The reasons for the rise since the December 2015 lows are many; most of them have to do with the erosion of the purchasing power of global currencies.

Hyper-inflation seems inevitable given the increased money supply around the world relative to global output. It shouldn’t come to as a surprise that much of the demand for gold has come from Central Banks directly as a way to “stop the bleeding” in recent years.

Gold’s price pattern and longer-term cycles had pinpointed a bottom in Dec 2015 and predicted the recent 18-month run up since 2018 lows. Gold’s longer term phases are now telling us gold may be forming an intermediate top within the next year.

Note the chart below is from just before 1970. When gold’s peg to $35 was removed.

You’ll notice since the low in 1970, gold has reached a significant low every subsequent 7 to 8 years. The most recent low being the December 2015 low in gold.

Also you’ll note, from each low, gold has gone on a secular bull market that ends up peaking on the 11th year.

The chart points out two important things to consider regarding timing to investing in gold over the next 5 to 10 years.

First, it shows the 11-year cycle that began in 2009 is to peak in 2020, or sometime within the next year (if not already). This means we could start seeing gold forming a top pattern ST and an ensuing decline to test key deeper support levels near $1,300.

Second, gold’s longer term price pattern also shows a renewed 11-year cycle began in December 2015. It’s next peak would be in 2026-2027.

Given the fundamentals driving gold, the current rise may not be over yet. Fear and uncertainty combined with currency debasement provides a haven for gold to thrive. Gold could still rise to test the old 2011 highs near $1,900 before its 11-year cycle is over and done.

We must remain price observant. Price action is especially relevant as trends are developing.

More recently, gold has shown strong resistance at the Feb highs near $1,700. If this level is broken, gold could have another leg up rise to the old highs near $1,900 short term. If gold fails to surpass $1,700, it could start showing signs of weakness developing which could add downside pressure.

Longer term, it seems we’re just at the onset of a new 11-year secular bull market cycle which began in December 2015. Last year’s breakout above $1,365 resistance was a strong confirmation.

The gold miners especially could go parabolical and among the best assets you could own. Gold shares are very cheap relative to gold on a historic basis but in a better shape today than they probably ever were. Gold miners today have tighter and more sophisticated management teams, less debt and many of them with lots of cash.

Opportunities will be popping up everywhere.

Make sure you do your homework to properly position yourself to take advantage one of the most lucrative longer-term uptrends you’ll ever see.

Good luck and good trading,

Omar Ayales

 

 

"Over the course of many years, ASI has developed a reputation as a leader in alternative assets. These include everything from foreign currencies, gold and silver, and platinum as well as rare tangible assets like ancient coins and collectible stamps. These are investment opportunities that fly below the radar of most investors. Yet, as ASI’s rigorous research confirms, they offer the benefits of higher returns and lower risk. The assets the ASI offers belong in every investor’s portfolio."

Nicholas Vardy // ETF Strategist, The Oxford Club

 

The Inside Story

 

The True Measure of Value

By Rich Checkan

If you understand just one thing about gold, this should be it…

Gold is the only true measure of value or worth.

And, if you understand that concept, you will have a much different view of the value of the stock market by the end of this article. If you stick around to the end, you will be amazed to see what the Dow is really worth.

Faulty Tools Yield Poor Results

It is rare that I give a presentation that does not include a slide entitled, “The Measuring Stick.” And, that is for good reason.

Gold is a reliable unit of measure. It measures value, much like inches, feet, or meters measure length and height. It measures worth, much like pounds, grams, and kilograms measure weight.

Have you ever tried to hammer a nail into a piece of wood with a banana? No. Of course you haven’t. Nor have you tried to measure time with an anvil.

These images seem far-fetched and simplistic. Yet, on a regular basis, we all tend to value things in fiat currencies… yen, euro, pounds, and of course, U.S. dollars.

The problem is the value of a dollar – or any other fiat currency – changes day-to-day, moment-to-moment. So, measuring value with a dollar is no different than measuring distance with a ruler that constantly changes in length while dogmatically believing it is of a constant length.

