Planning for the inevitable

"See...we plan ahead, that way we don't do anything right now. Earl explained it to me..."

-Kevin Bacon, Tremors

Nothing is ever lost; nothing is ever created. Rather, everything is transformed. The “magic” law of conservation of mass was first expressed by the French scientist Antoine Laurent de Lavoisier. This father of modern chemistry extracted hydrogen from water, and by reversing the process, made water by combining hydrogen and oxygen. Many considered this magic at the time, but the conclusion was that the mass of the final products of a chemical reaction is the same as that of its individual elements collectively. The conservation law doesn’t apply only to chemistry, however and it may explain all sorts of moves elsewhere.

Speaking of transformation, estate planning is an important aspect of a big transitional event for your family. Many people don't think about estate planning because they figure that when they die their affairs are no longer a problem. They assume their assets automatically go to their family. Others simply hold resentment or insecurities from their own past that prevent them creating an estate plan. They figure that since no one conducted estate planning for them then they shouldn't for their own family. This is all nonsense.

Without planning, when you die, the assets and debts you leave behind will go to probate court.

The cons of probate are what drive people to try to avoid it. The main problem with probate is that it is time consuming and expensive. It is also something you simply cannot ignore. Many states require 30 to 90 day waiting periods as part of probate. If a relative or potential heir decides to contest the will or the court's asset distribution, the process can take even longer. In addition, the court, attorneys, assessors, and other professionals involved all charge fees for processing an estate. These fees typically come out of the estate itself.

Without estate planning, when you die not only will your family be full of grief, they will have to go through a long and expensive court process in order to divide up your assets. Gee thanks. What a way to go! 

This can all be avoided and the money you saved throughout your life can go to the exact people you want it to. All you have to do is create a few documents. The most popular being a revocable trust. The other is a will.

A trust agreement is a document that spells out the rules that you want followed for property held in trust for your beneficiaries. Common objectives for trusts are to reduce liability, to protect property in your estate, and to avoid probate. A revocable trust essentially is a bucket to hold assets while you are alive. You can move assets in and out of the trust as you please, and when you die, the assets will be distributed to whom you wish as the trust specifies.

The other document you will want to have is a will. A will is a legal document by which a person, the testator, expresses their wishes as to how the property will be distributed at death, and names one or more persons, the executor, to manage the estate until its final distribution.

Although the revocable trust supersedes the will, the revocable trust only controls assets that have been placed into the trust.  You need a will because it helps with the distribution of assets that are not under a trust.

Trusts and wills can be a big help to families after their loved ones die. Take into account the recent death of the famous musician Prince. He did not have a will or trust. Now his estate is in probate and the family members are arguing and appealing on how the assets are to be distributed. The only winner in these cases are the lawyers.

Setting up a trust and a will is not hard to do. Visit www.legalzoom.com or contact a local attorney who can help you create these documents. The cost to create these documents are not prohibitive.

As Alan Lakein Said, "Planning is bringing the future into the present so that you can do something about it now."

Over and Out,

T. Norman

Changes, Plans, and Opportunities

“Three things cannot be long hidden: the sun, the moon, and the truth.”

-Buddha

A galloping horse can clip clop along at about 25 to 30mph. In 2016, the Koenigsegg Agera R production automobile clocked a blistering 273mph. Back in the day, I would bet Henry Ford did not likely believe that speed possible. The car has clearly overtaken horses in America as speeds have increased almost every single year.

Change is another thing that is increasing in speed. It is clear that we are brink of quite a few financial, economic, and political changes. In the event of change, preparation and anticipation are the keys to turning a change into an opportunity. Simon Black of Sovereign Man writes:

“By 2014, inflation was at 50% in Venezuela. Just paying the bill at a restaurant now required a thick stack of cash.

When that happened, some people simply tightened their belts and stopped going out to eat. Others saw this as a warning sign to look for another, more stable country.

Then in 2015, supermarkets started facing shortages.

So in order to get the groceries they needed, people started lining up outside of stores from early in the morning.

Others saw this as another warning sign, and started searching for jobs in other countries.

