‘Prepping’ for Deflation

“It’s tough to make predictions, especially about the future.” That whimsical saying is attributed to baseball great Yogi Berra.

It might make you chuckle, but Yogi was right. Predictions are tough, and accurate predictions doubly so. Still, we never hurt ourselves by preparing for the worst, even as we hope for the best.

So, what is the worst that could happen? Historical cycles are painting the possibility of grim times ahead indeed.

As the social mood turns negative, people are starting to wake up to possibilities that are becoming more probable as more pieces fall into place:

Governments are getting more tyrannical as they reach “peak debt”.

Propaganda is running rampant.

Riots and revolutions are spreading worldwide.

If we continue down this rough road, in the short term, we’ll likely see deflation as the War Cycles drive “fear money” into the U.S. dollar.

So, to prepare for the short term, you should …

FIRST — Get out of debt … because as money increases in value (gets harder to come by), you’ll be paying back your debt in more valuable currency.

SECOND — Hold off on major purchases … because things are going to get a lot cheaper. We’re already seeing folks decrease their buying due to the COVID crisis. That puts even more pressure on prices.

The largest asset for most is real estate. And it has already topped as a result of the turning of the 18.5-year real estate cycle.

It’s better to rent than to own — unless you’ve paid off your mortgage (or you’re able to get an income from your property).

If it makes sense, sell your home and buy it or another one back in a few years. In the 1930s, many homes owned by the affluent (who lost everything in the stock market crash) were on the market at fire sale prices.

In the longer-term

Civil wars will rage. Millions will die from pandemics. Food production will be curtailed. Densely populated cities will become dangerous.

As such, you should …

Have a secure stash of cash.

As they have so often in past economic collapses … many financial institutions will fail (go here to check the stability of your bank). Eventually, banks could stop lending as the current credit card scheme ends.

Reduce your cost of living.

As governments become more tyrannical, they’ll tax the population to pay off their ballooning debts. Also, many companies will fail. There are fewer jobs to be had. Salaries will fall.

Secure your food supply.

Some cycles point to a major economic collapse. Other cycles say we have a worldwide drought coming. This raises the scarcity of food.

This always happens at large cycle tops. For instance, beginning in the summer of 1314, the weather turned cold and wet. Rain fell incessantly. Crops rotted in the fields. Europe experienced the worst famine in its history.

This time, we’re likely to experience major food shortages brought on by a shorter growing season … and lack of rainfall.

Stock up on the necessities. And if you can, start a garden or create other means of harvesting food. For example, chickens were quite popular in the Great Depression.

Have an emergency source of power.

In many cases, infrastructure hasn’t been adequately maintained. We’re already seeing rolling blackouts in places like California. Consider getting a generator.

Stay as healthy as possible.

Exercise helps keep you not just fit physically, but psychologically as well. And at the same time public and private health systems are short on funds, we’ll see plague and measles (not to mention more coronavirus pandemics) on the rise. Millions of lives were lost in past cold-dry periods. This time won’t be any different.

Keep safe.

We already saw violence escalate, even before the summer of 2020. The War Cycle and climate cycles combine to fuel riots, unrest and even civil wars around the world. Depending on where you live, safety will be a concern. Desperate people do desperate things.

In the 1930s, many well-off families dressed in old clothes and made sure not to drive an expensive car. Visible wealth tends to become a target quickly.

Also, when society breaks down, you need to be able to defend yourself. Police and other services will be limited or even unavailable.

Bond with community.

Going forward, family is going to be more important than ever. Patch up relationships if possible. You may need to band together for security during the roughest times. Know who your friends are and strengthen those bonds.

Plus, if you’re handy and have the ability to help your fellow human beings, this will be your time to shine.

One more thing …

Having a stash of GOLD AND SILVER COINS (i.e. real money) will be a godsend for you and your family. And because we’re seeing a new bull market in precious metals, take advantage of any correction to grab more bullion …

And consider shares of solid mining stocks.

I’ll leave you with another Yogi Berra quote: “The future ain’t what it used to be.” So, what if the worst does come true? What if deflation hits hard?

The answer is, we’ll get through this together, if we stick together. In a normal economic cycle, deflation is necessary to “heal” the economy. And even in a more severe downturn, we have a better world to look forward to on the other side.

All the best,

Sean

P.S. I’ll be speaking at the New Orleans Investment Conference on the morning of Oct. 14. It’s a great conference; lots of interesting speakers, and little companies with enormous potential. Now YOU can attend the conference without leaving the comfort of your own home, as the NOIC has gone virtual. You can check it out here.

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Comments 5

  1. Tom Jones October 6, 2020

    Why are you saying we’re in a metals bull market yet your cycle charts show a full year decline in price ahead??

    Reply

  2. Richard Conzet Ronveaux October 6, 2020

    Couldn’t be more correct…

    Reply

  3. Kenneth Goldberg October 6, 2020

    Sean, I signed up for Gold and Silver Trader at the end of August and still have not received my gold bar. What’s up? Respectfully yours, Kenneth Goldberg

    Reply

  4. Nirodbaran mahakud October 6, 2020

    Hi

    Reply

  5. steven October 6, 2020

    Why is gold so good in a period of deflation. If all hard asset prices are deflating it doesn’t make sense that metals wouldn’t deflate as well.

    Reply