Silver Is the Best Protection From Fannie and Freddie Mess
Jul 18th, 2008 | By Porter Stansberry | Category: Gold MarketPorter Stansberry says the government will do whatever it takes to ensure troubled mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE) don’t go under. It will guarantee Fannie and Freddie’s debts. It will use taxpayer money to do this – money it doesn’t have. This means a big rise in gold and silver is on its way. Act now and buy physical gold and silver…
No government in history has ever repaid debts as large as those already assumed by our government (in terms of GDP). Paying off these debts will put more pressure on the U.S. dollar. The single best way to protect yourself is to buy sliver.
When I explained this for the first time in May 2006, gold was trading for $675 an ounce and silver was trading around $14. Today gold is trading for $935 – an increase of 38% in about two years. Silver is now around $18, an increase of 28.5%.
These numbers tell me that, while you would have done well in precious metals over the last two years (far, far better than in stocks), the real move into gold and silver hasn’t started yet. What should you do?
The answer seems obvious and urgent. Make sure you own a substantial amount of gold and silver. I would recommend at least a 5% position in gold and a 5% position in silver. I wouldn’t allocate more than 15% of your portfolio. That should be plenty to hedge yourself. Don’t forget, well-run companies will also appreciate along with other assets during an inflationary period. So you don’t need to dump high-quality stocks and buy a huge position in gold and silver.
The best way to buy gold or silver, in my opinion, is to simply own bullion – plain coins. Buy them and bury them somewhere safe. The gold won’t rust. Silver is more difficult to manage, but the best way to own it is to take physical possession. If you can’t manage physical possession of the metals, consider ETFs or become skilled at analyzing mining stocks.
That’s what I strongly recommend you do. Right now. Seriously. I wouldn’t be surprised to see prices soar next week if Fannie and Freddie are taken over by the Feds, which is what I expect will happen.
Source: How Americans Should React to the Fannie Mae Bailout
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