Now in 2016, those supermarket shelves are completely empty. Inflation is nearly incalculable. And the entire country has descended into crisis.

Regular people have turned to attacking supply trucks, looting stores, and combing through trash dumpsters just to survive.

As things become increasingly desperate, more and more are scrambling for a way out of the country… only to find that it’s too late.

Many countries, including the United States, have started putting up barriers to prevent a massive inflow of Venezuelan economic refugees.

Two years ago it wouldn’t have been much of a problem. Few people were trying to leave back then, so there were plenty of options available.

Today there are tens of thousands of people trying to leave at the same time, making this a full-blown refugee crisis. So naturally the gates have swung shut.

Venezuela is an incredibly important reminder, not only of how impoverishing socialism can be, but also how important it is to have another option.

Part of having a robust Plan B is ensuring that you and your family have the legal right to go, live, work, invest, and do business in a safe, stable foreign country.

It’s an insurance policy that you (hopefully) might never actually have to use.

But if the day ever came when you felt like you needed to leave, whether for financial or personal safety reasons, having clear legal status in a country where you actually like to spend time can make a world of difference, not to mention stability for your family.

It requires very little to establish a foreign residency in many countries other than a bit of advanced planning and perhaps a small investment.

In some countries, establishing residency can be as simple as setting up a local bank account and depositing money into it, as is the case in Panama.

(Which, given how much value and protection an offshore bank can provide you, this is something we definitely recommend considering.)

Depending on where you go, establishing foreign residency could even qualify you for naturalization and a second passport in a few years’ time.

Bottom line– Investing a little bit of time now will provide tremendous insurance against political and economic uncertainty in the future, should it ever occur.

And even if nothing happens, you can still end up with a second passport, something that can provide more business, investment, travel, and lifestyle options to you and your family.

Best of all, the second passport you obtain can even be something that you’re able to pass down to your children and grandchildren, so that future generations can benefit from the small investment you make today.”

Successful planning is all about having options. Your options will become your opportunities. It is worth taking the time and looking into it.


Over and Out



T. Norman

The Brexit

"Freedom is the right to tell people what they do not want to hear"

-George Orwell

Welcome to The Golden Sense! Below is a article and podcast featuring English investor Tim Price.

-Britain’s referendum on whether or not to stay part of the European Union was marred by some of the most blatant propaganda we’ve seen in the West in a very, very long time.

But… at the end of the day, the British government at least accurately counted the votes. No shenanigans.

“Leave” prevailed. So the UK will officially be leaving the European Union.

This has led to some unprecedented moves in the financial markets.

The pound is at its cheapest level in decades. High quality British companies are now trading for extraordinary discounts.

Investors are panic-selling because they don’t know what’s going to happen next.

Britain has been part of the EU for four decades, and now that’s coming to an end.

Nothing scares people more than their fear of the unknown.

In fact, for decades, the political, media, and financial establishments have been pushing people along a very clear path that they wanted us to follow.

Elections always represented the illusion of choice between establishment candidates and their establishment policies.

This referendum, just like the surge of candidates like Bernie Sanders and Donald Trump, constitute a major revolt.

Simply put, this wasn’t part of the plan. So the system is in complete panic.

Check out the Podcast between Simon Black and Tim Price on the Brexit.

https://www.sovereignman.com/podcast/tim-price-on-the-brexit-investment-opportunities-19936/

Over and Out

T.Norman

Reference: www.sovereignman.com

Black Gold

"If you are going through hell, keep going"

-Winston Churchill


Welcome to The Golden Sense!  Odds are pretty good that you’ve never heard of, let alone tried, Pemberton’s French Wine Coca. This was an extremely popular beverage of the mid-1800s. I am willing to bet, however, that you have tried the beverage it evolved into. Made from a combination of the South American coca plant, the kola nut and Bordeaux wine, an Atlanta-based pharmacist named John Pemberton created his coca wine. He eventually replaced wine with carbonated water and renamed his drink Coca-Cola.

