Financial Assets

Most readers know that I favor hard assets as opposed to paper assets. By hard assets I mean precious metals, land and things that will hurt you if you drop them on your foot. Paper assets are stocks and bonds.

My position regarding hard versus soft assets is a recent one. Up until probably 2001, I had never owned gold or gold stocks. Until then I had only invested in stocks and bonds. Since then, I gradually left financial assets until now a very small portion of my portfolio (less than 10%) is represented by financial assets. So far, this strategy has worked well, although there are periodic painful adjustments just as in any asset class.

Past success is no indication of future success. While I still believe that is the place to be, it may very well turn out differently. One never knows; one only guesses.

Daniel R. Amerman discusses gold and the difficulties of staying ahead of inflation. His focus, correctly, is on the real after-tax returns that one has been able to achieve. By “real,” the deterioration in the purchasing power of the currency is taken into consideration. He looks at three recent historical periods. Although his article is directed at gold, it applies to the difficulty of generating true real after-tax returns in an inflationary and confiscatory tax environment:

The government’s “game” is more sophisticated than most

More »How Government Steals Your Wealth