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What Should I Do? The Basics of Resilience (Part 7 – Protecting Wealth)

Tuesday, August 24, 2010, 6:13 PM

Note:  This article is part of a series on personal preparation to help you answer the question, "What should I do?"  Our goal is to provide a safe, rational, relatively comfortable experience for those who are just coming to the realization that it would be prudent to take precautionary steps against an uncertain future.  Those who have already taken these basic steps (and more) are invited to help us improve what is offered here by contributing comments, as this content is meant to be dynamic and improve over time.

Graduates of the Crash Course series emerge aware that, economically speaking, the next twenty years are going to be completely unlike the last twenty years.  This invariably leads to the question, "How do I prepare financially?"

We have entered some truly treacherous investing waters, where we must question everything and accept nothing, even (and especially) the base assumption that any given currency, be that the US dollar or euro or Yen, will retain its value.  Is a ‘double-dip’ recession coming?  Nobody knows for certain, but all the warning signs are there.  Our view is that it’s best to start thinking about preserving and protecting your wealth now, while you still have that opportunity.  The bottom line here is that you should not be taking your cues from what your neighbors seem to be doing, but instead being sure that your own house is in order.

There are no easy answers and no magic bullets.  But neither is there any need to take immediate or hasty action. Rather, I want you to view yourself as beginning a journey.  The time has come to put one foot in front of the other and take responsibility for your own financial future.  The ideas below are drawn from our more detailed guide to Taking Control of Your Personal Finances (Note: Access to this page requires free registration on our site).  As always, it is up to you to decide if you want to make use of the information offered here, or not.  We present these ideas for your consideration and as educational material.  We do not offer investment advice at PeakProsperity.com, and this material is not meant to be taken as such.

Here are a few basic ideas to get you started:

  1. Get out of personal debt.  This means paying down what you can and taking on absolutely no new debt if at all possible, especially if it is purely consumptive in nature (that is, it won’t increase your future cash flows).  During the Great Depression, debt was a killer.  During the 1990s and 2000s, credit (debt) advanced the living standards of many and became to be viewed as simply "something to manage."  But being in debt severely limits your options during good times, and it is a positive destroyer during down times.  Less tangibly, but just as important to us, being out of debt feels really, really good, as if a weight you didn’t know was there has been lifted.  During stressful times like these, removing a nagging source of worry has a value all its own, which is not to be underestimated.
  2. Get some inflation protection.  Nearly all governments, when faced with the massive liabilities and debts that those in the developed world currently face, have opted for the same solution:  Print money.  So we can be pretty certain that we'll see some quite solid inflation as we go forward over the next few years (decades?), especially as resource crimps arrive at the same time that the electronic money presses are working hard to conjure up an economic miracle.  But there is another worrisome potential source of inflation, and that is all the US debt held by foreign countries.  Trillions upon trillions of dollars of US debt are held by foreign concerns.  What would happen if all those claims got ‘submitted’ (i.e., bonds get dumped) over a short period of time?  My view is that the US dollar would collapse, triggering massive inflation in everything the US imports and would effectively ‘export’ inflation to the rest of the world.  That would include oil, gas, consumer electronics, clothing, and especially food.  So what is "inflation protection?"  It means holding non-paper-based assets.  Gold, silver, oil, grains, and base metals are a few examples.  My personal choice has been to hold gold and silver, but there are many other vehicles.  For those interested, I have prepared a short document that details the hows and whys of gold/silver purchasing.
  3. Diversify out of US dollars.  Many residents of European countries consider holding all of one's assets in a single currency and a single country to be a sign of madness.  Of course, Europe has a repetitive history of violently proving the validity of this viewpoint, while the US does not, but you may also want to consider how the truly wealthy in the US handle their affairs.  The financial managers for the very wealthy always recommend having assets in multiple currencies and multiple countries.  While it is simply not feasible for the average US citizen to hold offshore accounts, especially post-PATRIOT-Act, US citizens can easily hold foreign currencies (such as through everbank.com) as well as gold/silver (a.k.a. "the anti-dollars").  I also hold gold as a “currency hedge."  I personally do not hold too much in foreign currencies anymore – although this was a strong strategy of mine from 2003 to 2008 – because the almost daily interventions of various central banks in the currency markets has turned them into more of a casino than a fundamental play that we can assess on the basis of trade, interest rates, and other key variables.  Still, having a bit of diversification here can be useful and, if you have the opportunity to hold foreign bank accounts, those can offer an important buffer.
  4. Take control of your finances (and keep your holdings highly liquid).  This is outlined in the steps below.

First Step - Take Control

The very first step is for you to feel personally in control of your finances.  You are responsible for your finances.  Nobody else.  While I think it's perfectly okay to work with a trusted financial advisor or planner, that relationship still needs to be a partnership, and you need to get in the habit of authorizing and directing your investments, or else spending time thoroughly vetting someone who will.  I know this is a scary proposition for many people, but I've learned that the hardest step is the first one.  After you've moved a few things around, it gets easy (and fun).  The purpose behind this first step is to remove any barriers to action.

The main purpose of the steps below is to get your funds into the most liquid position they can be.  That is, we place a lot of value in being able to move and access funds quickly if the mood strikes us.  At times this may be because we are leery of the place we are holding the funds and want them someplace safer, and at other times we just want the freedom offered by being able to rapidly access and redirect our funds to other uses, should that seem the prudent thing to do.  In short, we place a premium on liquidity and safety – two qualities that could be real wealth-savers in a severe economic downturn.

  1. Write down the amounts of all of your different assets and liabilities.  This would include bank accounts, 401ks, annuities, pensions, Social Security, brokerage accounts, mortgages, real estate, etc.  GUARD THIS INFORMATION CAREFULLY.
  2. Record all the relevant information about where those assets are held.  Account numbers, phone numbers, contact info (if there's someone at the other end to call), routing numbers, website URLs, and any other information that would be necessary to either access or move the funds.  GUARD THIS INFORMATION CAREFULLY.
  3. Determine all the rules, processes, regulations, penalties (if any), and mechanisms that surround your ability to access or move the funds.  Understanding the rules surrounding (and often limiting) your access to your funds is usually an eye-opening experience.  Most are surprised to discover that “their” money is not accessible to them without jumping through a daunting array of hoops.  In order to determine what the rules even are, you will need to develop and pose some very specific questions to your account manager or institution.  Often it's a game of "you can get the right information only if you ask the right question."  Her are some sample questions:
    1. “What are the steps I need to take if I want to move money out of this account?”  Be sure to find out whether the rules change if the money is being transferred within or outside of the managing institution.  Also take careful note of the forms required.  Some mandate that a physical signature be on file, which means you are tied to the mail or other form of physical delivery.  If these exist, get them on file even if you have no intention of moving the money at all.  You may want to move it later on; having this step cleared up beforehand can be a real time saver.  Also note that joint accounts usually require two signatures and sometimes two separate forms.
    2. “How fast could I get this money into an account at my local bank?”  Be sure to understand the various mechanisms and thoroughly test out the one you want to use.  For example, wiring money may have different rules, and require different forms to be filled out, so compare this option to others, such as having the funds moved via EFT or sent in check form.  Once you think you have all the right forms in place, go ahead and move a tiny amount.  That’s when the rubber meets the road.  In some cases, there are redemption restrictions in place that limit your ability to liquidate holdings to anywhere from the close of business that same day to up to nearly a decade (in the case of some annuities).
    3. “What penalties, fees, surcharges, commissions, or other imposed costs will be associated with moving these funds?”  If at all possible, get these in writing before making a move.   It’s astonishing how many of these are layered on top of even the most routine transactions. fBe especially leery of any fees that are not fixed but vary with the size of the transaction.  Find out if there are any ways to avoid them.  Sometimes there are, and this is an example of an answer they will not reveal unless you ask the right question.
    4. “Have I missed anything, any step, form, signature or other requirement, either internal to your organization or regulatory in nature, that is needed in order for me to move this money immediately?”  You won’t know unless you ask!
  4. Take action:  Actually move some funds from one of your accounts to another.  This step will break the 'inertia' that most of us experience.
  5. Link up all of your main accounts via EFT and practice moving funds among them.  Unless you practice, you won't know how long it takes or what sorts of wrinkles exist.  You should also check to see if you can initiate a transfer electronically, by phone, and in person (assuming you have a branch office nearby).   In a crisis or emergency, having the ability to rapidly move funds out of one institution to another could be a real wealth saver.  All of my accounts are so linked and tested.