Speaking of different names and dark substances, oil is known by many names including black gold, Texas tea, dino juice and a host of others. Beyond the colorful language, it is indeed an important commodity in the modern day world. As you probably know, the oil market is a disaster. The price of oil has plunged 75% since 2014. In February, oil hit its lowest level since 2003. Some say that these lower oil prices are good for the economy, while others say that is a bad thing. 

First the good - lower oil prices mean lower gasoline prices and that means consumers have more money in their pocket to spend. I know I like going to the gas station much more today than I did a few years ago. Everyone is relieved to have a few extra bucks in their pocket.

Now the bad - lower oil prices can lead to weakness in bank loans related to bankruptcies in the energy sector. Since the start of 2015, 130 North American oil and gas producers and service companies have filed for bankruptcy owing almost $44 billion, according to law firm Haynes & Boone. Two weeks ago, Linn Energy filed for bankruptcy, making it the largest shale oil bankruptcy since 2014. It owes lenders $8.3 billion. A week later, SandRidge Energy declared bankruptcy. It became the second-biggest shale oil company to go bankrupt. The company owes its lenders about $4.1 billion. Ultra Petroleum, Penn Virginia, Breitburn Energy, and Halcón Resources also filed for bankruptcy in the past couple weeks. 

In addition, there has also been industry layoffs when prices tank and it can lead to spillover weakness in other businesses located in oil driven states. Before we get too pessimistic, please remember that not all oil companies will fail.

Recently, oil was trading at about $48 per barrel. That was up from the $32 low level of 2016 and also above the average of about $40. Still low overall, but slightly better.  Next, consider how that price of $48 compares to where we were just 1 year ago. Back then oil hit a high of about $64 per barrel, so the decline in 12 months from that point is about 25%. In any industry that is a big decline. To gain a broader perspective, we look at the $48 price and compare it to where things have been over the past 5 years. During that time, the high water mark reached about $143 per barrel and the average was about $84.  

The key drivers to the decline are higher production, a decline in global demand, a change at OPEC that allows for its members to keep pumping and selling oil on the market, a flood of production from Iran from the lifting of the global embargo there, a strong US Dollar and ongoing weakness in China and other countries. These factors seem to be medium to longer term issues, so the best guess at this point is that prices will remain subdued for now. 

So what can we take from all this? Remember, in times of crisis, there is opportunity. Not all oil companies are going bankrupt and oil companies will restructure their businesses. If you survey the damage, opportunities to buy quality oil stocks may exist. I consider a stock a buy if these oil companies are still able to turn a profit, have a price to earnings ratio below 18, and offer a dividend of 3% or more. These opportunities don't come around often, so take the time to do the research and make the play. 

Owning shares of a quality oil company is a good asset to have. Oil companies produce a prized necessary commodity that has staying power. They deal with real wealth. A real asset. It is not ‘wealth’ in the conventional sense. I’m not talking about paper money that’s conjured out of thin air by central bankers. They sell a commodity that is vital to the foundation of modern economies. These points are what make oil companies such a prized asset to own.

Now that oil has stabilized, the stronger companies are separating themselves from the weaker companies. This year, Exxon is up 15%. Chevron is up 11%.

The crash in oil prices has given us a chance to buy world-class oil companies at deep bargains. I'm not saying these companies are a bargain right now...but bargains do exist out there. It's time to start sniffing around... and perhaps you will find exactly what you are looking for.

Over and Out

-T. Norman

References:

Brown, Steve.  Bank Investment Daily 2016

Spittler, Justin. Casey Daily Dispatch 2016

Finding Value

"What is a cynic? A man who knows the price of everything and the value of nothing."

-Oscar Wilde

Welcome to The Golden Sense!   As cell phone photography proliferates, I pause to pay homage to the man who revolutionized the world of amateur photography. Edwin Land, the co-founder of the Polaroid Corporation, was the man behind the camera—the guy who unveiled a process in the 1940's that produced a full-fledged photograph in one minute. In the blink of an eye, the world of instant photography took off, and Polaroid, still a market leader, continues to develop this popular niche of cameras. It is amazing the kind of inventions people have come up with throughout history. This made me think of a Sovereign Man article that recently came out:

-Sovereign Valley Farm, Chile

It was early spring in 1971 when an obscure American folk singer wrote a song that would change his life forever. 

