June 2019 Information Line
I joined Asset Strategies International over 23 years ago, in February of 1996. The people I helped into gold back then are in a much better position today than they would have been if they had not taken that important step.
The success stories are plentiful.
In one instance, I had a client buy a small amount of gold as wealth insurance. Ten years later, he and his wife sold less than half of it to buy their daughter a home.
In another case, a husband bought gold at Perth Mint. He passed away a couple years ago. His wife didn’t know he made the purchase, and she settled the estate without touching his Perth Mint gold.
Our Preferred Client Relations Manager Brian Zweig reached out to her late last year because we had not heard from them in a while. We didn’t know it prior to Brian’s call, but she was facing staggering medical bills at the time. She was moved to tears at her “new-found” wealth. She told Brian it was the best Christmas present she could have ever hoped for.
In a third instance, a good son and client convinced his Mom to buy silver many years ago. She reluctantly agreed. Fast-forward a decade or so. Her good son was in a serious accident, but the insurance companies determined his issues were due to a pre-existing condition. So, they wouldn’t pay anything to cover his medical bills.
Mom was grateful to have that silver to offset the expenses. She was skeptical at first. She is a believer now.
What’s Your Point, Rich?
There are many more stories like that, and I hope to share more of them with you in time.
My point is simply this… We absolutely believe it is our job to educate our clients about the value of having a small portion of your assets in gold and other precious metals for wealth insurance. Needing it and not having it in place is a horrible combination that could lead to the destruction of all the wealth you worked so hard to accumulate over the years.
We are passionate about what we do. We believe, without reservation, that we provide an invaluable service to you, our clients.
We’re Getting “Louder”
From 2001 through 2011, we didn’t need to make many outgoing phone calls. It was all we could do to handle the incoming calls.
As a result, and rightly so, my message at conferences has been to make money where money is to be made… in equities. But, make sure you maintain your allocation to wealth insurance and protect yourself against the eventual downside in the stock market.
My suggestion for protecting yourself was to ensure you had trailing stops in place to insulate your portfolio against a sudden downturn, and to rebalance periodically… taking profits when over-weighted and using the proceeds to buy wealth insurance.
For the past five years or so, I believed this was sound and prudent. To this day, I think I was right to say so.
But, markets are changing, and so are my suggestions.
Our passion, born out of concern for your well-being, is beginning to flow again. We see the signs that now is the time to take action so you are one of those success stories we talk about ten years from now.
As a result, we are reaching out to you with phone calls, emails, chats, and mailings to share why we see now as an important time to act. Those of you who pick up the phone when we call or respond when we email or write, in my opinion, will be grateful you did.
Some may see this as a sales call.
I see it as us throwing you a life vest.
I strongly urge you to catch it and put it on.
But, you don’t have to wait for us to call. Simply call ASI today at 800-831-0007 or email us before we reach out to you. You will be glad you did.
Keep What’s Yours!
"If you’ve been thinking about owning gold and precious metals, Rich is the man to talk speak with. He’s my 'go to precious metals expert,' so if you are looking to invest in physical gold or other precious metals, I highly recommend a discussion with Rich." Jim Woods // Editor, Jim Woods Investing
"If you’ve been thinking about owning gold and precious metals, Rich is the man to talk speak with. He’s my 'go to precious metals expert,' so if you are looking to invest in physical gold or other precious metals, I highly recommend a discussion with Rich."
Jim Woods // Editor, Jim Woods Investing
The Aden Forecast on the "Big Picture"
By Mary Anne & Pamela Aden
"The big picture is the dominant trend and it’s the most important. It dictates which way the economy and the markets are headed in terms of years, not months," explain Mary Anne and Pamela Aden, leading marketing timing experts and editors of The Aden Forecast.
The economy has been in an upswing for the past 10 years, ever since the financial crisis literally pushed the economy and the whole financial system to the brink. The economy was saved by quantitative easing (QE).
This included super low interest rates and bond buying by the Fed and other central bankers. It was done to stimulate the economy and turn it around. They succeeded by adding trillions to the financial system, which was basically thanks to this manipulation.
Nevertheless, the big picture of the economic trend has been up since then and it’s still intact, even though it has lasted longer than the average upmove.
Meanwhile, interest rates have been in a big picture downtrend since the early 1980s, and this too remains intact. Interest rates hit 5000-year lows three years ago, which is as far back as the records go, and it looks like they’re going to stay near these low levels in the period ahead.
