Elites Preparing their Wealth

[Ripon83]

22% of their investments in hedge funds or commodities, just 5% tangibles like gold. Gold thus makes up barely 1% of their investments.
14% cash, nearly 3x that of tangibles
29% bonds, best hedge against deflation

65% of their investments are thus " protective" with 2/3rds or more protective of deflation instead of inflation.

[smle-man]

Backs up what I've been saying - we're in a delfation cycle.

[XYZ]

Link to source? Just curious to read the data. Also, what's the definition of Elite? >$1Mil, >$10Mil, >$250mil?

[AJAX22]

I think they are preparing for a liquidity crunch, I.e. Shortage of call money.


You want to be liquid when the bottom falls out of the market.

[caoboy]

Liquid as in property?

[AJAX22]

Liquid as in property?

Liquid as in rapidly accessible/convertible.

Its the same idea as the run up they did before the 20's crash.

[Ripon83]

Yahoo Finance Article

http://finance.yahoo.com/banking-budgeting/article/113004/portfolios-rich-marketwatch;_ylt=AoeW.1CPWVQyZeNJFJLDR0a7YWsA;_ylu=X3oDMTE2N3RuazJtBHBvcwMxMARzZWMDdG9wU3RvcmllcwRzbGsDd2hlcmV0aGVyaWNo?mod=bb-budgeting&sec=topStories&pos=7&asset=&ccode=

I read this several hours ago, but I believe they were talking about those with more then a million in investments. It could have been the 30m crowd though as they referenced both at some point in the article.

Link to source? Just curious to read the data. Also, what's the definition of Elite? >$1Mil, >$10Mil, >$250mil?

[Str8shutr]

Not being a smart arse here...But what does that mean for a guy like me, who wants to prep as best possible, but lives pretty much paycheck to paycheck. We dont "waste" money, we just dont have huge saleries. We own a home, and two vehicles that are paid for and thats about it. My wife has a 401K, and we have a little gold but thats it.
Should I NOT buy more gold? Are treasury bonds a good idea? Or should I just sit on my cash?

[Ripon83]

Tough One

Thank you. Your question is why I post this and have posted other inquiries about "deflation." I think 90% of the prepper community thinks we will suffer hyper inflation which is relatively easy to prep for and survive (gold/silver/ debt) are all good things in hyper inflation - all 3 relatively easy to get. WTF do you get for deflation? I don't trust putting money in bonds, and while cash is a good idea for some its at risk of being worthless if the hyper inflation scenerio is right?

If the elites of society think a deflationary state is coming they can afford to put 29% of their investments in bonds - I don't feel that secure doing just that. Mind you bond "funds" are easy to trade and can be traded quite quickly and I don't see an "event" causing market failures any moment. I'd say you are probably best off with food, water, guns, tools, and things you would use in terms of commodities. Even if they go down in value in deflation you can still use them.

Not being a smart arse here...But what does that mean for a guy like me, who wants to prep as best possible, but lives pretty much paycheck to paycheck. We dont "waste" money, we just dont have huge saleries. We own a home, and two vehicles that are paid for and thats about it. My wife has a 401K, and we have a little gold but thats it.
Should I NOT buy more gold? Are treasury bonds a good idea? Or should I just sit on my cash?

[OHOD]

My 0.02
I don't think deflation is coming anytime soon.
That's just my opinion, which don't count for diddly.

[OHOD]

http://finance.yahoo.com/banking-bud...&asset=&ccode=

An excerpt from this article...

"Are these people really smarter with their money than the rest of us? It doesn't look like it. Maybe they just have more of it.

[XYZ]

Thanks for the link. Prepare as best you can. It'll be a wild ride for years.

[Ripon83]

I didn't think so either

Actually I never gave deflation much of a thought either, but the fact is the catalyst for this economic mess is the housing crunch. $350,000 homes going to $105,000 is certaily "deflationary."

I recently bought two homes. One I chose to move too and the other for investment. It was literally shocking how hard the mortgage process was and things are good for me financially thank God. My wife and I enjoy high 700 credit, good income, stability, etc etc.....it took us more then 60 days and our home could only be approved as an "investment." Even though we already had a house that was paid for.

The second property was a condo - absolutely no loan available - it did not matter if I put 50% down - no loan. Fortunately I was able to pay cash for it and enjoy the rent, but still....no loans on condos at all? What the heck? Getting to know the MTG people through the process and it was clear - banks are not lending. They are holding onto their assets - not letting them go. Why? Our government is telling us they have green lights to lend, but they are not wanting too? Why? In a deflationary state they'd be hammered if the money was invested in real estate instead of sitting in their banks....in an inflationary state they'd have their worthless dollars paid back to them in no time....its a lose lose for the banks either way.

