By Sean Hyman
As you all know, I recently published an article that talked about the state of the U.S. economy and that it may be in the “beginning’ stage of an economic recovery.
I talked about the valuable indicator of copper and why it leads the way and tells you that the economy will recover long before the “nightly news” or even analysts tell you. Read more about it here.
Today, another site that I highly regard, also talked about the importance of copper in leading the way to an economic recovery. Daily Wealth.com gave this checklist for an economic recovery.
The True Wealth Script for Economic Recovery
• Investment-grade corporate bonds rally first,
• then stocks rally. Around the same time,
• the price of copper recovers.
• The CILI (aka “Silly”) Recession End-icator goes up for three months. This is a ratio of “coincident economic indicators” to “lagging economic indicators.” Dennis Gartman, one of my favorite newsletter writers, pointed out this indicator has called the end of recessions with remarkable accuracy for 40 years.
• The recession ends.
• Consumer confidence indexes rise.
• Housing begins its recovery.
So with all of that said, what does that mean for Main Street?
It means that as the economy recovers, inflation will grow. This means that your purchasing power is about to erode some more. This is why it’s imperative to save more than you typically do.
It also means that it’s time to invest in stocks for the long haul. Buy your ETFs and mutual funds with cash, no margin. But before you do this, make sure you have adequate savings set aside first. If that step is not done first, then if an emergency comes up, you are forced to sell the investments usually in a time when it’s not prudent to do so.
Make no mistake about it. Inflation is coming. Gold is already pointing the way. Just as the Fed announced that it was buying up $300 billion of long term U.S. Treasuries, it shows that they are trying to push yields down artificially low and make money “cheap” in order to spur economic growth. This inflationary action boosted gold almost immediately from $880s up to the $920s and shortly thereafter it hit $950 an ounce.
Not only is gold pointing to inflation but so is copper, oil, the CRB index (which is a basket of commodities). Remember, that commodities are things that you use every day on Main Street, whether you have one stock investment or not. Its things like wheat, sugar, gold, copper, oil, gasoline, etc. This is why the rise of commodities should matter to you on Main Street no matter whether you invest directly in a commodity contract or commodity ETF ever.
Another sign that the purchasing power of Main Street is about to erode is that the “decline of the dollar”. When the Fed made that statement about the purchase of treasuries, it’s obvious that they will be printing more money “like a mad man”.
This oversupply of dollars will only dilute the value of your dollar and boost the cost of goods that you buy and use in every day life.
So, most importantly, what can you do about all of this to protect yourself?
Beef up your savings like never before. With the employment situation still “touchy” and inflation coming, it’s only prudent to take this step NOW.
Invest in stocks through ETFs or Mutual Funds for the long term. If your dollar is eroding and the Fed wants stocks to rise again, then you’d better align yourself with their wishes because they will eventually win this battle.
Buy Commodity based ETFs through your stock brokerage account. One way to fight inflation and to hold your purchasing power is by buying the things that are going to go up on you. There are ETFs on gold, silver, oil, natural gas, etc. All of these things will rise in value as inflation returns and as the dollar falls (which as begin already).
Buy foreign currencies. Now for Americans, this may sound “foreign” and even difficult since we aren’t as familiar with the exchange of currencies as much of the rest of the world is. However, this is simple. You never have to “hold” or “physically exchange” any currency. You can open a forex (currency investing) account and buy foreign currencies against the U.S. dollar. As the dollar falls against these major currencies like the euro, Australian dollar, New Zealand dollar, etc., your account will gain and help offset the erosion of the purchasing power of the money in your wallet. To learn more about currency investing, click here.
Get Educated about these BEFORE you invest in them. Believe it or not, you can have a very good understanding of these areas in about a week’s time through our online courses which only cost $20-$25 and you can take them in your spare time. In this day and age we live in, I think you can see that Main Street has to “take charge” of their own financial future and not just entrust it to Wall Street. This is an inexpensive and convenient way that you can do this
Help someone else out. It’s always good for everyone to “give back”. You can do this by emailing this article to a friend, relative or co-worker, by buying them an online course so that they can also directly ask us their own financial questions which will allow us to directly help them. The people that are the most blessed generally are the ones that think of others and not just about themselves. This is a practice that I’ve held for over 30 years now and it’s served me well.
I’d encourage you to print out these steps and post them somewhere where you can review them from time to time. This is the roadmap to help you in the coming days and years.
Thanks for reading my articles. I value my readers and the insights that I’m able to pass along to you all.
Feel free to post these articles on your Facebook, MySpace, Digg them, Stumble upon them, Twitter them, email them, send them You Tube links and IM the links to friends and family, etc. Help us to spread the word and therefore help others. As you can see by watching the nightly news, people are in dire need out there and you can bring them a solution.
Sean Hyman
Head Course Instructor
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