Basically, everyone wants low interest rates and that’s what we’re going to get. This in turn will continue to be good for stocks. The stock market’s big picture trend has also been up since the early 1980s. Stocks had a big setback during the 2007-08 financial crisis, but then stocks started up again in 2009, thanks to the Fed’s QE actions.
Even though this stock market rise should be maturing, the rise could keep going as long as interest rates stay low.
As for the dollar and gold, the big pictures are down for the dollar and up for gold, and that’s been the case since the early 1970s when the dollar went off the gold standard. Obviously, there are ups and downs within these mega trends but it’s important to keep the big trends in focus. Why? Because they’re the most powerful and the most profitable over the long-term.
But it’s also very important to note that this time around, there’s a new twist in the big picture. And it could alter its outcome for a few years, or more. Here’s why — very simply, monetary policy has become political. President Trump, for instance, has demanded that interest rates must stay low.
The point is, the President is telling the Fed what to do and the Fed is following instructions. This is totally unprecedented because the Fed has always been independent.
But now it’s a different story. The President wants the era of low interest rates and super loose monetary policies to continue, and he’s not alone. Overall, it’s becoming more obvious each month that more stimulus is going to be the end result. Basically, the world is following Japan, and it has been for years.
Japan has been the trendsetter. Over 20 years ago, the Japanese lowered their interest rates to zero to help boost their economy. Even though this didn’t help much and their debt continued to surge, the rest of the world has been following in Japan’s footsteps, especially after the 2007-08 financial crisis, dropping their interest rates to near zero, and in many cases below zero.
Meanwhile, Japan was buying its own bonds and the rest of the world did the same. For years, Japan has also been buying its own stocks. And now some countries, like Switzerland, are following suit, all in an effort to help their economies.
Currently, however, the main countries simply do not have room to cut interest rates much further. So, they’ll again have to turn to unconventional stimulus measures.
In other words, what will the government do when bond servicing takes up most of the expenses? They’ll revert to more quantitative easing, buying bonds, negative interest rates, buying stocks and corporate bonds. But like Japan, it won’t work for the U.S. and other countries either.
Postpone the recession? Yes. Kick the can down the road? Yes, but solve the underlying debt-ridden problem? No… And that’s the bottom line. This is the new twist in the big picture. It’s basically manipulation of the normal business cycle.
Rather than let the cycle unfold on its own, everyone is jumping in to turn the tide. That is, this will delay the inevitable recession/ crash/crisis or whatever is eventually coming, but it will not eliminate it.
For now though, enjoy the ride. Go with the flow. Recognize where we are in the big picture and pay attention. These are interesting and historical times and it’s actually an incredible experience to be a part of this era and see what’s happening.
And using Japan as our guide, also recognize that this manipulated postponement period could last for a long time. If so, those big picture mega trends could also continue far longer than they normally would.
First, the mega trends will likely remain intact. But increasingly, it looks like we’ll see superior strength in the bond market and bonds will be stronger than stocks going forward. This doesn’t mean stocks will necessarily decline, it just means that bonds will outperform.
When bonds rise the Dow Utilities is usually strong too. That is, Utilities are poised to outperform the Industrials. So this also coincides with a strong outlook for bonds. And it reinforces that the low interest rate era is going to be with us for quite a while.
“As an investor and student of the market for more than 30 years, I know how unusual it is to find a company that is as honest as Asset Strategies International, especially in these times of market deceit and brazen self-interest. I appreciate your courtesy and your efficiency. Thank you again for helping me acquire the protection of gold.” —Roger L.
“As an investor and student of the market for more than 30 years, I know how unusual it is to find a company that is as honest as Asset Strategies International, especially in these times of market deceit and brazen self-interest. I appreciate your courtesy and your efficiency. Thank you again for helping me acquire the protection of gold.”
What Central Banks Know That You Don't
By Rich Checkan
Despite the recent escalation of the trade war with China and the unsettling impact that has had on the markets, consumer and business optimism in the economy overall remains high.
People, in general, believe the economy is good… firing on all cylinders.
But, if you dig a little below the surface, you can see some storm clouds forming.
For instance, stocks tumbled 6% in May as a result of concerns that the trade wars will trigger a recession as soon as this fall. And, safe haven buying of gold is on the uptick globally… especially in Europe, where the Brexit hard exit concerns are roiling markets and spooking investors.
But investors aren’t the only ones searching for a safe haven.