Sitting at a café in Saratoga Springs, New York, Don McLean scribbled the lyrics to a long ballad about an experience he had as a 13-year-old boy. 

It began with a radio bulletin that said that Buddy Holly had died in a plane crash. The boy was crushed. But the man used this emotion to write a song that would take the world by storm. 

Of course, that song was “American Pie.” 

It stayed atop the Billboard music charts for more than a year. And it turned this once obscure folk singer into a global sensation. 

More than that – McLean was immediately set for life: he still makes more than $300,000 a year from that song. 

Imagine getting paid hundreds of thousands of dollars a year for something you did in 1971! 

This story holds the key to one of the greatest business model ever invented: the idea that you can create something once and get paid on it for life. 

It’s the royalty business. 

In case you’re not familiar with the term, a royalty is a cash payment that you receive over and over again from an asset that you created, developed, or own. 

For example, songwriters collect a royalty every time a song they write is played, purchased, downloaded or streamed. That’s why McLean still makes money from American Pie. 

Royalties are also common in natural resources. Royalty companies often provide financing to oil and mining companies… and those borrowers pay a royalty on every ounce of gold or gallon of oil that the land produces. 

Authors earn a royalty every time somebody buys their book. Inventors receive royalties from their patents. 

And people who own royalties don’t have to do anything else to make money… except cash the checks. 

The powerful cash flow of this model can be incredibly appealing to investors, and there are even some companies that specialize in acquiring assets that produce royalty income. 

In his November 2014 edition of Price Value International, for example, Tim Price recommended a company called Franco-Nevada Corporation that specializes in gold-focused royalty income. 

Back then it was very cheap, and Tim’s subscribers have made nearly 50% including both dividends and gains in the stock price… far outpacing most traditional gold miners. 

There’s another company called Mills Music Trust still that has an impressive yield of 10% (i.e. the amount of annual dividends it pays to its shareholders is roughly 10% of the stock price). 

That’s an amazing yield. But good luck buying shares-- the stock has a market cap of just $5 million in the OTC market, and the shares rarely trade. 

One of the things I really like about royalties is that they’re REAL assets that produce income, just like agricultural property or a profitable private businesses. 

In times of inflation, the value of your asset goes up, thus protecting your savings. 

In times of deflation, the cash flow that the asset produces is extremely valuable. 

But the real potential with royalties isn’t with publicly traded stocks-- it's in owning private assets that generate income… like American Pie. 

It used to be very difficult to do this; owning royalties meant you had to know someone, or be in the business. 

Agents, managers and record labels bought royalty rights from singers and songwriters like Don McLean. 

But if you weren’t part of the music business, it was very difficult to get in on these types of lucrative cash cows. 

Fortunately the entire financial system is changing. 

Modern technology has made it possible to bring together people like Don McLean who own royalties, along with investors who want to buy royalties. 

It’s a similar concept to Peer-to-Peer lending platforms that match borrowers and lenders, or crowdfunding sites that match entrepreneurs with prospective investors. 

It’s no longer industry insiders and big banks that have the deals all to themselves. But today I don’t want to talk about buying royalty companies. I want to talk about an exciting new opportunity that allows you to buy royalty assets directly from the creators and current owners. 

You can cut out the middleman and collect these rich cash royalties yourself. 

Now, as an artist or patent holder, you can go to a website and offer a portion of your intellectual property to sell to an investor. 

And as an investor you can shop for any number of royalty-producing assets. 

For example, RoyaltyExchange.com recently auctioned off another music royalties from iconic bands like the Bee Gees and Eurythmics. 

(One recent songwriter royalty sold for 7x last year’s earnings, which translates to a yield of roughly 14%.) 

The site is currently auctioning a share of the royalties from comedy films like Dumb & Dumber, and There’s Something About Mary. 

That’s the other exciting about royalties based on copyright. Unlike patents, which usually last for 10-20 years… copyright royalties last for much longer… up to 70 years after the death of the creator. That’s why you see popular songs like “Happy Birthday” earn millions of dollars of royalties every year for more than 50 years. 