My 0.02
I don't think deflation is coming anytime soon.
That's just my opinion, which don't count for diddly.

[Joewy]

We have had a credit deflation since this collapse started. This is leading to a demand deflation because people cannot buy things. You havent really noticed the deflation that much because goods have deflated but the US dollar has inflated because of all the newly printed cash. So the price looks the same. But when the gov stops printing money then you will see the real deflation. Just take a look at copper. It deflated from 9000 per ton to 1600 right after the collapse. People thout it was a great deal and boutht huge amounts of it. The price then slowly rose to about 4000 per ton. Copper is now almost 9000 again but demand is half. This is because of the inflation of the dollar. However even thou the companies are paying the 9000 per ton they are selling it at a loss in many cases trying to keep their business in the pipeline and their skilled workforce from quiting.. They are surviving off of the copper that they paid 1600 for.

[derwiking]

Wow... I'm surprised people are worried about deflation. Deflation never happens across the board to all prices like inflation typically does.

Deflation is a symptom of over-appreciated assets having their bubble popped, OR, the currency used by the market appreciating. Either scenario is a plus to the average person as normalcy is restored to the market from mal investment being punished. One other poster used the example of housing prices. There is a reason why a) there was a housing bubble and b) why the bubble popped. The bubble was created by artificially low interest rates, at all time lows with the discount window treading around 0% to 1% (Yes, this means money was literally free to banks to loan to just about any one, for any reason, with zero risk). This was the direct result of 'Maestro' Greenspan and the Federal Reserve et al. This policy was also largely influenced by both the Clinton and Bush regimes pushing 'housing for all Americans'. Both Presidents oversaw and failed to veto dangerous pieces of legislation that literally penalized Banks for not loaning to risky and dangerous clients (those whom the Banks KNEW could not pay the mortgages and would undoubtedly default). The housing prices had such a run up largely because of this. ANY ONE could qualify for a loan! Massive inflation in the housing market occurred. With every one having their pockets lined with fake money, naturally bidding wars ensued over the period of the 90's and home prices went sky high.

So you see, in this case the deflation was caused by mal investment as the Central Bank and the runaway Government were putting out the wrong market signals to buyers and investors. Every one that got burned got their just desserts. Not to say they deserved it, but they were misled by a command economy. Those who went against the grain, or got out early either profited or stayed safe. Now here is the catch; in order to fix the 'deflationary' scenario, and trust me, the economic wizards are determining the market's poor health SOLELY on housing prices, 'we' must flood the market with USD's to combat the deflation! Now with Bernanke at the helm, drinking the same Federal Reserve kool-aid as Greenspan, the only solution seems to be to flood the market with cheap money.

So while the talking heads, the financially misguided, and the university professors might all be worried about deflation, their solution will be to combat it with inflation. This presents the scenario seen in the 70's and early 80's; STAGFLATION. The dirty word in economics. Certain goods or markets will indeed experience deflation as the invisible hand of the market tries to naturally correct the mal investment. This will largely be perceived as deflation across the board. This will not however stave off the damage done to the currency in the process of trying to solve the deflationary scenario.

This time is different, we've been through this cycle quite a few times in recent history and each time the problem has been bandaged over. You can only do this so many times until you reach a point of complete currency destruction. Let us also keep in mind what both domestic and foreign investors are doing when they invest in bonds; they are betting and propping up the solvency of the central bank and the Dollar. There WILL come a time when even this safe haven and hedge will be walked away from. This will be the tipping point for when the bottom will drop out from under the Dollar. A investor can only handle the heat for so long. Unfortunately, we are near the end of the rope at this point. We can either allow the corrections to take place, live with some uncomfortable short term deflation (~8-10 years) of certain assets/sectors, or drink the kool-aid and blow the Dollar to hell. So long as the Federal Reserve is around deflation WILL NOT occur in any detrimental fashion. Keep in mind that is one of the primary purposes behind the central bank, is to stave off deflation by being the lender of last resort.

Keep buying Silver. Keep buying Gold. Keep buying other commodities. Keep buying tools. Keep buying property. Buy DURING the deflation when it does occur with certain things. Whatever you do man, just don't get caught with the Dollar when things go awry. If you are in the deflationary mindset of 'Cash is King', keep in mind that all the 'Kings' will have that cash to purchase your physical assets. You can't go wrong, and if cash is still desirable, you will have it. People will always need tools, property, food, precious metals, weapons, ammunition, live stock, ect.

My long winded .02 cents.