Last month, the World Gold Council reported a number of interesting statistics with regard to Central Bank gold buying…
- Central Banks are buying gold at a pace not seen in 50 years.
- Central Bank gold buying for the 1st Quarter of 2019 is up a full 70% from 1st Quarter 2018.
- China and Russia (and others) are buying gold in an attempt to increase their reserves of gold at the expense of U.S. dollar reserves.
When you couple this Central Bank gold buying behavior with the increased tensions between the U.S. and the rest of the world, with the movement toward bi-lateral trade agreements between the likes of China and Russia, with the rise of U.S. debt to $22 trillion, with the fact that annual U.S. deficits are expected to exceed $1 trillion from now on, and with the falling interest in the purchase of U.S. Treasuries… I think you can start to see why.
The U.S. dollar is not going away as the world’s reserve currency anytime soon. But, clearly, the world is starting to lose faith in the almighty dollar.
And, when the reserve currency is questioned, all eyes turn to gold.
Be Your Own Central Banker
A number of years ago, we suggested you take matters into your own hands to become your own Central Banker. Now, we echo that suggestion, and we are going to start raising our voice a bit louder.
Regardless of which side of the aisle you stand politically… left, right, or in the middle… I think we can all admit that the politicians with whom we align ourselves have been poor stewards of our hard-earned money.
They all spend more than they take in from us in taxes. They all fail to understand fiscal responsibility and how to balance a checkbook. They all choose, time and time again, to buy votes for re-election by spending more money than we have supplied in taxes.
The result is a weakening of our financial position as a country and a weakening of the world’s reserve currency, the U.S. dollar.
True, the dollar is still currently strong, but the cancer is growing for those who have the eyes to see. And, on this current path, that cancer will undoubtedly metastasize.
Your best bet is to follow the example of Central Banks worldwide and make sure your gold allocation is appropriate and secured.
Action to Take
In an excellent webinar conducted last month, Porter Stansberry suggested moving to a position of 40% of your assets in gold and cash in order to be ready for the inevitable downturn in equities markets.
The purpose of these funds is to be ready to take advantage of the bargains that will be created when the 10-year bull market goes south.
We couldn’t agree more.
Right now, the two best performing currencies are the U.S. dollar and gold… in that order. But, the U.S. dollar’s strength will not continue.
That’s why I believe the time is now to use that dollar strength to shore up your gold allocation. Take advantage of the opportunity to get more gold with your dollars before the dollar’s cancer spreads and overcomes it.
“If gold is your chaos hedge, then Michael Checkan is King Midas. He's been a personal friend, and his company, Asset Strategies International, Inc has been dealing in gold (silver, platinum and palladium too) for over 35 years. You want them in your corner when it comes time to buy.” —Bill Drescher
“If gold is your chaos hedge, then Michael Checkan is King Midas. He's been a personal friend, and his company, Asset Strategies International, Inc has been dealing in gold (silver, platinum and palladium too) for over 35 years. You want them in your corner when it comes time to buy.”
The Inside Story
Interview with Mike Cobb
After 37 years of business, Asset Strategies International certainly understands the importance of owning real things with intrinsic value. We also understand firsthand the benefit of holding real assets offshore. We sat down with Mike Cobb of ECI Development, a long-time partner of ASI, to discuss how Americans can stretch their retirement savings by considering an ex-patriot lifestyle. For many facing rising inflation and a diminishing social security payout, living in a country with a lower cost of living could provide a surprisingly luxurious lifestyle, when paired with prudent financial planning and a diversified portfolio. Mike Cobb was able to shed a lot of light on how and why people choose to adopt this lifestyle.
ASI: What does a typical ex-pat look like? If you look up the definition of a US ex-pat in the dictionary, what are you looking at?
Mike Cobb (MC): There’s two kinds of ex-pats. There’s the working ex-pat; that’s anybody and everybody who has a job overseas.
Or your typical retiree, or pre-retiree, ex-pat is someone in their late 50’s to early 70’s who is adventurous and entrepreneurial. There are also a lot of state department and military folks who stay overseas when their term or their career is up.
ASI: Do they fall into a specific demographic category?
MC: It changes by country, actually. There’s a group of families that travel around and do the homeschool thing and live different places. So that’s another face of the ex-pat experience. It’s a much smaller face, but it’s out there.
There are more and more of these sorts of perpetual travelers. I just talked to a guy yesterday who’s been living in Guatemala at Lake Atitlan for three months. He’s from Norway and was an investment banker in New York. He and his family sold their big house, banked the money, and said, “You know what? We can kind of live anywhere.”