Once you are comfortable that you know what you've got, where it's located, how it's distributed, and the rules and regulations governing access, then you’ll be in a better position to react to a variety of circumstances/scenarios and take action.  These steps are the exact ones that I took in my process of becoming financially self-dependent, and I swear by them.

Second Step – Develop Your Game Plan

The next step is to determine what scenarios you think are most likely to play out in the future and their likely impact on your investments.  Many folks don’t feel they have the expertise to do this on their own.  If you’re one of these people, finding a good financial advisor if you don’t already have one, is an important next step.

A good financial advisor will take the time to learn about your financial background and goals in depth, as well as get to know you personally, and tailor a customized investing plan accordingly.  We recommend working with advisors on a "percent of assets under management" basis – steer clear of commission-based advisors, as their incentive structure can be at odds with your financial interests.  If you don’t know where to start looking for a financial advisor, referrals from family and close colleagues are a good way to start, as are these resources provided by the Certified Financial Planner Board of Standards.  (While we don’t currently connect investors with individual investment advisors on this site, we are exploring how we might do so in a valuable way for our members.  If you’re an interested investment advisor, or have one you work with that you would highly recommend, please contact us

You then need to determine which investing horizons to concern yourself with.  I use three: near, middle, and long-term.  Each has its own body of information to consider and digest.  Here’s my best estimation of the events that will likely characterize each:

  • 0-2 years
    • ongoing housing bust
    • double-dip recession (bad for stocks)
    • growing energy disruptions (e.g., BP Deepwater)
  • 2-4 years
    • Energy demand/supply crossover
    • Boomers begin retiring
    • Growing pension issues
  • 4-10 years
    • Government insolvency
    • Peak Oil/other resources
    • Geopolitical conflict/war

I recommend that you create a similar chart based on your own assessment of the most probable outcomes the future holds and think about their implications.  Start with the nearest horizon, and ask yourself or your trusted financial advisor a few basic questions, such as:

  1. Are my assets well-diversified with respect to asset classes?
  2. What percentage of my wealth is denominated in a single currency?  Am I hedged in any way in case that currency begins to weaken substantially?
  3. What risks do my particular holdings face in another recession?  In a depression?
  4. What about during an event like an outbreak of hostilities with Iran?
  5. What sources do you (or your advisor) use to keep informed?  Have you watched the Crash Course?  What do you think of its thesis and outlook?  How should our portfolio change if/as the predictions it makes (increasing oil cost/scarcity, money printing, slow/negative economic growth) come to pass?
  6. How liquid are my investments?  How quickly can I liquidate, move, and access my holdings?

Third Step - Take Action

This is where you begin to get comfortable making decisions and taking action.  I recognize that this is typically the hardest part for people, and it was for me as well.

Buying Gold & Silver

It’s no secret that I’m a big fan of owning precious metals.  Why?  Because it provides you with the most direct way to protect your wealth from paper money devaluation with no counterparty risk.  Gold is the only financial asset I know of that is not simultaneously somebody else’s liability.  That makes it rather unique.  I think everyone who can should have at least some exposure in their portfolio to gold and silver.

There are many ways to invest in gold and silver, but for the individual who is just starting out, we highly recommend beginning by purchasing at least a few ounces of physical bullion.

Most of us are so unfamiliar with buying physical coins or bars of precious metal as an investment that it feels somewhat alien at first.  Buying my first lot of gold was both exhilarating and a bit unnerving, and it almost felt as if I were 'doing something wrong' (like a kid sneaking candy, or shoplifting, perhaps).  That’s why just getting started – buying your first few ounces – is the most important step.  After you’ve done it once, it gets a lot easier psychologically.

We advise a 2/3 gold, 1/3 silver allocation.  Gold provides the monetary protection against a systemic financial breakdown, while silver is a hedge towards a more normal future.  Silver's main value is as an industrial metal, and it will do extremely well post-crisis, due to scarcity issues and the increased expense of getting it out of the ground.  For me, silver is a long-term play, possibly lasting decades and possibly involving transference to grandchildren who have not even been born).

For gold, we recommend the American Gold Eagles and Canadian Maple Leaf coins.  For silver, we recommend starting with pre-1964, 90% silver U.S. coin bags (they come in varying sizes to accommodate your budget).

For buying physical gold & silver, we recommend:

  • APMEX.com
    • Quick, easy, 24/7 online purchasing (US & Canada)
    • High marks from the PeakProsperity.com community
    • A+ rating from the Better Business Bureau
    • Attractive combination of price, selection, customer service, and security
  • Colorado Gold
    • Phone ordering (US only)
      • Mention that you’re a referral from PeakProsperity.com
    • High marks from the PeakProsperity.com community for excellent customer service
    • A+ rating from the Better Business Bureau
  • Local coin shops
    • Transactions can often be anonymous
    • No minimum purchase requirements or shipping fees (although sales taxes may apply below certain amounts – commonly $1,500)

For investors with substantial wealth to protect, we also recommend:

  • Anglo Far East
    • Extremely high-touch, white-glove service – 24/7
    • Option to take physical delivery at any time, anywhere in the world
  • BullionVault.com
    • Very low purchase premiums to spot
    • Can buy and sell in US $, Euros, and Pounds Sterling (no currency conversion costs)
    • Allocated bullion held at low storage fees
    • Choice of storage location: New York, London, Zurich

We have a lot more to say in our guide to Buying Gold and Silver.  We consider it a must-read, especially if you’re ultimately planning to invest a substantial portion of your wealth in precious metals.

