Regardless of the size of your financial pyramid, without a core-holding foundation, you are building it on sand. Core holdings are for protection, not for profit. They function as insurance against a catastrophe. [Let me explain.] Words: 754
So said the co-founder of ASI (www.assetstrategies.com), Glen O. Kirsch, in a twenty-one year old article* which is presented again by Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), who has edited the article further below for length and clarity – see Editor’s Note at the bottom of the page. (This paragraph must be included in any article re-posting to avoid copyright infringement.). The message it contains is important – and timeless – and ASI could think of no better way to honor Glen’s memory than by sharing these thoughts with you now.
Kirsch’s article went on to say, in part:
We get a lot of questions about core holdings: “What are they? Do I need them? How much should I own? ” So we decided to write an article that answers these frequently asked questions.
1. What are “core holdings”?
Core holdings are your emergency money. They’re your ace in the hole – the gold and silver (and maybe some platinum) that you hope to God you never have to use, but thank God you have if you do. They are your bridge across social, political and economic chaos.
2. What form should they take?
Core holdings have four crucial qualities:
- they have to be liquid – something you can sell in a heartbeat.
- their value should be widely and instantly recognized. When blood is running in the streets, you don’t want to find yourself trying to sell some off-the-wall asset.
- they should be easily and quickly divisible. A bar of gold is inconvenient when all you want is to buy a loaf of bread. You may not be able to get change.
- they should not require assaying. In other words, their quality and purity should be instantly recognized.
We know of only one medium that answers all of these essential criteria for core holdings: precious metals. Bullion bars meet the first two requirements, but not the third and fourth. Bullion coins meet all four criteria perfectly. Coins have all the advantages of bullion with none of its limitations.
3. Is one kind of precious metal in core holdings adequate?
Owning one is infinitely preferable to no core holdings at all but, as in any other investment, diversification cuts risk and maximizes returns. We agree with many financial planners who recommend you allocate 10% of your net worth to core holdings.
Of that 10%, we would suggest putting:
- 40% into gold,
- 40% into silver and
- 20% into platinum.
- The gold and platinum should be mainstream bullion coins, such as Canadian Maple Leafs, American Eagles or Australian Koalas or Kangaroos.
- The silver should be in the form of 90% U.S. junk silver coins.
4. What kind of profits can I expect?
Core holdings are for protection, not for profit. They function as insurance against a catastrophe. True, they are likely to earn you a profit, but that is not their main purpose. Just as you would not cancel your fire insurance because your house didn’t burn, neither should you sell your core holdings because they went up in value.
5. How do core holdings fit into my personal finances?
Envision a pyramid that represents your wealth – everything you’ve saved and own. On the base are the most important building blocks – those things that are the foundation of your financial health. They would include such investments as your home, life insurance and your core holdings. As I said above, your core holdings should represent 10% of the total pyramid.
If your total net worth is $1,000,000, then $100,000 should be allocated to core holdings. You would divide this into $40,000 in gold, $40,000 in silver and $20,000 in platinum.
6. Why ten percent?
To many Americans, 10% sounds high. To most non-Americans, it would be low. Many Europeans would ask, “Why only 10%?” That’s because they or their parents have experienced currency upheaval or rampant inflation. The only people I’ve ever heard say, “I’m not liquid enough to allocate 10% of my net worth to core holdings,” are Americans. That’s because most Americans have the bulk of their net worth tied up in the equity of their home. This is a serious indicator of illiquidity that makes the entire financial pyramid vulnerable.
Emergency money is not a luxury, but an absolute necessity for your financial health. Regardless of the size of your financial pyramid, without a core-holding foundation, you are building it on sand…
Editor’s Note: The above article has been has edited ([ ]), abridged, and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.