They’re homeschooling their girls, so they don’t have to be in New Jersey in an expensive school district, and they’ve been moving around Mexico, Guatemala now, and that’s what they do.
ASI: Has that demographic changed over the years or is it fairly constant?
MC: Think about it this way: the very first people who go into a new country are like the Jeremiah Johnsons, they’re the mountain men who literally went off to the [American] West and most of them were never heard from again. The second group of people are like the pioneers; the people that went, but stayed on the edge or reported back. The third group of people were the settlers, the Laura Ingalls Wilders, the people that took their wagons and their families and went West to make a life and a community.
So, each of these countries attracts a different type of person. Mexico has attracted settlers for 20-30 years. The Costa Rican market is more and more settlers, you still have a few pioneers, but the mountain men went to Costa Rice 50 years ago. They went to Mexico 80 years ago. They went to Nicaragua 25-30 years ago in the late 90’s. I would consider myself a pioneer in Nicaragua, I showed up in the late 80’s. Nicaragua is still mostly pioneer with the beginnings of settlers.
Costa Rica is now mostly settler. Panama is 2/3, maybe half settler. Belize is still a mix of pioneer and settler. Colombia is still mostly pioneer.
Ecuador is interesting. Ecuador is kind of an anomaly because Ecuador certainly is pioneering in some locations, but other locations have become settler. Cuenca has about 5,000 ex-pats just in this one little town and it became a settler haven, whereas other places Cotacachi, Vilcabamba, and some other towns stayed somewhat pioneering. So even within a country there can be different demographics.
ASI: How big is the ex-pat community, and what are the projections going forward? Shrinking? Growing?
MC: Oh, it’s definitely growing. The problem is there’s very little hard data. When somebody moves overseas to Costa Rica, who knows about it? You do, but the US government doesn’t really keep track of it, and so there’s no real, hard data. Let me give you the one piece of hard data we have and then some anecdotal numbers.
In 2016, there 613,000 people registered with the Social Security Administration to receive their social security checks outside the US, whether it was through a consulate or embassy. I think most people now do direct deposit, so that number may even be even larger.
Mexico has about 300,000-400,000 US citizens who live there part time to full time. Mexico has been attracting US buyers for 60-70 years, since the 1950’s when Hollywood went to Acapulco. In Costa Rica, about 40,000-60,000, but nobody knows for sure. Panama – 25,000-30,000. Belize – 15,000-20,000. Nicaragua -- 10,000-15,000. Ecuador is sitting at about 15,000. Colombia is a much smaller number, probably in the 3,000-5,000 range. My world is Central and South America, so that’s all I can really comment on. I don’t have any feel for Europe.
ASI: What careers are typically best suited for this lifestyle?
MC: Computer programmers, writers, graphic artists; there are a ton of industries. Look, if you can work from home in the US, you can work from anywhere. If your work is portable, it’s easy-peasy.
My counsel is do what you did in the states, or do what you did back home. Anything you can do that brings your experience with you is a huge plus.
If you have to come in as an investor to open a business, you have to hire locals. You can’t come in and compete against the locals. You’re not going to get a work permit generally in the first place. Panama would be the one exception, but generally most countries you would be faced with very hard-to-get work permits. If you came in and started a company, hired locals, trained them, and put in procedures in your organization to deliver a more efficient product or service, you’re going to do very well.
ASI: What obstacles are ex-pats running into today?
MC: Not being able to play the long game on the business side. People think because I’m a master roofer, I’m going to move to Costa Rica and set up a roofing company, but they don’t understand that it’s going to take 10,000 hours to master living and working in Costa Rica. If you work 40-hour weeks, that’s five years. I think people are overconfident in their ability to adjust to whatever the cultural norms are from a business standpoint. You also need to make sure you’ve got enough capital resources; rope to run the long game.
On the lifestyle side, the poverty is a big one. You have to find a way to get some psychological comfort, closure on the poverty issue. That’s a big one. I think the poverty drives a lot of people out.
ASI: What is the best way for ex-pats to navigate other cultural differences?
MC: Culturally, I live by a creed that when we’re in a foreign country, we’re a guest. It’s like being a guest in somebody’s home. If you’re a guest in someone’s home, you offer a little extra help, recognizing the fact that you’re a guest. Whatever you’re doing, you’re helping to make your environment – their home— a better place. And conversely, you stay out of political discussions, don’t offer your opinion on any matters that are domestic, because you’re a guest. So, I think if you do those kinds of things, the acceptance on a cultural level is pretty easy. It has been for us and it has been for many of the folks we know that are ex-pats.
