4 Steps To Take When Your Emergency Fund Doesn’t Cover Your Emergency

4 Steps To Take When Your Emergency Fund Doesn’t Cover Your Emergency

David Nadelle  Mon, February 17, 2025   GOBankingRates

Having a financial safety net to cover unexpected medical costs, the loss of a job or income, or large expenses, like car repairs or appliance replacements, is essential.

However, while you won’t have to look hard to find tips on starting and maintaining an emergency fund, there’s not a lot of useful information out there to assist you when your emergency fund falls short in covering an emergency

Here are four things to do if an emergency has emptied out your emergency fund.

Stop Spending

When inflation and consumer prices stretch your income to the limit, finding extra money to fund an emergency reserve is difficult. However, it’s generally recommended that you sock away three to six months’ worth of expenses as your emergency fund goal, depending on your lifestyle and living situation.

Hindsight being 20/20, of course, you could have saved more to prepare for an emergency. But financial crises are unforeseen and you can’t live your life sacrificing all enjoyment for the sake of hoarding cash. If you do find yourself without the funds to pay an emergency expense, you’ll need to start cutting back where you can by reducing, pausing or eliminating.

Discretionary spending on new clothes, restaurant outings and indulgent services or subscriptions need to be assessed and excised in times of financial burden. If necessary, temporarily downgrade your cell service or insurance needs and start penny-pinching at the grocery store.

Pay the Minimum on Credit Cards

Not having to rely on credit cards or high-interest loans will help you avoid adding to your debt if you have an emergency fund. But what about existing debt that still needs paying off?

TO READ MORE:  https://www.yahoo.com/finance/news/4-steps-emergency-fund-doesn-190025271.html

Mark Cuban’s Simplest Money Advice That Anyone Can Use

Mark Cuban’s Simplest Money Advice That Anyone Can Use

Jennifer Taylor   Sun, February 16, 2025  GOBankingRates

He’s a billionaire, but many of Mark Cuban’s spending habits are surprisingly relatable. While he owns a private jet, the businessman hasn’t forgotten his middle-class upbringing. Over the years, he’s given plenty of interviews, and often shares money advice that can apply to anyone.

Here’s a look at five of Cuban’s simplest financial tips that you may want to try out.

Live Like a Student

When get your first job, it can be tempting to upgrade your lifestyle, Cuban told Vanity Fair. When he was in this position, he said he was tempted to buy a new car, but didn’t.

Instead, he said he kept his old car, which is decision he’s proud of to this day. Living like a student will keep your bills down, so you can avoid going into debt.

In fact, this advice could be tailored to anyone. If you’re struggling to make ends meet, cut costs by scaling your lifestyle back.

Don’t Use Credit Cards

They’re convenient in more ways than one, but Cuban advised against using credit cards in the interview. Personally, he said he remembers getting calls from bill collectors every two minutes.

If you don’t want to pay with cash, he recommended using a debit card. This will give you the convenience of paying with plastic, without the temptation to overspend.

TO READ MORE:  https://www.yahoo.com/finance/news/mark-cuban-simplest-money-advice-150031872.html

3 Pieces of Financial Advice From Amazon Founder Jeff Bezos

3 Pieces of Financial Advice From Amazon Founder Jeff Bezos Have Stood the Test of Time

Kristopher Kane  Sun, February 16, 2025  GOBankingRates

Jeff Bezos is one of the richest people on the planet, so his insights on wealth creation and management come from a truly unique vantage point. Bezos keeps a low profile compared to some other billionaires, but he has dispensed financial advice from time to time over the years.

His range of strategies and observations are the kind of advice that anyone — from people just beginning their financial journeys to top-tier entrepreneurs and CEOs — can learn from. Here are three of his best pieces of advice that you can apply to your financial planning.

Think Long Term

Bezos is a believer in the “buy and hold” school of thought. Rather than focusing on elusive short-term goals, he focuses instead on more distant horizons. He’s held several investments for 10 years or more.

In the billionaire’s view, a long-term perspective is necessary for success. Success isn’t realized through immediate gains and risky investments but through assets and objectives achieved over time.

Focus On Cash Flow

Bezos emphasizes the importance of keeping your eye on the bottom line. In a 2004 letter to Amazon shareholders, he wrote, “Our ultimate financial measure … is free cash flow per share.”

While he was referring to Amazon’s business model, this translates to personal finances: The value of your investments or savings is linked to — if not dictated by — the state of your current and forecasted cash flow.