If you take 5 separate measurements with that same, ever-changing ruler, you will most likely get 5 different lengths… even thought the object has not changed at all.

This is no different than measuring value in U.S. dollars and believing your results.

Constant Value

Gold, on the other hand, in terms of goods and services, is a constant.

I’m sure you have heard the story of the business suit.

In Roman times, and ounce of gold bought you a new toga, the business suit of the day.

In 1913, when the Federal Reserve was created, $18 would buy you an ounce of gold. It would also buy you a new business suit.

Today, with gold trading in the $1,600’s, you can use that ounce of gold to buy a nice new business suit.

But, $18 won’t even get you a sleeve!

How are your stocks doing?

Take a look at the following chart…

This chart tracks the Dow Jones Industrial Average in ounces of gold.

You can clearly see the major stock market peaks. You can clearly see the low points in 1929, 1980, and in 2011.

Further, and here’s the point, you can see that even though the Dow has made new all-time high after all-time high from the Great Financial Crisis until the recent COVID-19 bust… in U.S. dollar terms, the Dow actually peaked right before the dot.com bubble burst.

By measuring the Dow in gold, we can see, despite an over decade long bull market in U.S. equities where we were led to believe we were at new all-time highs virtually every other day, the stock market was less than 63% of what it was valued as we approached the year 2000.

Flawed standards of measure yield flawed measurements.

Don’t Be Fooled

The demise of the U.S. dollar over the years has been both significant and insidious. Significant is defined as roughly 98% of purchasing power lost since the creation of the Federal Reserve in 1913.

I describe it as insidious because of the amount of people that have been fooled into believing they are better off – wealthier – as measured in U.S. dollars.

Value shouldn’t be measured in dollars or any other fiat currency. Measure value – or purchasing power – in gold. In so doing, you should never be fooled again.

Use gold to measure wages, home values, assets… anything. Then, you will get a better feel for their true worth.

And, of course, ensure you hold your 10% in gold for wealth insurance… so you always know you have real wealth available to handle any real crisis you might have in the future.

Buy gold to help you Keep What’s Yours!

Simply call ASI at 800-831-0007 or email us today.

 

“As the Publisher of The Oxford Club financial group for over 28 years, I've learned to be very selective in who I recommend to our Members. When it comes to buying precious metals and offering services for offshore diversification and protection of assets, there's only a few groups I would trust. Asset Strategies International is one of the select firms I recommend without hesitation. I've worked with them for decades. ASI is a family-led business that offers the perfect complement of hard asset services and expertise for our Members, with the utmost professionalism and responsiveness."

—Julia Guth // CEO & Executive Publisher, The Oxford Club

Bonus

Editor's Note: We are delighted to offer a special preview of Adriane Berg's newest book, "The Retirement Income Explosion," in this month's Information Line. If you are interesting obtaining your own copy of the book with Adriane's insights and access to the bonus supplemental website, click here to purchase your own copy.

 

The Retirement Income Explosion

Have More. Spend Less. Live Better.

By Adriane Berg

 

Longevity Is the Detonator of The Income Explosion

In Marty, Paddy Chayefsky’s 1953 teleplay, later an Academy Award- winning movie, Marty’s mother and aunt complain that they are finished, washed up. “What can you expect at fifty-six”? they lament.

These women lived at a time when it was “justified” to feel “washed up.” What more could they expect in middle age?

Times have changed. Today, fifty-six is the start of the peak earning years for many Boomers, both men and women.
Mid-life and pre or post-retirement is now the time that Boomers are starting new businesses, traveling the world, and still have time to plan for a retirement that may last for thirty years or more.

Ageism and The Income Explosion

If we plan to live longer, we must embrace aging. We must start by rejecting the notion that infirmity, forgetfulness, and obsolescence are the inevitable by-products of longevity. We must replace these outdated handmaidens of aging with vitality, sharpness, and contribution.