I talk about viewing life through “adventure eyes” when we go someplace new. We see the positives in things and we filter through that. As we get more and more familiar, comfortable, and used to [living abroad], I think we take off our “adventure eyes.” We’re not patient and seeing the awe and wonder in things anymore.
My counsel is, in order to live overseas long term, maintaining “adventure eyes” goes a long way. I think we move abroad because we want something different and it will never be what we expect it to be— nothing ever is. But, if we get there and we maintain a sense of wonder and respect, I think our cultural assimilation is much faster, much better for all—for us and the folks in our new country, our new home.
ASI: How do ex-pats bank and invest?
MC: Typically, if you become a resident of a country, you can get a local bank account easily, but a lot of ex-pats actually never get a bank account. There was a couple that lived in Nicaragua that we were friends with – I think they were there 7-8 years— and they never had a bank account. They paid all of their bills with their credit card, and they took money out of an ATM machine and gave their landlord cash for rent once a month. But everything else they did on credit cards, so you actually don’t even need a bank account to be able to do that. But it makes sense, I think if you’re going to live somewhere. They were the anomaly. I think most people open up a local bank account. Usually it’s just a residency card that lets you do that in the post-FATCA environment.
A lot of it is simply great connectivity. Having access to reliable, high-speed internet is important, phone service and internet. The truth is if you’re sitting on a beach in Nicaragua or you’re up in the foothills of the Andes; eating some empanadas, a steak, and drinking Malbec, you’re going to go on your phone or your computer, call a precious metals dealer, or buy a Perth Mint Certificate, or trade your stocks on e-trade or pay your credit card bill. You’re going to do all those things online, so the connectivity issue is a big one. It’s becoming less and less of an issue, the connectivity is just increasing exponentially everywhere.
ASI: If I’m considering the ex-pat experience as an option, how do I plan financially for living overseas?
MC: Whether you’re going to live in the U.S. or overseas, you should have three months of cash reserved, you should have precious metals, stored and physical. Those are all important things to get ready for retirement and get ready for the rest of your life. The honest truth is, I’m not sure that financial planning looks that different whether you’re going to live overseas or live in the U.S.
You folks at ASI give incredibly prudent, wise counsel to your readers and to your clients. Everybody should have a cash reserve. Everybody should have physical metals. Everybody should be thinking about how they’re going to live in retirement with their investments, retirement savings, IRAs, 401Ks, and all that kind of stuff. So, from that standpoint, I’m not sure it changes very much.
Something I read said that by 2030, Social Security is only going to be able to pay ¾ of what they plan on paying you. If all of the sudden you haven’t planned very well, you don’t have a big nest egg, or you have some nest egg, but you realize you’re going to need some part or all of your Social Security to live well, then looking overseas actually becomes a great option. Because you can go live in many of these countries for half of what it would cost in the United States.
All of the sudden, living overseas becomes a lot more attractive. People don’t get this, but living overseas can be a step up in quality of life for a lot less money. It’s paradoxical. How can you have a higher quality of life that costs less? The harsh reality of only having ¾ of your Social Security payment is something that I think is going to change the focus for a lot of North Americans. I think that on a macro level, it’s going to be a big game changer for our industry in general.
Stay tuned for Part II of our interview with Mike Cobb, where he discusses the specific lifestyle options his company ECI Development has been able to provide for American citizens who are considering living, working, and retiring abroad. Curious about exploring your options for living abroad? Regardless of whether you seek lifestyle, retirement, or investment opportunity, we recommend that you check out ECI Development’s Escape Artist Conference coming up in Pittsburgh, PA this month.
“Over the course of many years, ASI has developed a reputation as a leader in alternative assets. These include everything from foreign currencies to gold, silver, platinum, and palladium as well as rare tangible assets like rare U.S. and ancient coins. 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 that ASI offers belong in every investor’s portfolio.” —Nicholas Vardy // ETF Strategist, The Oxford Club
“Over the course of many years, ASI has developed a reputation as a leader in alternative assets. These include everything from foreign currencies to gold, silver, platinum, and palladium as well as rare tangible assets like rare U.S. and ancient coins. 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 that ASI offers belong in every investor’s portfolio.”
—Nicholas Vardy // ETF Strategist, The Oxford Club