Do you own enough gold and silver for what lies ahead? If 10% of your total investable assets (i.e., excluding equity in your primary residence) aren’t held in various forms of gold and silver, we…think your portfolio is at risk. Here’s why. Words: 625
There is such a “fear of gold” amongst most people that it must be due to statist indoctrination and propaganda because it makes no rational sense to have such a fear of such a time tested and true store of wealth. After all, we are talking about time tested and true money – the only money that has lasted for thousands of years and is still fully accepted worldwide as a store of wealth….What would you rather hold “for eternity” gold [or] US dollars [which are nothing more than] a paper debt obligation of a bankrupt nation state? Words: 450
All you gold bugs out there (and budding gold bugs too!) should find this article of extreme interest. With gold about to make a major move upwards in price NOW is the time to position your gold-investment allocation to maximize your dollars deployed and returns generated. Those in the know will not be investing in physical or paper gold, or even the stocks of the miners, but in the long-term warrants of the very few mining companies that offer such an opportunity. This article provides a primer on the MAJOR advantage that long-term warrants have in a market upleg and identify the specific warrants that are available. Words: 1037
Whatever their reasons, the number of investors wanting exposure to gold is increasing. Many who ignored it a decade ago are now buying. Those who started buying, say, five years ago, continue purchasing it today in spite of paying twice what they paid then. Slowly but surely, it’s becoming more important to more people…but what happens when it becomes a must-own asset to a substantial majority instead of a small minority? Sure, the price will rise, probably parabolically, but putting aside speculation on the price of gold for now, have you thought about what happens if you have trouble finding any actual, physical gold to buy? [Let’s explore that possibility and what that would mean for gold stocks in such an eventuality.] Words: 870
151 analysts maintain that gold will eventually reach a parabolic peak price of at least $3,000/ozt. before the bubble bursts of which 101 see gold reaching at least $5,000/ozt., 17 predict a parabolic peak price of as much as $10,000 per troy ounce and a further 13 are on record as saying gold could go even higher than that. Take a look here at who is projecting what, by when and why. Words: 844
Out of the 7,500 separate mutual funds available, and with 22,000 shares classes to choose from, only 1 fund – just ONE fund – actually managed to achieve a greater percentage return than gold bullion since the alarm bells rang out at the turn of 2007! [That being said, are you still one of the 99% of investors who, for whatever reason (are you foolishly listening to the “advice” provided by your stock broker/securities salesman going under the guise of a financial “advisor”), is still without any physical gold or silver?] Words: 395
The traditional view of portfolio management is that three asset classes, stocks, bonds and cash, are sufficient to achieve diversification. This view is, quite simply, wrong because over the past 10 years gold, silver and platinum have singularly outperformed virtually all major widely accepted investment indexes. Precious metals should be considered an independent asset class and an allocation to precious metals, as the most uncorrelated asset group, is essential for proper portfolio diversification. [Let me explain.] Words: 2137
It is no longer a matter of whether or not you should buy gold and/or silver but, rather, which type of investment(s) and how much. You don’t need a lot but you do need some – and here’s a primer on just what type of investment vehicles are available and recommendations on just how much you should buy. Words: 1086
That governments will want – and will NEED – much, much higher gold and silver prices in the future is counter intuitive, given that they have done everything within their power to throttle back and to keep a lid on bullion prices. Let me explain why. Words: 1300
Dow 13,000 is a meaningless number! [True] the DJIA index has touched that number for the first time since 2008 but, when priced in gold, it has actually declined. Let me explain. Words: 245
In my opinion, the greatest threat to long-term and retirement investors is the wealth-destroying triple combination of monetary inflation, asset deflation, and inflation taxes. Fully understanding [these factors] is absolutely essential for financial survival because history shows us quite clearly that when all three of these major wealth destroyers are working together in the real world then conventional investing methods cannot withstand the destruction of investor wealth that occurs. [Let me explain why, then, your past and future stock market gains actually have been, and will continue to be, absolutely nothing more than a mirage – a cruel illusion that has and will continue to only benefit our governments – unless you develop a drastic out-of-the-box investment strategy that is radically different from anything that currently exists (or is in the public domain).] Words: 3456
Asset allocation is one of the most crucial aspects of building a diversified and sustainable portfolio that not only preserves and grows wealth, but also weathers the twists and turns that ever-changing market conditions can throw at it. However, while the average [financial] advisor or investor spends a great deal of time carefully analyzing and picking the right stocks or sectors, the basic and primary task of asset allocation is often overlooked. [According to research by both Wainwright Economics and Ibbotson Associates and the current Dow:gold ratio, allocating a portion of one’s portfolio to gold and/or silver and/or platinum is imperative to protect and grow one’s financial assets. Let me explain.] Words: 1060
We are reading a lot of hype these days about gold and the necessity to own it but only about 2% of ‘investors’ actually have gold in their portfolios and those that have done so have insufficient quantities to offset the future impact of inflation and to maximize their portfolio returns. New research, however, has determined a specific percentage to accomplish such objectives. Words: 1063
The United States is now so far in debt, it will never be able to pay it off, that is, without hyper-inflation. That subject alone will require many more articles than this. The sky is not falling (yet) but your savings and investments are in dire jeopardy going into 2012. You might wish to now do something to protect yourself. [May I offer the following investment ideas.] Words: 1648
Evidence shows that the U.S. money supply trend is in the early stages of hyperbolic growth coupled with a similar move in the price of gold. All sign point to a further escalation of money-printing in 2012…followed by unexpected and accelerating price inflation, followed by a rise in nominal interest rates that will bring a sovereign debt crisis for the U. S. dollar with it as the cost of borrowing for the government escalates…[Let me show you the evidence.] Words: 660