Since “Scientific American’s “1987 proclamation that “aging is not a disease,” we have begun to disconnect old age from illness.

Recent attempts by scientists in the field of aging to bring back aging as a disease, not because it is negative, but to get funding for age-related disease research like cancer, heart disease, and cognitive decline, is motivated by the hope of potential breakthroughs, not ageism.

Whether they succeed in designating aging as a disease for FDA and fundraising purposes or not, aging will not be stigmatized if we stop our culture of ageism.

As we read through this book on money, you will find me a cheerleader for successful aging. Join me in my campaign to stamp out ageism. See all you can do at RetirementIncomeExplosion.com.


Retirement Planning is Life Planning After You Know Yourself Better

We are the artists of our lives. The TV show, Ed featured a lawyer who opened his practice in a bowling alley. In one episode, his friend, an artist, passed away. On his gravestone were the words, “Art was my life.” The protagonist said he wanted a different saying on his memorial, “Life was my art.”

That is what it means to live the handcrafted life and Live Better.

Let’s get a taste of what it means to Live Better.

Come back with me to that fabulous day in kindergarten when you were assigned your very first arts and crafts project. It was the time before that papier-mâché panorama with the erupting volcano that really counted for your science grade, the time before you cared even one bit, about coloring within the lines.

You were riveted to your desk with excitement and focus. Every moment counted, so you could finish your daisy chain, clay cat, or finger painting before your Mom or Dad came to pick you up from school. The bell, signaling the end of the day, startled you. You did not want to put your brush down. But alas, you had to go home.

Somewhere along the way, creativity got bound up with approval and competition, and things weren’t so much fun anymore. But it doesn’t matter. It takes no more than a new box of crayons to revitalize your primal urge to scribble. Utilize that primal urge and get that dream fulfilled, now, in your longevity years.

Here is the action to take: Write it down!

What have you tucked away in your dreams? Will you be equipped to fulfill its promise as soon as you retire? When you reach sixty? Eighty? One hundred? One hundred and two?

As you make your written list, your mind will inevitably start the process of conjuring dreams—the things you have always wanted to do but saved for later. Not all the entries are positive. Many times, you will want to consider “NEGATIVE” entries—things you want to STOP doing, like smoking or traveling so much for a business.

Write down these goals in simple sentences, without elaboration. By clearly expressing your desires and creating an object (paper with the descriptive words), you have brought your passions into a new realm and made them tangible.

This is the most significant step toward fulfillment.

Unfortunately, making a list is so simple, and so easy that you are probably in danger of dismissing it as a useless gimmick. Don’t. The list technique embodies the concepts and findings of decades of self-actualization, habit formation, life-planning, and self-fulfillment research. Most important in this frenetic world of ours is that it works in practice. It costs nothing, and it can be done on the fly.

For each positive or negative goal, answer the following 5 questions in writing (I use index cards), next to each.

#1. What are your dreams, large and small? This is both the most fun and the most critical part. Do be specific. “Travel” is not enough. Where do you want to go? Don’t hold back because you think your wish is impossible.

#2. When do you want the dream fulfilled? Give yourself a date, a season, and a timeline, in which the vision will fit. The late Milton Gralla, my co-author in How Good Guys Grow Rich, and one of the world’s leading philanthropists taught me that in business, you must always set a date by when a task is to be done. He considered this the centerpiece to success. This is just as true in life fulfillment as in business.

#3. Why won’t you realize the dream? List every barrier of which you can think. I am sure you can imagine many of them. The five most often expressed are money, age, family obligation, time, and lack of know-how or ignorance.

#4. Who can help you overcome your barriers? What would help?

Now comes the magic. You will start with a blank page. Maybe a germ of an idea will come to you, or a hundred far fetched ideas.

“When the student is ready, the teacher will come,” is undoubtedly correct.

 

Click here to purchase your own copy of "The Retirement Income Explosion" by Adriane Berg.

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