It means that whenever these movies are rented or played on TV stations around the world, the royalty owners get paid. 

It’s like being a toll-collector on the pop-culture highway, so the potential is quite interesting. And these photos have another 50+ years of copyright left on them… so if you buy them… you could be getting paid until 2066! (These are the types of assets that could pay for your grandchildren to go to college.) 

-Simon Black

The Golden Sense has been promoting the concept of multiple income streams for many years now. Not all of us will secure royalty income ...but it is important to create an investment and saving strategy that uses the same concept as royalty income. This is one of the best paths to financial security.

Over and Out

T. Norman

Keep Investing Simple

"Life is simple, but we insist on making complicated"

-Confucious

Welcome to The Golden Sense! Ranch dressing dates back to the owners of a dude ranch in Santa Barbara California. Yes, the ranch was named Hidden Valley and they served their guests a special salad topper that combined herbs, mayonnaise and buttermilk. This being the 1950's, the best they could to commercialize their invention was to sell little packets of seasonings which buyers then mixed with their own perishables at home. The breakthrough of Hidden Valley Ranch dressing came in the 1980's after chemists at Clorox (the new owner of the brand), figured out the right combination of preservatives to allow the dairy-heavy dressing to be sold as a “shelf stable” product that could last for 150 days. 

Investing is not as complicated as chemistry. However, many people insist that it should be. There are all sorts of mathematical formulas, charts, trends, and theories to follow. Some people treat investing like gambling (they call it speculating), others think of it as a poker game and play with options and futures. Most of these strategies are based on buying a stock, or any other security, at the right time and selling it later at higher price. This may be a fashionable strategy, but it is devoid of long term wisdom and the creation of financial stability. 

The only thing that matters when it comes to investing in stocks is cash flow and return on investment. This is where keeping it simple comes into play. There are three rules when it comes to investing in stocks. If you follow these rules you will most likely do well over the long run. 

First, only invest in stocks that pay a 3% dividend or higher. A dividend is a sum of money paid regularly (typically quarterly) by a company to its shareholders out of its profits or reserves. By owning shares of a company that pays a healthy dividend, you are ensuring a quarterly cash flow into your personal account. This represents and actual return on investment. 

Dividends are important because they measure the financial health of a company. As the late Richard Russell used to say, "A lot of lies can be told about a stock, but dividends don't lie. In order to increase dividends a company must create a history of producing cash, analysts can lie, earnings can lie, and CEO's can lie, but dividends don't lie."

An investor should always get paid for the risk they take when investing in a stock. Kevin O'Leary, of Shark Tank, emphasizes the same point when he says, "don't rent your room out for free". His point is that you should not invest money in a company without receiving a return on your investment as you wait. Kevin O'Leary, just like me, encourages investing in dividend paying stocks. Forget about stocks that don't pay a dividend. Investing in those stocks are based on faith that the company will reinvest current profits and make bigger profits in the future. This might happen, but it might not. It's much better for the shareholder to receive a portion (dividend) of current profits for the risk he or she took for investing in the company.

Secondly, never invest in a stock or any security that you do not understand. This means being brutally honest with yourself. Don't act like you know everything about the tech industry or act like you understand what is on a bank’s balance sheet. Unless you are an insider or actively involved in the industry... forget about it. You probably know very little. Examples of easy to understand businesses are Coca Cola, British American Tobacco, or United Parcel Service. I am not saying these companies are a good buy at this point in time, but what I am saying is that these companies have business models that are simple, time tested, and hard to screw up. If you have a good understanding of a company’s business model, it will force you to make better investment decisions. This is critically important to your financial future because it helps you to take responsibility for your decisions.

Third, invest only in stocks that have a price to earnings ratio (P/E Ratio) of 17 or below. A P/E ratio measures the current share price relative to the company’s current earnings per a share. The higher the P/E ratio the more expensive the stock is. You need to treat investing just like going to the grocery store. You don't want to over pay for a stock just like you don't want to over pay for a loaf of bread. You are getting ripped off if you over pay for a loaf of bread, and if you over pay for a stock you are also getting ripped off and will most likely lose money in the future as the price of the stock will lower in relation to its earnings.

