Update - May 19, 2020

The Latest Issues in China… and What Gold Can Do About It

Gold and China. We’re covering all the fun – and potentially hugely profitable – stuff today.

But before we get into it all, I just saw the first draft of our next monthly health issue. It’s good… perhaps our most research-intensive issue yet.

It hits on a very important topic… aging. But it does it in a very Manward way. It takes the path least traveled and finds some pragmatic solutions that you can put to use right away.

Look for the issue later this week.

Right now, I want to return to another subject we’ve covered in a way that others have not… China.

Playing the Downside

I first began writing about China’s largely unreported economic woes in late 2018, after having lunch with an international banking analyst in Dallas. At the time, we were getting some pretty serious clues that Beijing was getting tired of its trade imbalance and the monetary weakness that came with it.

In last year’s “big prediction” issue, I detailed the country’s massive Belt and Road Initiative – a trillion-dollar plan aimed at expanding China’s footprint in Europe, Africa and other parts of Asia and the reach of its currency.

The plan was showing some serious faults, which led me to recommend playing the downside of the country’s economy via the ProShares Short FTSE China 50 ETF (YXI).

At about the same time, President Trump doubled down on his attacks on the country, pulling the headlines away from the troubles in China’s expansion plans. But just because the reporters weren’t covering the story doesn’t mean it went away.

I’m now learning that several countries – that owe China as much as 80% of their annual GDP – are using the global pandemic as an excuse to call Beijing and ask for loan forgiveness. It could cost China tens of billions of dollars… and cause yet another major setback to its expansion plans.

Since the start of the program, China has lent out as much as $350 billion to countries across the globe – and half of them are considered high-risk borrowers. Much of that money will not come back. And now Beijing must decide what to do next. Does it throw good money after bad money and hope the projects will be a success, or does it take its losses and wait for the next opportunity?

My guess is it will toss out even more money. After all, that’s what everybody else is doing these days.

It’s a good reminder that there’s not just a pandemic these days… there’s a global plague too. It’s a plague of debt, and it’s everywhere.

It’s a good reason for us to stick with our position, playing the downside of China’s economy.

With that idea, I want to introduce you to a good friend of mine, Rich Checkan. He’s one of the most pragmatic guys I know (West Point will do that to a fella, you know), and he’s also one of the best and brightest when it comes to gold (working for a leader in the precious metals business will do that too).

After a recent conversation about the current economic crisis and exactly how he would tell my readers to use gold to protect their portfolios, I asked him to put his thoughts on paper.

They are below.

His essay is quite good… especially if you’re worried about the effects of all the debt plaguing the world these days.

I think you’ll enjoy it.

Be well,

Andy

The Best Wealth Insurance Money Can Buy

By Rich Checkan, Asset Strategies International

In times of crisis, gold is the best wealth insurance money can buy.

That’s why, as we’re one of the country’s premier precious metals brokerages, the doors at Asset Strategies International (ASI) have stayed open.

We consider ourselves to be an essential business… not just as a financial firm, but as brokers of this all-too-critical insurance policy.

How good would that insurance policy be if, when you finally needed it, the insurance broker were closed, and you weren’t able to cash in your policy?

And right now, too many Americans, and investors worldwide, are experiencing a financial crisis.

We’re here to help investors protect their wealth and way of living with the safe haven of gold.

This crisis has revealed all too painfully just how important it is to diversify your assets.

So let me give you a brief introduction on how to create your own wealth insurance plan.

How Does Gold Work in a Crisis?

Gold is meant to be a form of protection for your portfolio against any kind of financial crisis.

For example, when the stock market plummeted in mid-March, investors who owned gold were able to sell off some of their position in gold to meet margin calls. That’s exactly what it is there for – to provide liquidity in a time of crisis and act as a safe haven for investors.

In extremely volatile markets, gold holds steady.

Gold’s negative correlation to the stock market and paper currency has benefited gold investors for a long time. The spot price of gold has historically risen when the U.S. dollar weakened and the stock market faltered.

Gold prices soar and the stock market plunges during periods of high inflation.

Gold is also known as a crisis commodity for its ability to maintain or even grow in value during times of geopolitical uncertainty.

We are certainly seeing this now.

Precious Metals for Protection… and Profit

For pretty much everyone, getting started with precious metals means building your core holdings. Your core holdings, or wealth insurance, are a store of purchasing power. They’re highly liquid in the event of a financial crisis you hope to never have. Therefore, your core holdings should be around 10% of your portfolio. They should (hopefully) remain untouched for the remainder of your life… but be kept close at hand (more on this below).

Generally, you do not trade in and out of your core holdings. You sell only when you have a financial crisis. Economic and political uncertainty is a given, so you absolutely cannot risk giving up your core position.

Your core holdings should be primarily gold with some silver. Once you’ve filled this quota, any additional funds you allocate toward precious metals typically are purchased for profit potential.

Silver fills this role well. Silver tends to be more volatile than gold. But with increased volatility and risk come increased profit potential as well.

Investors focused on holding for the long term should give priority to finding the lowest premium. In a bull market for precious metals, it is the ounces you own that will produce the investment returns.

Storing Your Wealth

Once you build your core holdings, where should you keep them?

We recommend starting by storing at home up to the point where you have enough to cover a foreseeable short-term need, or up to the point where you no longer feel comfortable storing and safeguarding the assets yourself.

At that point, start putting the rest of it in the hands of the professionals… either domestically, abroad or both.

Storing your precious metals in storage facilities may actually be preferred when you acquire a significant amount of precious metals. You will need extra space, security and insurance.

Compared with other precious metals dealers, ASI has developed many relationships with a wide variety of storage facilities where you can store your precious metals. These relationships allow us to offer you the freedom to choose the ideal location for your metals based on the features that are most important to you.

In addition to a host of domestic storage facilities, ASI has partnered with numerous offshore facilities. Some clients may prefer offshore storage in order to diversify their assets across borders, along with the added layer of privacy and potential tax-free benefits.

Want to Find Out More?

Buying, selling and holding gold involves certain nuances. Always, but particularly in a crisis, it is essential to own gold.

But more importantly, it is essential to have a dealer you can rely on to help you make decisions to best protect your interests.

Call 800.831.0007, or email a preferred client representative from Asset Strategies International. They will be happy to have a conversation with you about the best ways to buy gold to suit your investment purposes.