HELPING PHYSICIANS ATTAIN FINANCIAL SECURITY
By Robert M. Doroghazi, M.D., F.A.C.C.
Wealth Outside the Banking System
Dick Bove at Rochdale Securities is, in my opinion, the savviest banking analyst around. In an interview on Tuesday on CNBC, he said (I am paraphrasing) “People don’t trust the dollar yet are piling into Treasuries. People don’t trust the banks. They sell the bank stocks, and then deposit their money in the same banks”.
I have already been thinking about this subject a great deal, but his comments helped me crystalize and organize my thoughts. The US just suffered a downgrade of their debt, and if GAAP (Generally Accepted Accounting Principles) were applied to our budget, considering our unfunded liabilities, the US would be bankrupt.
So if you have concerns about the US dollar, about all paper (fiat) currencies, and about the very integrity of the banking system, where should you put your money to preserve your wealth?
Yesterday I had a $30+K CD mature. I left $10K in the CD (with a short maturity), will buy some gold and platinum bullion coins with $20K (see below), and took the remainder in cash. While I was waiting for this to be processed, I asked the very nice customer service lady if many people were raising cash.
“Yes, Dr. Doroghazi. A lot of people are asking for cash and raising cash. Some are just putting the money in their check account, and a lot are withdrawing money from CDs and money markets to pay off debt”.
RMD comment: Governments are doing just about everything within their power to destroy the value of their currency. The banking system is fragile. I think one of your basic investment goals going forward is to have a definite portion of your wealth outside the banking system.
1) I again recommend that the core position of your entire investment portfolio be physical gold in your personal possession at the safe deposit box.
2) Own “things” that are unleveraged, that are yours free and clear. First, of course, is to have your home mortgage paid off; same advice for your vehicle. Other “things” include art, collectables and real estate.
3) Have some physical cash. 0.2% interest on a $10K CD is $20. You are probably better off having $10K in cash in your safe deposit box (You are even better off having 5 US one oz. Gold Eagles).
4) You must have some money and accounts in our banking system to conduct the business of your life. I suggest A) If the bank is publically traded, watch the stock price, B) Avoid the huge banks, C) The smaller, local, often family-owned or controlled banks, have been more prudent in their lending practices (because it is their money), and are thus more stable.
Caution is warranted. Be careful with your money. The person you can trust the most is you.
RMD
In the last several weeks, gold has become more expensive than platinum. This occurs very rarely; the last time was 2008. Regression to the mean suggests that platinum is currently under-priced in comparison to gold. I called Stephen Davidson at Blanchard and Co. He tells me that platinum is currently essentially unavailable.
RMD comment: I own a little platinum and will try to buy a little more. Note, however, I continue to recommend that gold must be the core holding of your portfolio. Rather, if you wanted to own a little platinum as a diversification tool, now may be the
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