Allocating Your Other Assets

Now it’s time to invest your remaining wealth according to your outlook for the future.  As you begin, here are some broader questions you might ask yourself (or your financial advisor):

  1. Investing and horizons:  Is there a way to navigate both the near-term and long-term landscapes with a single investment stance?  For me, there’s one no-brainer in this category, and that’s making energy improvements to your home.  Solar hot water can offer a better than 10% return, even without an increase in energy costs.  Insulating can offer a payback time of only a few years.   In today’s world of 0% interest rates on saved money, the returns offered by energy improvements can be sound investments under any circumstance, but they become fabulous investments in a world of rising energy costs.
  2. How do I stay informed?  There are so many possible things to focus on.  How do I filter and condense it all?  What do I keep my eye upon?
  3. What are the key warning signs I should watch, no matter what?  My list includes the dollar, bonds, stocks, oil, and gold.  I figure that any major shifts will be signaled in these markets well before anything is announced on TV or in the newspapers.  The Money & Markets section of our site provides updated data throughout the day on the most common markers I think people should follow.  You should consider picking a couple of things to begin keeping an eye on, based on your investment allocations. For example, if you happened to be invested largely in cash and bonds, you'd want to keep a careful eye on the US dollar, because any weakness there will impact both of your holdings.  If the dollar suddenly started to weaken significantly, and I held cash and bonds, I would move those assets into gold as fast as I possibly could.

Your asset allocation strategy should be based according to the probabilities that you (and your advisor, if you have one) assign to major trends.  For example, if you believe, as I do, that inflation and declining energy reserves are really two of the main stories for the longer-term future, then here are some areas to begin looking into:

  1. Your resilience:  The first investment that you should make is in increasing your resilience.  For instance, in case the US attacks Iran and the Strait of Hormuz becomes impassable (a reasonable scenario in the current political climate), you'll want to consider all the possible impacts and shortages that could result from a lack of oil.  What would you do if a sudden shock made basic supplies temporarily unavailable or unaffordable?  Have you done all that you can around your home to minimize your vulnerability?  Our What Should I Do? The Basics of Resilience series is designed to help you identify the non-financial investments that you should seriously consider making in preparation for such developments.
  2. Energy:  My favorites are oil and natural gas producers that have significant reserves in North America.
  3. Treasury Bills ("T-Bills"):  I like these because you can easily move in and out of them (they are very liquid) and they come in very short maturities such as 4-week, 3-month, and 6-month.  I place a high value on being able to move rapidly out of any given investment, and these fit that bill.  Two ways to participate here are with TreasuryDirect and a Treasury-only money market fund.  In every case, I am referring to short-term bills only, not longer-term notes and bonds.
  4. Gold and Silver:  (For my thoughts on this topic, see the reasons described in ‘Buying Gold & Silver,’ above.)
  5. Treasury Inflation Protected Securities (TIPS):  These pay you a percentage premium over the official government inflation rate (the CPI), and this is an 'okay' way to go if you do not want to handle or think about your investments for long periods.  I am not crazy about them, because I think the inflation rate is vastly understated, but that is simply my opinion.

Conclusion

My views on the matter have always been clear – protecting wealth is Job Number One.  There are ample warning signs that the various governmental stimulus programs in the developed world are not working and that the risk of the recession returning to our official statistics (to differentiate the point that I think it never left Main Street) is very, very high.  Now is not the time to play catch-up with your portfolio; now is the time to favor caution over greed and prudence over risk.

As I currently see it, the chance of a 10% advance in the stock market is about the same as a 30% decline. Those are bad odds if you are holding stocks.  Additionally, I think that municipalities and corporate bonds are vastly overrated by the (still, for some reason, in-business) ratings agencies and that a renewed recession will begin to expose the rot there as well.

However, I don’t have a crystal ball, and I don't know if deflation or inflation is going to win out over the near term.  My personal view happens to favor deflation followed by inflation, but I believe inflation will be more a function of loss of faith in fiat currencies rather than the usual recovery-induced return of the banking credit machine.

In the absence of a working crystal ball, I continue to hedge my bets 30%/70% for a deflation/inflation outcome and therefore favor cash to gold/silver in the same 30/70 ratio.  But that happens to be my personal stance, and yours should be tailored to reflect your own situation and personal assessment of the markets and our chances for a lasting recovery.  As yet, I do not see one on the horizon, because our fiscal and monetary authorities decided to try and sustain the unsustainable, rather than let the chips fall where they may.


The guidance above is provided to empower you to assume command of your own financial destiny.  That said, I do offer personal and business consulting services for a limited number of people whom I think I can help.  These can take the form of a one-on-one phone session or a visit to your company to help motivate and align your key employees for the challenges of the coming times.  If this is of interest to you and you'd like to learn more or schedule a consultation, click here.  


If you have not yet seen the other articles in this series on resilience, you can find them here:


What Should I Do?: The Basics of Resilience (Part 8 – Community)


    What Should I Do?: The Basics of Resilience (Part 9 – Your Next Steps)

    Full disclosure: In this and future articles, we will recommend specific products and services that we have found to be especially suitable and relevant. If you click on a link to purchase one of the recommended products or services, PeakProsperity.com may receive a small commission. This will not impact the price you pay for those items -- you can locate and buy these products elsewhere if you wish -- but with the funds we receive as the result of these transactions, we can continue to expand our other community offerings, produce the next wave of videos, and bolster our outreach and educational efforts. You win by saving time and having easy access to our well-researched product recommendations, and we win by receiving your support and encouragement to continue doing what we do.

    We’d also love to hear any feedback based on your firsthand experience with the products and vendors that we recommend. Our goal is to ensure that we’re doing our utmost to offer the best guidance for utility, value, and service.

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    65 Comments

    NZSailor's picture
    NZSailor
    Status: Bronze Member (Offline)
    Joined: Oct 4 2008
    Posts: 59
    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    Chris- Another in a fantastic series about actually taking action.

    One question though... do you (or others on the site) have an opinion about which foreign currencies to hold.... consensus on the net seems to be Australian or Canadian currency because of the resource focus of their economies or an Asian currency because of their structurally productive economies.

    I like the Australian as I can hold AUD$ with a government guarantee and get about 3.5% interest but I also worry a bit about the Australian economy in that they seem to still be in a signifigant housing bubble.  The Canadian foreign currency accounts pay essentially no interest but I suppose the investment is about capital preservation.

    Thoughts anyone?

    Chip

    ao's picture
    ao
    Status: Diamond Member (Offline)
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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    Excellent article Chris.  I really appreciate this series and all the valuable and well thought out information.  One point I would recommend caution with, however, are the currencies held through Everbank.  There is currently a pending class action law suit related to the Icelandic currency CDs.  The others have the potential to "bite" as well.  Unfortunately, not all is written in the fine print, even if you read it.

    capesurvivor's picture
    capesurvivor
    Status: Platinum Member (Offline)
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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    Your caveat echoes my experience with Everbank foreign CDs, ao.

    SG

    SingleSpeak's picture
    SingleSpeak
    Status: Gold Member (Offline)
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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    I really miss the days of putting my allowance in the bank and watching them add the interest each month.Cry

    ao's picture
    ao
    Status: Diamond Member (Offline)
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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    SingleSpeak wrote:

    I really miss the days of putting my allowance in the bank and watching them add the interest each month.Cry

    LOL.  You and me both.  It's a reverse process nowadays.  You watch the fees shrink your balance. 