An increase in income translates into a greater ability to take advantage of lucrative investment opportunities or bolster existing savings. Improving your future cash flow increases your ability to save or invest more effectively, which positions you in the long term to realize optimal returns on investments.

TO READ MORE:  https://www.yahoo.com/finance/news/3-pieces-financial-advice-amazon-120035808.html

Is This the Biggest Heist of All Time?

Is This the Biggest Heist of All Time?

Notes From the Field By James Hickman (Simon Black) February 11, 2025

We recently received a question from a reader asking for my thoughts on crypto.

He said we’ve been talking about gold a lot lately, the gold price, and how the price could go a lot higher. Shouldn’t we hold the same views on crypto, given everything that has happened with Bitcoin over the last year or so?

We ended up doing a whole podcast about this today, We talk a lot about gold, and a lot about crypto. To clarify, I’m not anti-crypto. In fact, I brought Bitcoin to our audience’s attention back in 2013, when the price was under $100.   But there are some differences to gold.

Right now, I think there are some major catalysts that could drive the price of gold much higher. It’s a matter of arithmetic, and we walk you through the math on it.

The other important thing is that while gold is at an all time high, gold related businesses have been in the dumps for a long time. And that’s a bizarre anomaly that is simply not going to last.

Conversely, that same dynamic doesn’t seem to exist with crypto related businesses.

And we talk about, in today’s podcast, Microstrategy, as perhaps the best example.

This is essentially now a Bitcoin holding company, with 478,000 Bitcoin, valued at around $45 billion. Yet Microstrategy’s market cap is almost double that.

So if the point is to buy Microstrategy stock as a proxy for Bitcoin, you’re actually paying double the price.

Versus with gold, we have the opportunity to pay less than two times forward earnings for gold companies that have an all in production cost of $1,500 per ounce— roughly half the price of gold.

So it’s a completely different dynamic, and we explore all this and more in today’s podcast.

We even talk about the Microstrategy convertible notes, and why it’s frankly wildly inappropriate at this point to even compare “crypto” and gold.

You can listen to the podcast here.

(For the audio-only version, check out our online post here.)

To your freedom,  James Hickman   Co-Founder, Schiff Sovereign LLC

https://www.schiffsovereign.com/podcast/is-this-the-biggest-heist-of-all-time-podcast-152072/

With Gold At an All Time High

With Gold At an All Time High, This Gold Company is Still Insanely Cheap

Notes From The Field By James Hickman (Simon Black) February 10, 2025

And almost on cue, gold is at another all time high today and rapidly closing in on $3,000 per troy ounce.

It’s not hard to understand why.

We’ve been talking about this for quite some time— foreign governments, central banks, and even some large foreign corporations now are trading their dollars for gold. And that’s going to have some unfortunate, negative consequences for the US.

I’m sincerely pulling for Elon and DOGE. I really am. And I think they’ve got a great shot at cutting hundreds of billions of dollars from the federal budget. These guys aren’t messing around and have no qualms about cutting everything that doesn’t make sense.

I also hope Congress and the White House find the courage to make critical reforms to Social Security (though I am less optimistic about that one).

And the final piece to the puzzle of getting America back on track, of course, is slashing regulation and getting back to capitalism. There certainly seems to be a lot of momentum in this direction.

The math is pretty clear: if they manage to succeed at these key challenges, then there is a good chance for the US to grow its way out of debt. But even that is going to take many, many years.

In the meantime the Treasury Department will still need to rely heavily on foreigners to buy (and continue to hold) US government bonds.

I’ve explained before that foreigners own roughly half of all fixed-rate, “marketable” US government debt. So they’re a pretty important lender.

And in order for this turnaround plan to work, the Treasury Department will need those foreign bondholders to keep investing and reinvesting in America’s national debt.

But right now there are a lot of foreign countries that are deeply concerned about holding US Treasury securities. This administration has already threatened even its friends and neighbors with tariffs, and the last administration had an endless fetish for sanctions.

Think about it like this: imagine you hold a good chunk of your money in a faraway bank, and your banker was constantly threatening to freeze your account and cut off access to your funds.

Sure, maybe it’s a very nice and prestigious bank. But after so many threats, would you still keep all of your money there? Would you still want your paycheck direct deposited into that bank, month after month? Or would you start looking around at alternatives?

That’s what’s driving the gold price right now. Foreign governments and central banks are wary about holding official US securities, gold is the most viable alternative. Just like dollars, gold has universal marketability— no central banker is worried about whether they’ll ever be able to sell their gold.