The historical average P/E ratio for the entire stock market (S&P) is between 15 and 18 (depending on how far back you go).  If you stick to the rule of investing in companies with a P/E ratio of less than 17, you will most likely avoid the mistake of buying a stock that is overvalued. You could also look at the historical P/E ratio of a particular stock. However, if you generally follow the rule of 17 or below, you won’t lose your shirt on the investment.

Imagine, over time, continually investing in reasonably valued, easy to understand stocks that pay a 3% dividend or better; as you age, your cash flow from the dividends will get larger and larger. You will build a healthy second income that one day could develop into the only income you need. Your investment portfolio won't be at a huge risk because you will have purchased time tested stocks at reasonable values. This practice is the corner stone of creating a stable financial future. It is never too late to start, because getting your share of some profits is always a good thing.

Speaking of share, ranch dressing is now believed to be the most popular salad dressing in America. It shows you what a little bit of stability can do.

Over and Out

T. Norman

References:

(Brown, Steve 2016. Bank Investment Daily)

A Chicken with Clothes

“Freedom: To ask nothing. To expect nothing. To depend on nothing.”

-Ayn Rand, The Fountainhead

Welcome to The Golden Sense! Riding on the coat tails of the puppy fashion industry, there’s been an uptick in the number of chicken owners who are dressing their pet hens in knitted sweaters to provide an extra dose of warmth during the winter months. Chicken sweaters are also used by many rescue organizations that take in retired hens to compensate for their lack of feathers caused by overcrowded, traumatic living conditions.

Of course, not everybody believes in accessorizing chickens. Opponents claim that birds are warm blooded and can regulate their own body temperatures, rendering sweaters unnecessary. Proponents disagree, saying sweaters are more than just a fashion statement and are necessary to keep the birds toasty and comfortable in the cold. (Brown 2016)

For some reason when I hear about accessorizing chickens, it instantly reminds me of the United States of America’s financial situation. The guest article for the month updates us on how dire the U.S. financial situation is. No matter how you dress this chicken up, it looks bad.

Written by Simon Black of Sovereign Man:

“Hot off the presses, the US government just published its audited financial statements this morning, signed and sealed by Treasury Secretary Jack Lew.

These reports are intended provide an accurate accounting of government finances, just like any big corporation would do.

And once again, the US government’s financial condition has declined significantly from the previous year.

For 2015, the government reports $3.2 trillion in total assets.

This includes everything from financial assets like bank balances to physical assets like tanks, bullets, aircraft carriers, and the federal highway system.

Curiously, the single biggest line item among these listed assets is the $1.2 trillion in student loans that are owed to the government by the young people of America.

This is pretty extraordinary when you think about it.

37% of the government’s total reported assets are student loans, which is now considered one of the most precarious bubbles in finance.

$1.2 trillion is similar to the size of the subprime mortgage market back in 2008. And delinquency rates are rising, now at 11.5% according to Federal Reserve data.

Plus, it’s simply astonishing that so much of the federal government’s asset base is tantamount to indentured servitude as young people pay off expensive university degrees that barely land them jobs making coffee at Starbucks.

On the other side of the equation are a reported $21.5 trillion in liabilities, giving the government an official net worth of negative $18.2 trillion.

This is down from last year’s negative $17.7 trillion and $16.9 trillion the year prior. It just keeps getting worse.

But there’s one thing that’s even more incredible about all of this.

You see, each year these financial statements are audited by the government’s in-house agency known as the Government Accountability Office (GAO).

All big companies do this. They publish financial statements, which are then reviewed by an independent audit firm.

Auditors are a critical component of the financial reporting process.

It’s their responsibility to make sure that shareholders and the public can have confidence in a company’s financial statements.

When Apple publishes an annual report, auditors go through all the books of the company and make sure that management is accurately representing the company’s true condition.

Thus when an auditor issues a failing grade, or what’s known as a qualified opinion, there’s usually hell to pay.

At the very hint of impropriety a company’s stock price will tank immediately. People get fired. SEC investigations are launched.