    TNdancer's picture
    TNdancer
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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    Which is a good case for buying physical gold.

    bluestone's picture
    bluestone
    Status: Gold Member (Offline)
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    Posts: 263
    solar air heater

    Chris thanks for the great report.

    you mentioned a return on investiment with solar water heaters and insulating.  Do you or anyone have any experience with solar air heaters?  here is an example of one  www.cansolair.com 

    The concept is simple.  the solar air heater is a box with a plexiglass surface.  Aluminum cans or tubes are placed within the box.  The box has an intake hose at the bottom and and outlet hose at the top.  The box is placed on the southern surface of a house or building (if you live in the northern hemisphere).  the sun heats up the air in the box which then blows air into the house.  cooler air from within the house is then pulled into the box which in turn is heated again.

    The makers of these devices claim that the payback is 5-7 years.  cost for cansolair is around $2,000-2500.  Of course a solar air heater is only an adjunct to heating your home, but supposedly can make a significant difference.  They can only provide heat during the daytime and in sunny weather.   I posted this subject about a year ago, but unfortunately got little feedback Frown I just want to know if anyone has any experience with them and are they worth it?

    Brian

    pjvandal's picture
    pjvandal
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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    1. Get out of personal debt.
    2. Get some inflation protection.

    Paradoxically -- but maybe this down the rabbithole economic landscape we are in now makes paradox the rule -- couldn't you look at personal debt AS a kind of inflation protection?

    Personally, I hate debt. I have no debt and I am highly resistant to taking on any debt under any circumstances. But in an environment of high inflation, when tomorrow's dollars are worth a lot less than today's dollars, and when tomorrow's interest rates are a lot higher than today's interest rates, can't you make a viable argument for taking on -- especially low interest rate like, say, a 30-year mortgage at sub-5% -- debt in today's dollars so that the inevitable money-printing will relieve you of the burden of that debt while it is relieving our fearful leaders of the burden of sovereign debt?

    Particularly if you used the debt to purchase long-lived assets like a primary residence or a solid (not luxury) vehicle. Or maybe wealth protection assets like precious metals...

    I would love for someone to point out a logical or mathematical flaw in this argument because i hate it. But i can't find one.

    I do see the moral flaw in it and that stops me from doing it. But is there a real financial flaw in this reasoning?

    Jager06's picture
    Jager06
    Status: Gold Member (Offline)
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    Posts: 395
    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    PJ-

    I have considered the same idea, and actually made plans to go into debt should the appropriate criteria be met. I have discussed it with my wife and we are in agreement. Should hyperinflation show itself, we intend to each take out the maximum in signature loans from each of the five banks we use. The idea is to purchase items that Chris described above, Gold and Silver. But also we have the intent of purchasing items that we cannot provide for ourselves right now. We have secured our water and food supplies, but items that have relatively short term expiration dates, like cooking oil and yeast, will be purchased with the fixed rate signature loan. We anticipate paying the loan back in short order using the Gold and Silver as inflation increases their value to cover the cost of the note plus the supplies.

    For debt we currently hold, Mortgage anbd business debt, we have diversified to cover each $1000 of debt with an ounce of silver. The final goal being to have every $300 in debt covered by 1 ounce of silver and every $10k covered by 1 ounce of gold. If inflation reaches the worst case hyperinflation, we anticipate trading the metals for deeds and contract closures.

    We are currently waiting to hear back form our CPA in regards to accepting US denominated gold and silver coins as payment at our business. I dont know if anyone else is doing this, but I recently read a news article that outlined several businesses that are doing this. My thought is that the business provdes a service or good at the Federal Reserve Note rate, in exchange for a dollar denominated gold or silver coin, say a $35 gold ounce. The company then records an income of $35 for the good or service, while the true Federal Reserve Note value was the actual spot price for the metal.

    If any business owners are doing this, I would like to hear your experience.

    Jager

    capesurvivor's picture
    capesurvivor
    Status: Platinum Member (Offline)
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    Posts: 942
    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    Search this site;I believe others have spoken of this with, for example, one person taking out a huge fixed mortgage on his already-paid-for house. One difficulty here is that there are so many threads and posts on CM that people find themselves reinventing the wheel.

    See if the "search" function  helps.

    SG

    JaWS's picture
    JaWS
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    Posts: 1
    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    My wife and I are currently debating whether to purchase the rental home we have lived in since February. The only way we will consider is to pay 20% down and the owner agrees to finance the balance. After viewing Chris's Crash Course I refuse to create money for the banks. As an older gentleman told me a couple of years ago - "Your friendly neighborhood banker is really not your friend". I completely understand that statement now.

    Jager06's picture
    Jager06
    Status: Gold Member (Offline)
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    Posts: 395
    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    Cape-

    I meant the use of PMs for payment at spot equivalent vs. FRN while registering the transaction at the face value of the PM. Make sense?

    For example I have a customer pay me a $1 Liberty silver (1oz. / .999 pure) for a $18 item. They get the $18 FRN item, and I register a $1 transaction based on face value fo the coin, not the FRN value at spot price...

    I am definitely going to search for it. I was hoping maybe someone here knows, or has set up their business to accept PMs already and has some advice?

    capesurvivor's picture
    capesurvivor
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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    Whoa, I misunderstood.. There's a court case right now about a guy who tried to do that with his whole staff, paying them, say, a $50. gold piece for $1200. worth of work so they can state they were paid less. Google the topic and you'll find it.

    The IRS (I think they were the agency involved) was not convinced.  To me, it blows open the lie that FRNs are worth the paper they are printed on.

    I was going to make a note to follow that case. It would seem difficult for the Feds to win but I would let someone else pay the legal fees to find out.Smile

    SG

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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    I've heard of this in regards to purchasing a used vehicle via private party.  I recently purchased an old diesel pickup to run on biodiesel.  My offer was to give him 2 oz. in Eagles and $400-600 in FRN for a total value of $2,800 (but a reportable/taxable value of $700 - 900 because each coin has a face value of $50).  He wasn't familiar enough with gold to accept the deal, so we went with all FRN. 

    Here is a good link on Colorado Gold to the concept:

    "Eagles have a dollar denomination on them, and you can play games with that.  Example:  I sold one of my Mercedes to a client for $7,000.  He paid me in Gold Eagles which were $1,000 each at the time, but they have $50 on them.  He then, could have gone to the local county clerk, and paid sales tax on $350, (7 Gold $50 Eagles), rather than on $7,000."

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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    Thanks both of you. I will be getting on that law suit info and trying to see what happened. I have a feeling I know what the answer is going to be. You can't publicly allow an event that would drive everyone into metals as real money if you are the Federal Reserve waiting for the tax dollars to come rolling in from the IRS. What a fabulous kick in the teeth to "da Man"  it would be though!

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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    I believe the case involved Robert Kahre in Nevada. 

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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    I found it. 161 charges, 0 convictions for paying FRN millions, but only pennies on the FRN in Gold and SIlver with face values of $1 and $20, $35 and $50.

    http://www.rense.com/general78/defeat.htm

    So I wonder if this, by extrapolation, means that accepting the face value PM's for FRN free transactions means that reportable INCOME for a business would be lowered based on PM face value...?

    I am intrigued. I am also going to ask my employees how they feel about getting paid everything above minimum wage in face value PM.

    If anyone else has any links or other ideas...I am all ears.

