Well, just three years after Katrina, here comes Hurricane Gustav! While we are pretty far inland, the storm's track looks like it will run right over us. My lifetime partner, wife and witness to my life (the long-suffering and lovely Miss Puddy) told me, "Perhaps, we should take a few measures to rig for a storm." I dutifully put all the lawn furniture, canoe and anything else that could fly around in a high wind safely away. Also, we made the automatic trip to the grocery store that everyone in the South makes whenever a hurricane approaches. We stocked up on enough food to carry us through a month, or so. In addition, I finally broke down and purchased a generator that we can also use for our Airstream travel-trailer - I have been putting off the purchase for over six months, waiting for it to go on sale (fat chance of a sale today on generators). Puddy said that she did not want to sit around in the dark and watch the food in the freezer spoil if the power went out for a few days. I was also sent out to fill both vehicles and a couple of spare fuel cans with gasoline.
It is only prudent to take a few preparations, when you are fairly certain a storm is approaching, and yet what about the approaching financial storm? A recession is possibly on the horizon. Whether the Federal Reserve can pull another rabbit out of its hat is still to be seen. And even if they can, will it only put off the inevitable clearing of debt a little longer and make it even worse when it finally arrives? So, what can you do to batten down the financial hatches and how to rig for a financial storm?
Well, first, get your debt under control. Quit buying things that you do not need or cannot afford. Pay down your debt. It is not the time to buy a new car, unless you can pay for it outright. If not, then drive the old girl a little longer or trade it in on a newer used model that you can pay for outright. Build up a cash reserve to last a couple of months (six months would be better). Keep a little of that cash close at hand, outside of the banking system. Take stock of your complete financial situation and run a personal financial statement. If you are lucky, your assets are greater than your liabilities. If not, then you need to take a serious look on how you are living your life and perhaps learn to live below your means, so that you can save a bit. If you have been prudent enough to save, then look carefully at how your savings are invested. True inflation is running around 10%, so are you keeping your savings safe, but still in front of inflation? Finally, have you built your financial lifeboat? I recommend that everyone in good times, keep 10% of your entire net worth in precious metals. In uncertain times, you may want to consider 20%, or maybe even 30%, of your entire net worth in precious metals.
Remember that the time to build your position in precious metals is before the storm hits. When the storm hits, it is too late to go shopping for supplies or lifeboats!
Wishing everyone fair winds and smooth seas,
Happy moments, Praise God.
Difficult moments, Seek God.
Quiet moments, Worship God.
Painful moments, Trust God.
Every moment, Thank God!
Larry LaBorde,
Silver Trading Company
September 1, 2008
