Guns, Gold, and Barns
Christian DeHaemer tells you how to deal with the looming economic collapse.

This Article Originally was Published here: http://www.wealthdaily.com/articles/guns-gold-and-barns/3805

"If you are prepared, you will be confident and will do the job." — Tom Landry

I was farm hunting over the weekend.

An old Queen Anne Victorian with three outbuildings and a swimming pool on a decent piece of property was up for sale out in the county. It was what was left of the farm after the farmer sold off the land over the years — much like America as a whole has sold off its capital.

Eaten its seed corn, as it were.

There is still a part of me that believes America can still grow its way out of this $16.3 billion debt hole. But with the current crop of statesmen in office and the divided nature of the population, I have my doubts. There are too many hard choices and too many soft people.

If you stop giving a man a fish, he will riot for more fish, as they say.

But it's not just an economic collapse, wanton greed, and the abandonment of common values that we have to worry about...

As Greg McCoach wrote in his popular article a few months ago:

Any single event or combination of events could cause terrible and debilitating circumstances for a short or long period of time:

  • Natural disasters such as hurricanes, floods, tornadoes, volcanic eruptions, solar flares, earthquakes, and other geophysical events
  • Possibility of wars, nuclear wars, nuclear reactor meltdowns, and radiation fallout
  • Financial meltdown (derivative, debt crisis, economic collapse and/or bond implosion) causing currencies to implode and governments to topple
  • Problems with the exploration, delivery, or production of oil, the lifeblood of modern economies
  • Spread of disease such as the Black Plague or a bird flu pandemic
  • Power grid failure
  • Political anarchy or revolution
  • Racial strife or civil war
  • Electromagnetic pulse event

Recent hurricanes in New York, murders in Libya, and political strife in Europe instruct us in the necessity of being prepared.

And so I found myself in the proverbial sticks on a blustery Sunday with thoughts of corn, cows, and chicken coops.

One of the farm owners, the oldest of seven surviving children, was walking me through the big barn, pointing out this and that.

Tom had introduced himself with a soft handshake. He must have been about seventy-five, and he still had the strong easy movements of a man who spent his life working — though you could tell by the glint in his eyes and the veins in his nose that he'd been spending more time down at the Crossroads.

Tom had one hand jammed in his front jeans pocket and was talking with the other. “This barn used to be so high, you could see it when you got off the highway. Then in '72 or so, we got a terrific windstorm that took the top story off. A big oak tree fell over and stove-in the silo. That's been gone for years. We didn't plant wheat after that...”

As I was climbing over an old rusty boiler and moving aside a Grumman canoe — looking for a likely spot to bury my gold safe — I ruminated on the nature of disasters.

“As it happened,” he went on, “my dad had just put on a new tin roof at the time, but he didn't have time to nail down that corner over there,” he gestured up the heavy timber beams.

“We got hit by the back side of a Nor' Easter and the top story peeled away. Most of it ended up in the swimming pool. Dad took what he could find of the roof and nailed it on top of the first story.”

The barn was forty feet at the center beam and covered half an acre. It must have been huge before Hurricane Agnes took the top off.

That's the thing about farmers. If a big storm cuts your barn in half, you just lower the roof.

Making due is part of dealing with life, but it never hurts to make preparations...

I like handguns, gold, and real estate.

Guns

Gunmaker Smith & Wesson (NASDAQ: SWHC) has been running hard. It's up from $2.50 this time last year to $10.79 today.

Sturm, Ruger & Co. (NYSE: RGR) hit an all-time high of $59.43 yesterday. It was a $10 stock in 2010. Ruger is selling a lot of LCPs, a compact .380 auto.

Gold

Yesterday saw a big sell-off as gold fell to $1,705/oz before bouncing back.

It turns out the speculators had a large number of sell orders placed after the December options expiration Tuesday night. The new range is between $1,700 and $1,750.

We have end-of-the-month selling pressures as well as those looking to lock in their year-end bonus.

It's always a good idea to feast on this selling. A good time to buy is between Christmas and the New Year, as there will be a lot of tax selling this year.

Land

As for real estate, I'm putting my money where my mouth is.

The price of housing is down a third from the top and interest rates have been cut from 6.5% to 3.5%.

The popular opinion still says that you'd be a fool to buy a house. That was true in 2006, but it's not today. The smart money is buying up housing by the bushel basket.

I got rid of my house in 2007 and I've been renting ever since. I'll be a buyer by spring.

I find this interest rate chart fascinating (click to enlarge):

longterm

The only time mortgage rates were lower was after WWII. The 30-year T-Bill is 2.75% as of 11:38 a.m. yesterday.

Was is a good time to buy a house in 1946? You bet your sweet bippy it was. The average house cost $5,600 right after the war. In 1963, it was $17,200. In 1981: $71,200.

That's a gain of 1,171% in 36 years.

Again, the common idea is that high interest rates will kill off the housing market — but the numbers say they did just the opposite. People bought to escape inflation.

Buy low, sell high... The rest is just noise.

All the best,

Christian DeHaemer Signature

Christian DeHaemer

follow basic@TheDailyHammer on Twitter

Since 1995, Christian DeHaemer has specialized in frontier market opportunities. He has traveled extensively and invested in places as varied as Cuba, Mongolia, and Kenya. Chris believes the best way to make money is to get there first with the most. Christian is the founder of Crisis & Opportunity and Managing Director of Wealth Daily. He is also a contributor for Energy & Capital. For more on Christian, see his editor's page.

This Article Originally was Published here: http://www.wealthdaily.com/articles/guns-gold-and-barns/3805



Guns, Gold, and Barns originally appeared in Wealth Daily. Wealth Daily, a free daily newsletter, offers practical investment analysis and contrarian stock market advice.
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