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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    Chris,

    What is the reasoning for specifically recommending the American Eagle and Canadian Maple Leaf coins?

    Is there something about Krugerrands that make you avoid them?

    (or others coins that aren't Eagles or Leafs)

    Isn't an ounce an ounce regardless of shape?

    Just curious..

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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    TBH,

    Krugers are actually heavier than an ounce.  I was once using a scale to weigh cylinders of them without having to open the cylinders and was all messed up until I Googled the actual weight of Krugers - about 1.09 ounces.  They have 8% copper alloy to make them harder. One pure ounce of gold and some copper (22kt).

    I think they are plenty recognizable and don't carry as big a premium as Eagles.  On the other hand, Eagles are "American" and may be easier to barter and trade when the SHTF.  Just get half and half if you're unsure but don't wait.

    Regards and welcome to CM,

    Rector

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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    Jager06 wrote:

    I found it. 161 charges, 0 convictions for paying FRN millions, but only pennies on the FRN in Gold and SIlver with face values of $1 and $20, $35 and $50.

    http://www.rense.com/general78/defeat.htm

    So I wonder if this, by extrapolation, means that accepting the face value PM's for FRN free transactions means that reportable INCOME for a business would be lowered based on PM face value...?

    I am intrigued. I am also going to ask my employees how they feel about getting paid everything above minimum wage in face value PM.

    If anyone else has any links or other ideas...I am all ears.

    Jager06,

    I don't have time to check out the details but if this is the case I think it is (?Las Vegas area?), the IRS put this guy through hell.  You DO NOT want this type of trouble, believe me.  Your legal fees will be devastating and the psychological stress will make you old before your time and put an incredible strain on your marriage and family life.  I looked into it at one time and not being a masochist, decided against it. 

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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    TNdancer wrote:

    Which is a good case for buying physical gold.

    No matter how much physical gold you have, you still have to pay most of your bills in FRNs.  Apples and oranges.

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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    Chris, thank-you for your excellent preparation series.  It is extremely helpful!

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    Re: solar air heater

    bluestone wrote:

    Chris thanks for the great report.

    you mentioned a return on investiment with solar water heaters and insulating.  Do you or anyone have any experience with solar air heaters?  here is an example of one  www.cansolair.com 

    The concept is simple.  the solar air heater is a box with a plexiglass surface.  Aluminum cans or tubes are placed within the box.  The box has an intake hose at the bottom and and outlet hose at the top.  The box is placed on the southern surface of a house or building (if you live in the northern hemisphere).  the sun heats up the air in the box which then blows air into the house.  cooler air from within the house is then pulled into the box which in turn is heated again.

    The makers of these devices claim that the payback is 5-7 years.  cost for cansolair is around $2,000-2500.  Of course a solar air heater is only an adjunct to heating your home, but supposedly can make a significant difference.  They can only provide heat during the daytime and in sunny weather.   I posted this subject about a year ago, but unfortunately got little feedback Frown I just want to know if anyone has any experience with them and are they worth it?

    Brian

    I've seen the concept before....it would probably make a small contribution, but considering it would only work 5-8 hours/day on sunny days, my guess is the payback on 2500 bucks is a lot farther out than the 5-7 years they quote.   Also, this is an excellent design for a homebuilt, low tech project.  The fan they use ( 31watts) has to be quite small ( not much bigger than the fan in a desktop computer ), and one could even use a 12v DC version poweredby a small PV panel on the unit.  Looks to me like these could be home made for 500 bucks, or less, if you scrounge materials.  Also, by home building it, you could 'customize' it to fit your window opening exactly, and such. ( you will need to have double hung windows for these )

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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    ao wrote:

    TNdancer wrote:

    Which is a good case for buying physical gold.

    No matter how much physical gold you have, you still have to pay most of your bills in FRNs.  Apples and oranges.

    Quite true......and you should keep enough FRNs for that purpose. 

    My point was it does very little good to park a LARGE amount of money in a savings account that pays 1% ( or less ) and be peddling backwards ( when you consider even current, "official" inflation + taxes you have to pay on your "gain" ) and watch gold 30% a year like it has for the last several, and potentially WAY more than that down the road.

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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    Jager06 wrote:

    We are currently waiting to hear back form our CPA in regards to accepting US denominated gold and silver coins as payment at our business. I dont know if anyone else is doing this, but I recently read a news article that outlined several businesses that are doing this. My thought is that the business provdes a service or good at the Federal Reserve Note rate, in exchange for a dollar denominated gold or silver coin, say a $35 gold ounce. The company then records an income of $35 for the good or service, while the true Federal Reserve Note value was the actual spot price for the metal.

    If any business owners are doing this, I would like to hear your experience.

    Jager

    Jager:

    I believe the "official" price of gold is 42.22/oz, not 35.   But in any case, were I to do what you propose, I would use the face value of US eagles, since they are legal tender.   That also brings up WHY one should only buy US gold......because they ARE legal tender, whereas maple leaves and kruggerands are not.......if you intend to play gold vs FRN games.

    The owner of a business, as the guy in Nevada did, pay his employees part or all in gold, at face value.  The IRS won't like it, but as that case pointed out, they have no justification for "intrensic" value basis of gold, for if they did, they would also have to apply that standard to paper FRNs.....and it turns out the intrensic value of a piece of paper with ONE dollar printed on it or ONE HUNDRED dollars, is exactly the same !  They can't have it both ways....ahahahahaaaa...

    The advantage to the business owner, and to the employee, is obviously lower FACE amount of income....thus, the business owner would pay less matching SS, unemployment, etc, based on the lesser FACE amount of payment.  The employee would also drop in tax bracket, and might save there.

    The DIS-advantage is when they decide to SPEND that income.  IF they convert it back to FRNs, they are gonna owe tax on the difference in their "basis"  ( say you paid them a 1oz Eagle for a week's work.....$50 ) and the price they sold the coin for in FRNs ( say they got 1300FRNs )....they have a tax liability of 1250 FRN gain.  

    The only solution to this I see is:  one, they manage to use the metal coin to buy things directly...which is going to be a VERY limited thing, given most merchants are not set up for real money.  The other would be if you simply paid them partially in gold, say a $5 1/10oz eagle per week, in lieu of say, 130FRNs, and they simply save that money, in the hopes someday the IRS and all their ilk are gone, OR the price of gold goes so high ( and the FRN so low ) the taxes become less of a point and the fact they have some ACTUAL money is quite important.

    Another problem you're gonna run into:  rising price of gold.   Let's say you started doing this 5 years ago, and gold was 500/oz.  Say you agree to pay your employees $5 in gold coin, and 800FRNs a week.   1/10oz eagles were costing you probably 60-65 FRNs then....now, they are 150.  Your employees are quite happy...they got a little 'raise'.....but it's costing you 2 1/2 times the original amount to keep up your end of the bargain.   When do you stop ?

    This whole deal is fraught with problems, not to mention raising the hackles of the IRS gestapo.....you'll probably find it's best to just keep paying them in FRNs, and let each person decide what to do from there.

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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    Two other things on this subject. I believe there are tax issues going into Canada with American eagles and not on the Canadian. I read this on the site here about a year ago. Also there are taxes on the gold when sold like around 20% on your gains.

