Imagine a scenario where a giant asteroid is on a collision course with Earth. When it hits, a huge portion of the world will be destroyed.
Scientists and politicians know it’s coming. But it’s years away.
Fearful of triggering panic, the information is suppressed. Even when leaks get out, they’re spun to seem insignificant.
Of course, those in the know realize real estate and businesses in the region facing obliteration will become worthless.
They also realize values in safe areas will skyrocket once people realize what’s happening and flee the danger zone … bidding up anything available where it’s safe.
So insiders begin quietly divesting themselves of assets in the danger zone … and begin to systematically accumulate assets in the safe zone.
They know there’s time to warn people, but want to make all their moves before acknowledging to the world the gravity of the situation.
Along the way, astute observers piece together the clues. They realize what’s happening and use all means available to sound the alarm.
Some are dismissed as conspiracy theorists. Others as doom porn profiteers.
Meanwhile, news feeds are filled with sensational, but trivial headlines … keeping the masses distracted.
So most people go about their daily business, completely unaware a disaster of epic proportions is slowly, steadily looming closer.
Most will be caught completely off-guard. Some will reap huge profits simply through happenstance … because they accidentally own property in the safe zone.
Most in the danger zone escape with their lives, but not their fortunes. Because their wealth and income are all based exclusively in the danger zone, they lose everything.
However, a few alert people in the suspected danger zone decide to hedge by acquiring property and expanding their businesses into other areas.
They reason that so long as the underlying investment makes good sense in its own right, even if a disaster never strikes, they really aren’t worse off for diversifying.
Sure, it takes extra time and effort to learn a new area, build relationships, and make the investments … but the incremental expense is accounted for as an insurance premium.
What would YOU do?
And what does this have to do with your investing?
Perhaps obviously, the asteroid is a metaphor for a catastrophic financial event … say, the collapse of the U.S. dollar or the global financial system.
Could it happen? Will it?
Of course, no one knows. But there’s plenty of smart people out there who think it’s already started … and is inevitable.
It may not destroy the entire world. But it could destroy yours … depending on how well you’re prepared … or not.
Robert Kiyosaki says the stock market will eventually collapse under the weight of baby-boomers hitting age 70-1/2 and beginning forced liquidations.
It hasn’t happened yet, but that doesn’t mean his premise is false.
It can be reasonably argued massive money printing and Central Bank interventions are propping markets way up … at least temporarily.
Chris Martenson says an economic system reliant on compounding growth and abundant energy is doomed to fail. You can print money, but you can’t print energy.
So when energy production fails to compound as quickly as debt, an economic implosion is inevitable. There’s no economic activity without energy.
Worse, Chris says, collapse will happen quickly because of the exponential nature of debt.
You can double the straw on the camel’s back many times … but the final doubling ends it all very quickly.
Consider the growth of only U.S. debt (the rest of the world is just as bad) …
1992 – $4 trillion
2000 – $6 trillion
2008 – $10 trillion
2012 – $16 trillion
2017 – $20 trillion
Notice the speed at which the debt is growing. It’s compounding like a cancer. And at some point, it consumes the host.
In 2006, Peter Schiff warned the world about the 2008 financial crisis. People scoffed.
Peter says the next crash will be even bigger because everything wrong in 2006 is MORE wrong today.
Critics of Schiff’s theory point at the stock market … and the fortunes being made … to claim all is well.
Not surprisingly, people are fleeing Venezuela… a reminder of how economic conditions, harsh or otherwise, stimulate migration. Of course, that’s of interest to real estate investors.
But this isn’t about Venezuela. It’s about human behavior in the face of possible disaster.
Some ignore facts they don’t like. Others deny them. Still others spin them, while most simply don’t understand and can’t be bothered to try.
A few will remain rational, curious, diligent, and proactive. Common sense says those folks generally fare better.
Clues in the News …
Bloomberg recently reported China is considering slowing or even ending lending money to the United States.
Markets responded by dumping bonds, which drove up interest rates.
So yes, what China does with its balance sheet affects YOUR interest rates on your Main Street USA rental properties.
Of course, China doesn’t want bond prices to fall when it’s holding a bunch of them … especially if they’re thinking of selling. They just want to quietly unload.
Unsurprisingly, China decried the Bloomberg report as “fake news”.
But if U.S. news is “fake”, what are non U.S. news sources saying?
Here’s an interesting headline from Sputnik News on January 16th …
You should read it, but two important components are oil and gold.
“ … both Russia and China are also stepping up with exploration and acquisition of physical gold reserves, hedging against the implications of a possible collapse of the de-facto world currency.”
Of course, the de-factor reserve currency they’re referring to is the almighty U.S. dollar.
Hmmm … maybe China and Russia see an asteroid on the horizon.
Doom porn? Conspiracy theory? Or clues of a possible cataclysmic event coming to an economy near you?
We don’t know. But we took Robert Kiyosaki’s warnings in 2006 too lightly and paid a BIG price.
Since then, we’ve gotten to know Peter Schiff, Chris Martenson, and Simon Black.
Peter keeps us sufficiently freaked out. He makes sure we don’t fall asleep at the watch.
Kiyosaki teaches us to keep an open mind, to seek out diverse perspectives, and talk with other interested and thoughtful observers.
Chris Martenson reminds us to pay attention to energy. And he’s accurately predicted the recent run-up in the price of oil.
Simon Black advocates the pragmatic wisdom of having a Plan B … not being overly dependent on one location, economy, currency, or investment.
Simon says you’re no worse off to be prepared … and it could make all the difference in your future.
All of these very smart friends … and many more … will be with us for our Investor Summit at Sea™ in April.
It’s unfortunate not everyone reading this can afford the time and expense to be there.
Even more unfortunate are those who can, but choose not to. They have the most to lose … and gain.
We don’t know if the “asteroid” reports are true or not. But every investor owes it to themselves to consider the arguments and the options.
Better to be prepared and not have a crisis, than have a crisis and not be prepared.
Until next time … good investing!
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