And now based on US securities law and section 404 of the Sarbanes-Oxley Act from 2002, senior executives can face criminal charges if their companies receive a failing grade from their auditors.

This is serious stuff.

Yet year after year the GAO gives the federal government a failing grade in its audit report of America’s financial statements.

In this latest report, not only did the GAO chastise the federal government for its “unsustainable fiscal path”, but they state that the federal government consistently fails to prepare “reliable and complete financial information– both for individual federal entities and for the federal government as a whole.”

The Department of Defense, Department of Housing and Urban Development, and the Department of Agriculture are all singled out for their failure to prepare complete and accurate financial statements.

This is corroborated by a report published last year stating that the Defense Department has somehow “misplaced” $8.5 trillion of taxpayer money over the last 20 years.

The GAO cites other material weaknesses in the government’s reporting of supposed cost reductions in Medicare and Social Security.

In all, the GAO calculates that these financial uncertainties total $27.9 trillion, suggesting that the government’s true financial condition is far worse than reported.

Bottom line– if this were a private company, Barack Obama and Jack Lew would be wearing day glow orange jumpsuits in court while facing felony fraud charges.

It’s not just the $18.2 trillion in negative net worth. Or the $41+ trillion (by their own calculations) in the Social Security shortfall.

It’s the fact that they can’t even stand in front of the American people with an honest accounting of how pitiful the financial situation really is.

The government of the United States is totally, desperately, hopelessly bankrupt. And they become even more insolvent with each passing year.

Nearly every single dominant superpower throughout history was eventually consumed by its unsustainable finances. And in their decline from power, bankrupt governments rely on a simple playbook to desperately try to maintain the status quo by every means available.

They destroy freedom. They impose a police and surveillance state. They seize assets. They wage campaigns of violence and intimidation.

They impose capital controls. Cash controls. People controls. Whatever it takes.

This time is not different. The finances of the US government are obvious, as is the trend.

We’re not talking about what ‘might happen’ or ‘could happen’. We’re talking about what IS happening.

And this is not a consequence free environment."

Over and Out

T. Norman







References:

(Black, Simon 2016. Sovereign Man)
(Brown, Steve 2016. Bank Investment Daily)

It's The New Thing

"Change is the law of life. And those who only look to the past or present are certain to miss the future"

-JFK

Welcome to The Golden Sense! A Hungarian team of engineers has been working on a new way to fly the friendly skies. Their invention is called the Flike tricopter, a flying bicycle designed to allow a person or equivalent weight of roughly 220 pounds to reach airspeed of up to 62 mph. Back in May, the Flike got liftoff for about 1.5 minutes—an impressive display you can view for yourself on YouTube. The Flike, which is powered by lithium polymer batteries, offers 15 to 20 minutes of hover flight or 30 to 40 minutes of cruise flight. The contraption is expected to make its market debut in 2016 at a cost of around $200k— comparable to a sports car. In most countries, an ultra-light pilot’s license will allow a flight enthusiast to take the Flike for a spin. (Brown, 2015)

Speaking of flying. The advent of new technology seems to be really taking flight. Most of the new technology is ultimately for the better as it creates more credibility and speed of process for people to interact with each other.

The following article is written by E.B. Tucker, editor of The Casey Report. I thought it was an excellent identification of a trend and I couldn’t leave it off the The Golden Sense.

-As you read this, Wall Street CEOs are panicking. They’re holding secret meetings about a new technology that’s going to change the financial world…and potentially make them obsolete.

Soon, you’ll be reading about this technology on the front page of The Wall Street Journal and The New York Times.

It’s going to radically change how people do business…just like the Internet changed how people share information.

I know these are big claims. Let me explain…

The new technology is called “blockchain.” You may know it as the engine behind bitcoin, the digital currency created in 2008.

You can think of blockchain as the plumbing that makes bitcoin work. But blockchain is not bitcoin.

Unlike bitcoin, blockchain is not a currency, and it’s not money. It’s a technology that’s going to change the way people buy and sell things.

It’s more secure, cheaper, and far more reliable than any system of payment that exists today – including cash, checks, and credit cards.