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    Re: solar air heater

    thanks TN

    I tried building one of these myself, but I never mounted it to the house.  Building the box was pretty easy.  I had difficulty getting the plexiglass to seal to the wooden frame I built.  im not very construction savy, so Im sure others would be much more effective than me. 

    Brian

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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    I am expecting gold would go down in price due to deflatiion. And deflation may go for  long time. I am in the process to sell.

    Any inflation camp goer here?

    My opinions are basically from:

    http://theautomaticearth.blogspot.com/2010/07/july-22-2010-big-picture-a...

    Can anyone tell me why I should not sell? please.

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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    kennyq -

    Are your gold holdings a means of insurance against uncertainty or economic disruption, or are they part of a speculative trading opportunity?  If it's for speculative trading then selling now is certainly an option, but if you bought it as insurance or a hedge against economic uncertainty then selling right now would defeat your original purpose of acquiring gold.  Unless you have a reasonable expectation you will need that money from the sale of this gold in the near future, you may want to resist the urge to sell.

    I have quite a bit of respect for Stoneleigh at Automatic Earth and find her arguments for deflation pretty compelling.  However none of us can see the future beyond a doubt, and anything can happen no matter how probable the deflation scenario appears to us now.  In fact she could be correct and gold prices go down, but we might find at the same time gold (physical bullion anyway) might be very hard to find any available for sale.  This happened before in late 2008 and it may well happen again.  Another possibility may be that public and market perception of gold changes to the point where the majority of people and investors see gold as being primarily a form of money rather than a commodity.  If that change in perception happens, we could see nasty, long-lasting deflation where gold actually remains steady or increases in price in terms of dollars/euros/yuan.  The decision is all up to you, but I would be careful of basing such an important financial transaction on the opinions of any one source, even one as good as Stoneleigh.  Take some time and get more information from other sources.  There's no need to rush to make this big of a decision.

    - Nickbert

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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    TNdancer wrote:

    ao wrote:

    TNdancer wrote:

    Which is a good case for buying physical gold.

    No matter how much physical gold you have, you still have to pay most of your bills in FRNs.  Apples and oranges.

    Quite true......and you should keep enough FRNs for that purpose. 

    My point was it does very little good to park a LARGE amount of money in a savings account that pays 1% ( or less ) and be peddling backwards ( when you consider even current, "official" inflation + taxes you have to pay on your "gain" ) and watch gold 30% a year like it has for the last several, and potentially WAY more than that down the road.

    TN dancer,

    I'm not sure how familiar you are with the gold market but I've been trading in gold the past 10 years with a LARGE position placed back in 2001 and smaller trading positions since then.  I'm sure you're familiar with the downsides of gold but just in case you're a latecomer to the game, you may want to consider liquidity issues that will arise as the endgame approaches.  It will be very easy for inexperienced folks to get caught holding the bag.  They will be holding it a long, long time.  There's been sufficient warning as of late.  Buyer beware.  

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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    Kenny,

    In the upcoming hyperinflation, people will be looking to get out of assets because the currency will be in the process of failing.  They will use that cash to try to buy items that they need, or items that will hold value.  Hyperinflation is a process of escaping the currency into something that will hold purchasing power.  DO NOT SELL YOUR PM'S because you think Deflation will lower their value.  PM's will not act like other asset classes in a Hyperinflationary crisis.  

    They will be a store of value; something with the global, historical, and recognizable ability to act as a store of purchasing power.  When the Treasury bubble pops, and the flight from Treasuries starts, everyone will be looking for something to put their money into.  The obvious answer:  PM's.  On that day you will wail and nash your teeth for having dumped your PMs.

    Read these two excellent posts for an explanation of this process:

    http://gonzalolira.blogspot.com/2010/08/how-hyperinflation-will-happen.html

    http://gonzalolira.blogspot.com/2010/08/hyperinflation-part-ii-what-it-w...

    Rector

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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    I second that Rector.

    Gold allows you to purchase the next form of currency, if you want to look at it that way. Many countries whose currency was debased due to various reasons, took previous forms of currency, lets say pesos, and recalled them. You would have to turn in your old peso dollars for the new petro dollars. Only you get 1 petro dollar for every 10,000 peso dollars you turn in. Unless you have gold and silver. 1 ounce of gold in peso dollars is $500,000.  But in the new petro dollars, 1 ounce of gold is $200.

    In this case by changing your money from peso dollars to petro dollars you lose $175 petro dollar value in terms of gold. If you buy the new currency with your stored gold and silver, you make $175 MORE than the official exchange rate alone, not counting the increase in value compared to the previous currency that you used to buy it with.

    I hope that makes sense. Precious metals have several ways to win in my mind. Fiat currencies always lose.

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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    Thanks for the welcome...I'm more of a lurker than a newbie at this point. ;)

    I knew that Krugers have a bit more other metals that make them harder and a little duller than other coins but, still...they contain an oz of gold.

    I guess I consider PMs absolutely fungible...maybe I"ll have to reconsider.

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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    Rector,

    Thank you for the links. Great articles.

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    Re: solar air heater

    bluestone wrote:

    you mentioned a return on investiment with solar water heaters and insulating.  Do you or anyone have any experience with solar air heaters?  here is an example of one  www.cansolair.com

    The concept is simple.  the solar air heater is a box with a plexiglass surface.  Aluminum cans or tubes are placed within the box.  The box has an intake hose at the bottom and and outlet hose at the top.  The box is placed on the southern surface of a house or building (if you live in the northern hemisphere).  the sun heats up the air in the box which then blows air into the house.  cooler air from within the house is then pulled into the box which in turn is heated again.

    The makers of these devices claim that the payback is 5-7 years.  cost for cansolair is around $2,000-2500.  Of course a solar air heater is only an adjunct to heating your home, but supposedly can make a significant difference.  They can only provide heat during the daytime and in sunny weather.   I posted this subject about a year ago, but unfortunately got little feedback Frown I just want to know if anyone has any experience with them and are they worth it?

    Brian

    Hi Brian,

    I worked as a solar installer in New Mexico in the early 80's, installing a similar type of collector for a company called Solar Age.   They worked very well there.  I think the main concern I would have is what is the loss from a system like this on days that are not sunny enough to get to 110+ degrees F.  Also, in order to install this you will need to put a break in the envelope of you home.  If it's not sealed well, you could have leaks that seriously reduce the efficiency. In order to have it fully automatic, you may not be able to provide a good seal for low solar days.  The benefits of a system like this is it will work on a cloudy day (like solar hot water heaters), but you don't have to deal with water lines that must either drain back at night, or be a sealed anti-freeze system, and if it's done at minimum cost, your ROI could be quite quick.

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    Re: solar air heater

    thanks Dean

    so let me get this correct.  the solar air heater needs to get up to a temperature of about 110 degrees F to provide heat to the house?  And if not, the solar heater can actually have a cooling effect on the house?  I was under the impression that these heater did not work very well on cloudy days.  I live near Albany NY where cloudy days are the norm in the winter time.  