Soon, you’ll use blockchain to buy a TV, a car, or a stereo. You’ll also use it to buy things like stocks, bonds, and real estate.

Blockchain 101

Blockchain is an “open ledger.” It keeps track of transactions, just like an old-fashioned ledger on a store clerk’s counter.

But the store clerk’s ledger is only for him to see. You’ll need a warrant to see it even if you’re a paying customer. If you do get a warrant, he might change it before you see it.

An open ledger is different. It’s visible to everyone involved in a transaction. Buyers, sellers, regulators, and anyone granted access can see the ledger. Plus, everyone involved in the transaction has their own copy of the ledger on their computer, and all copies must agree. This prevents stealing or fraud.

Here’s an example. When you buy a pair of shoes using blockchain, both you and the seller “broadcast” the transaction over the Internet. Everyone updates their copy of the ledger for your transaction. Then everyone compares ledgers. When there’s disagreement about the content, the most common ledger is accepted as the “truth.”

Then the transaction becomes permanent. The record in the ledger can’t be changed unless all people in the transaction agree to it.

We call this “decentralization”…because it takes the power out of the hands of a single institution like a bank. And it puts the power in the hands of the people doing the transaction.

With blockchain, no central authority or group can manage or manipulate a transaction. And no one can steal things that are secured by blockchain. Not thieves, hackers, or even the U.S. government.

This incredible security is what makes blockchain so amazing.

In 2013, the U.S. government tried to seize over 600,000 bitcoins worth over $100 million. The Department of Justice claimed the owner of these bitcoins was breaking the law.

However, because bitcoins are built on blockchain technology, the bitcoins were worthless to the U.S. government. Only the owner could sell or spend them. If he didn’t agree to the transaction, they could not be sold or spent. Period.

Changing the Way We Buy and Sell

A long time ago, people bought and sold things face-to-face. If you wanted a pair of shoes, you bought them from the town shoemaker.

This changed as technology advanced. Today, you can buy something from China without ever knowing the seller.

Companies like Amazon, the gigantic online retailer, make this possible. In exchange for connecting buyers and sellers and making sure the transactions run smoothly, Amazon generates tens of billions of dollars in sales per year. Amazon is the sixth-largest publicly traded company in the U.S., worth $317 billion.

Or think of it this way. You’re reading a financial newsletter, so you likely buy and sell stocks. When you buy a stock, how do you know the seller actually owns the stock? How do you know he won’t take your money and run? And how does he know you’ll actually pay for the stock?

You may never think about these things. But making sure stock transactions run smoothly is big business for Wall Street. It’s a full-time job for tens of thousands of highly paid lawyers, accountants, bankers, brokers, and custodians. In exchange, we pay them hundreds of billions of dollars in fees and commissions.

In 2008, we saw these “middlemen” collapse. Markets froze up. These pillars of our financial system are not as strong as we thought they were.

Blockchain can replace these middlemen. It’s faster, cheaper, and more secure than the middlemen.

For example, when you place an order with your broker to buy a share of stock, it takes three full business days to “settle” (for you to actually own the share of stock). This means it takes 72 hours to buy, pay for, and officially own a share of stock.

This same process would take less than a minute on a blockchain. It’s like the difference between mailing a letter and sending an email.

And stock ownership recorded on a blockchain isn’t some far-off dream. It’s about to happen right now. Online discount retailer Overstock.com (OSTK) just got clearance from the U.S. Securities and Exchange Commission (SEC) to issue up to $500 million worth of stock on a blockchain. Other companies will follow suit.

NASDAQ announced a blockchain-based stock-trading platform called Linq last year. Other exchanges will follow.

Credit card companies like American Express, Visa, and MasterCard have also invested millions in blockchain. They know the way we buy and sell things is about to radically change. And they don’t want to be left behind.

-The future looks pretty good. One day we may just be flying a bike and buying stocks with our smart phone using a blockchain system.

It all seems cool to me...

Over and Out

T. Norman

References:

Brown. 2015 Bank Investment Daily

Tucker. 2015 Casey Daily Dispatch