    Brian

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    Re: solar air heater

    deanrholden wrote:

    bluestone wrote:

    you mentioned a return on investiment with solar water heaters and insulating.  Do you or anyone have any experience with solar air heaters?  here is an example of one  www.cansolair.com

    The concept is simple.  the solar air heater is a box with a plexiglass surface.  Aluminum cans or tubes are placed within the box.  The box has an intake hose at the bottom and and outlet hose at the top.  The box is placed on the southern surface of a house or building (if you live in the northern hemisphere).  the sun heats up the air in the box which then blows air into the house.  cooler air from within the house is then pulled into the box which in turn is heated again.

    The makers of these devices claim that the payback is 5-7 years.  cost for cansolair is around $2,000-2500.  Of course a solar air heater is only an adjunct to heating your home, but supposedly can make a significant difference.  They can only provide heat during the daytime and in sunny weather.   I posted this subject about a year ago, but unfortunately got little feedback Frown I just want to know if anyone has any experience with them and are they worth it?

    Brian

    Hi Brian,

    I worked as a solar installer in New Mexico in the early 80's, installing a similar type of collector for a company called Solar Age.   They worked very well there.  I think the main concern I would have is what is the loss from a system like this on days that are not sunny enough to get to 110+ degrees F.  Also, in order to install this you will need to put a break in the envelope of you home.  If it's not sealed well, you could have leaks that seriously reduce the efficiency. In order to have it fully automatic, you may not be able to provide a good seal for low solar days.  The benefits of a system like this is it will work on a cloudy day (like solar hot water heaters), but you don't have to deal with water lines that must either drain back at night, or be a sealed anti-freeze system, and if it's done at minimum cost, your ROI could be quite quick.

    Why anyone would pay $2000.00 for one of these things when you can build one for under $200.00* is a mystery. If properly built and installed it does not breach the envelope of insulation, and cab be set up very easily to shut off anytime the panel is colder than the inside air temperature.

    * if anyone whats a link to free construction plans or video's let me know and i'll post them here.

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    Re: solar air heater

    bluestone wrote:

    thanks Dean

    so let me get this correct.  the solar air heater needs to get up to a temperature of about 110 degrees F to provide heat to the house?  And if not, the solar heater can actually have a cooling effect on the house?  I was under the impression that these heater did not work very well on cloudy days.  I live near Albany NY where cloudy days are the norm in the winter time.  

    Brian

    According to their info, it is thermostatically controlled to turn on when above 110 degrees.  It won't necessarily cool you house, but it is will have an inlet and an outlet which are openings to an uninsulated panel, so you could lose heat there.  They definitely work better on a sunny day, but there is still energy from the sun on a cloudy day.

    Dean

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    Re: solar air heater

    Diogenknees wrote:

    Why anyone would pay $2000.00 for one of these things when you can build one for under $200.00* is a mystery. If properly built and installed it does not breach the envelope of insulation, and cab be set up very easily to shut off anytime the panel is colder than the inside air temperature.

    * if anyone whats a link to free construction plans or video's let me know and i'll post them here.

    I think it's significantly less than $2000 when you include tax credits, but people pay for things like this for the same reason they pay for anything.  It could be convenience, it could be lack of tools, knowledge, confidence, or many other reasons (like it's more cost effective to pay somebody else to build it than build it yourself).  On the other hand, I think it would be great for you to post the link to the free construction plans and video.  I think many people would find it useful.

    A comment on Return On Investment:  I find it very interesting that people can spend a lot of money on things that they think are cool, or justify in some other way, and ROI is never a consideration, yet as soon as anyone mentions an "alternative" energy source, there's a question about what its ROI is.  Maybe the ROI is increased resilience, or saving the planet, or some other thing that is not so easily measured in dollars.  I realize there is a lot to be said for trying to get as much energy out for your energy in, but if someone has $2000 to spend and they spend it on a clean energy source instead of a new HD TV, then I say "way to go!"

    Dean

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    Re: solar air heater

    deanrholden wrote:

    Diogenknees wrote:

    Why anyone would pay $2000.00 for one of these things when you can build one for under $200.00* is a mystery. If properly built and installed it does not breach the envelope of insulation, and cab be set up very easily to shut off anytime the panel is colder than the inside air temperature.

    * if anyone whats a link to free construction plans or video's let me know and i'll post them here.

    I think it's significantly less than $2000 when you include tax credits, but people pay for things like this for the same reason they pay for anything.  It could be convenience, it could be lack of tools, knowledge, confidence, or many other reasons (like it's more cost effective to pay somebody else to build it than build it yourself).  On the other hand, I think it would be great for you to post the link to the free construction plans and video.  I think many people would find it useful.

    A comment on Return On Investment:  I find it very interesting that people can spend a lot of money on things that they think are cool, or justify in some other way, and ROI is never a consideration, yet as soon as anyone mentions an "alternative" energy source, there's a question about what its ROI is.  Maybe the ROI is increased resilience, or saving the planet, or some other thing that is not so easily measured in dollars.  I realize there is a lot to be said for trying to get as much energy out for your energy in, but if someone has $2000 to spend and they spend it on a clean energy source instead of a new HD TV, then I say "way to go!"

    Dean

    I guess I was insulated from a lot of that coming from a family that didn't believe in paying anyone for something you could build/fix  yourself, or couldn't find someone to show you how it was done. Personally I'd be terrified not being "Handy" in the coming age ;~) Here's some links to get anybody who's interested started:

    Here's one for solar water heating

    http://www.builditsolar.com/Projects/WaterHeating/water_heating.htm

    Here's some for Solar thermal

    http://www.builditsolar.com/Projects/SpaceHeating/Space_Heating.htm#Swed...

    Here's some video of solar thermal in action

    DRHolden's picture
    DRHolden
    Status: Silver Member (Offline)
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    Posts: 128
    Re: solar air heater

    Diogenknees wrote:

    I guess I was insulated from a lot of that coming from a family that didn't believe in paying anyone for something you could build/fix  yourself, or couldn't find someone to show you how it was done. Personally I'd be terrified not being "Handy" in the coming age ;~) Here's some links to get anybody who's interested started:

    Here's one for solar water heating

    http://www.builditsolar.com/Projects/WaterHeating/water_heating.htm

    Here's some for Solar thermal

    http://www.builditsolar.com/Projects/SpaceHeating/Space_Heating.htm#Swed...

    Here's some video of solar thermal in action

    Thanks Diogenknees!  I think many on this site will be interested in building one, including myself, and this makes it a lot easier.

    Dean

    Diogenknees's picture
    Diogenknees
    Status: Silver Member (Offline)
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    Posts: 109
    Re: solar air heater

    deanrholden wrote:

    Diogenknees wrote:

    I guess I was insulated from a lot of that coming from a family that didn't believe in paying anyone for something you could build/fix  yourself, or couldn't find someone to show you how it was done. Personally I'd be terrified not being "Handy" in the coming age ;~) Here's some links to get anybody who's interested started:

    Here's one for solar water heating

    http://www.builditsolar.com/Projects/WaterHeating/water_heating.htm

    Here's some for Solar thermal

    http://www.builditsolar.com/Projects/SpaceHeating/Space_Heating.htm#Swed...

    Here's some video of solar thermal in action

    Thanks Diogenknees!  I think many on this site will be interested in building one, including myself, and this makes it a lot easier.

    Dean

    You are very welcome, Knowledge is power, the Power of Knowledge is freedom.

    bluestone's picture
    bluestone
    Status: Gold Member (Offline)
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    Posts: 263
    Re: solar air heater

    Diogenknees

    I'd like to take crack at your question.  I do see your  point about trying to be self sufficient and do things yourself (and in reality that's what Im trying to do, at least for a lot of projects).  But here's my situation.  I am a surgeon and have been in practice for several years.  I am not a wealthy person (just finished paying off my school loans), but I do have some spare cash in the bank.  That cash may lose its value in the near future.  Why not deploy some of that cash into something usefull. 

    I work about 12 hours a day and much of the rest of my free time is spent with my wife and young children.  I have devoted much of my spare time to learning how to garden over the past two years.  My wife is only pseudo sold on the concepts of debt crisis and peak oil.  The last thing Im going to do is start ripping holes in the side of our house to install a "solar heater", especially since I really don't know what Im doing.  Im already the village crackpot as it is with my rants about peak oil.

    i do envy your capabilities, but at the same time I have to pick my battles and my free time is very limited. 

    By the way, have you installed a solar air heater in your home or do you have experience with them?  Do you feel that they make a significant contribution to heating a home or a building?

    thanks for your input

    Brian

    pinecarr's picture
    pinecarr
    Status: Diamond Member (Offline)
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    Posts: 1573
    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    kennyq wrote:

    Rector,

    Thank you for the links. Great articles.

    +1 I agree!  Thanks for sharing, Rector.  The articles and some of the associated comments, was an interesting read!

    kennyq's picture
    kennyq
    Status: Bronze Member (Offline)
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    Posts: 80
    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    Hello Rector, but some one posted this, that made me swing back to deflationist again. Please don't laugh. What do you think?

    The problem, . . ., that NO INFLATIONIST EVER ANSWERS when I put it out there is this - hyperinflation will destroy the Fed AND the special powers of the US dollar to impose a $1.2-$1.8 TRILLION hidden tax on the entire world each year. Further, the Fed is independent of the government and does not act as the government wishes. So tell me again exactly why the Fed would take a path that will result in its own destruction?

    If you point to Argentina or Weimar Germany or Zimbabwe, I will point back and note that those central banks were controlled by the politicians directly. Here, the politicians are owned and controlled by the banks.

    Hyperinflation destroys the lender so why would the Fed and its member banks choose to hyperinflate?

    No one ever answers this question. No one ever explains why the Fed would commit suicide and destroy its most valuable tool, the dollar, when the Fed IS the most powerful financial entity on the planet. Everyone just says "Oh they'll print" and never examines the unique position of the US Fed. Well if they were going to print, why haven't they done it already? And don't point at money numbers because almost all money indexes like M1 and M2 fail to account for credit. Mish has covered this endlessly, credit IS money and therefore has to be counted as such and we've seen the Fed print maybe $3 trillion while the global economy has imploded by nearly $60 trillion from what I can count (and I haven't bothered to count in months).

    In other words, the Fed is not trying to inflate at all. And people who point at the money the Fed prints and gives to the big banks are missing the picture. The Fed is not trying to reflate the economy despite public noise to that same idea. What the Fed is really doing is printing just enough to ensure that its member banks, particularly the NY banks, have enough cash on hand to squelch any run on their banks.

    I've watched them playing this pattern for a while now. And why would they allow a deflationary collapse instead of a hyperinflationary collapse? Because the Fed believes that the politicians will take most of the blame for that AND that the Fed's member banks, again particularly the NY banks, will ultimately end up holding all the real assets via defaults.

    Normally if an asset defaults, the bank has lost that money and now is in the hole in terms of paying back depositors. But with the Fed printing just enough to ensure none of the banks can be destroyed by a run, that problem is eliminated, and the banks can foreclose on assets over time.

    Ben's not going to hyperinflate, ever. It ain't happenin', sir. He's going to try to tread water as he is now to ensure maximum value returned to the banks. I believe he will fail but nonetheless we are three years into an endless deflationary spiral and he hasn't printed yet. But the deflationists have been correct for 3 years now.

    Tell me again when the hyperinflationists are going to be correct? I'll tell you when - when the politicians take the Fed back into the government and out of the hands of the NY banks, and not one minute before.

    isjrb029's picture
    isjrb029
    Status: Bronze Member (Offline)
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    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    I believe you have a great point Kenny. A very thoughtful one at that. Bravo!

    jerimiah797's picture
    jerimiah797
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    Posts: 1
    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    Hi Kenny,

    The short answer is that you are right - no central bank would choose to hyperinflate. But that's not how hyperinflation occurs.

    There's a difference between hyperinflation and regular inflation occuring at a high rate.  The latter is generally controlled by the central bank, while the former is caused by the people of the country. Specifically, a tipping-point percentage of the population starts to believe that the paper money has no value. They see paper FRNs as monopoly money. So the problem is not that THINGS get really expensive in terms of FRNs - it's that the money is viewed as nearly worthless in relation to those real things. The THINGS still have their own, intrinsic value, and are perceived as more or less 'valuable' in terms of their scarcity and usefullness, just like now. But the people who want to sell those things are less and less interested in accepting FRNs for their goods and services.

    The process will usually be quick, but not instantaneous. Since we have used paper FRNs for so long, it will create too much cognitive dissonance in our own minds for FRNs to go from having 'some' value to 'no' value in the blink of an eye. Seeing $100,000.00 of supposedly worthless FRNs will be a very difficult thing to process. For a while it seems like those FRNs should really be worth at least SOMETHING, right? Until it sinks in for everyone that they are really nothing more than worthless paper, there will be some some people that will still sell you their last loaf of bread, but only for a million bucks, just because they can't quite let go of the dream that FRNs used to be worth something.

    Hope this helps.

    -Jerimiah

    lastboyscout's picture
    lastboyscout
    Status: Member (Offline)
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    Posts: 9
    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    Gold is not increasing in value, US Dollars are decreasing in value. Gold holds a constant. value, fiat currencys are rising and falling around gold. The Fed Reserve has every intention of devaluing dollars. AS the dollar devalues, it will take more and  more dollars to trade for an oz of gold OR it will take less gold to trade for a certain amount of dollars. We are seeing both defaltion and infaltion at the current time. Inflation of food raw materials and energy, but a deflation of housing, labor, electronics and STUFF. If you want to hold Gold or silver, hold the metal, not GLD ETF's

    DrFelthouse's picture
    DrFelthouse
    Status: Member (Offline)
    Joined: Sep 29 2010
    Posts: 1
    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    Thank you for providing these stimulating and thought-provoking articles. I'm the executor for my late father's small estate, the beneficiary being my mother. I shall be seeing him sooner than he thinks....!

    Bets wishes

    Dr Andrew Felthouse

    bbroadhead's picture
    bbroadhead
    Status: Member (Offline)
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    Posts: 12
    Re: What Should I Do? The Basics of Resilience (Part 7 – ...

    My wife and I are ready to act and pull out of the banks when the time comes - except for our IRA's.  We are looking for a way to avoid the huge penalty.  One option might be to set up a self-directed IRA and purchase raw land.  The recent post suggesting a woodlot seems like a good idea.  Does anyone have experience setting up a self-directed IRA or have comments on this idea?

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