Plus virtually every other government and central bank owns gold, which means it can already be used to settle current and capital account deficits if necessary.

Concern over sanctions, inflation, and America’s gargantuan national debt led foreign officials to buy up more gold over the past couple of years. Overall, they made roughly $80 billion in excess gold purchases in 2023-2024, causing the gold price to jump from about $1,800 to over $2,900.

$80 billion is a drop in the bucket for foreign governments and central banks; they have 100x that much worth of US dollar reserves.

So if $80 billion of excess purchases resulted in a $1,000+ price jump in the gold price, what will happen if they buy $1 trillion or more in gold? That’s the potential scenario that could play out.

Either way, gold is at an all-time high today. But, quite bizarrely, gold-related companies are still at ridiculously cheap levels.

To give you an example, there is a company we presented not long ago to subscribers of The 4th Pillar, our premium investment research service; it’s a profitable gold company with an excellent, clean balance sheet, very little debt, and strong growth. In fact the company even pays a healthy dividend to shareholders.

Yet when we published our research on the company, it was only valued at a mere 5x Free Cash Flow. That’s practically nothing.

The stock has now more than doubled in price as some investors are starting to realize what we discovered and presented to our subscribers many months ago.

But even now, because current and projected earnings have continued to increase, the company is still extremely undervalued even though it doubled in price.

We still see a number of similar opportunities, i.e. gold-related businesses that may be paying strong dividends, have debt-free balance sheets, and are profitable, yet still trade at outrageously low valuations despite gold’s all-time high.

Another report we sent out to our premium subscribers just last week profiled an undervalued gold mining company that has an all-in production price of just $1,500 per ounce. And yet the business is valued at TWO times its expected earnings this year.

It’s really unusual to see such an anomaly, and it almost certainly will not last.

To your freedom,  James Hickman   Co-Founder, Schiff Sovereign LLC

https://www.schiffsovereign.com/trends/with-gold-at-an-all-time-high-this-gold-company-is-still-insanely-cheap-152066/

10 Money Rules To Build Life-Changing Wealth

10 Money Rules To Build Life-Changing Wealth, According to Ramit Sethi

Diana Kelly Levey GOBankingRates   Sun, February 9, 2025

You probably have a few money rules that you made for yourself, like setting a budget when you go clothes shopping, never looking at the menu prices when you eat out or setting aside a certain percentage of your income for savings.

Podcaster, author and financial guru Ramit Sethi isn’t shy about voicing his thoughts on money, particularly when it comes to “money rules.” In a video from his YouTube Channel, “I Will Teach You To Be Rich,” Sethi dove into his top 10 money rules for building life-changing wealth.

As Sethi noted in the video, these are his rules. They make him feel happy and secure, and they allow him to continue building wealth. They won’t all work for us — ahem, most Americans can’t afford to buy a house in cash — but you should be able to find ideas from which you can borrow philosophies to help develop and formulate your own unique money rules.

Set Aside a One-Year Emergency Fund

Sethi acknowledged that he’s one of the few personal finance experts to suggest something that extreme — or should we say conservative? Most money experts recommend an emergency fund to cover three to six months’ worth of expenses.

The U.S. Bureau of Labor Statistics found that Americans spent about $73,000 in 2022, up about 9% over the previous year. If piling up $73,000 for a one-year emergency fund sounds daunting, start small. “If something really bad happens, I have extra cash available to tide things over,” Sethi said.

Apply the Rules of 10 and 20

Sethi said he saves 10% and invests 20% of his gross income at a minimum. In his book “I Will Teach You to Be Rich,” Sethi suggested saving 5% to 10% and investing 5% to 10% as part of a conscious spending plan (aka a budget).  So why are his money rules different?

You need to increase the amounts you save and invest as you earn more money, he suggested. If you followed the popular 50/30/20 rule, 50% of your money would go to necessities, 30% to discretionary items and 20% to savings. How you’d want to split that up between emergency funds, general savings and investing is personal.

Pay In Full for Large Expenses

This money rule suggests you have enough money set aside that you’re able to pay in full for large expenses, such as a wedding or a house. As part of this, Sethi has adopted a no-debt policy in his household. And yes, he said he started saving for his wedding before he ever met his now-wife.

Why so strict on this money rule? “I don’t want cost to be the first reason to make a decision, the second or even the fifth,” Sethi said.

Never Question Spending On Books, Appetizers or Charity

TO READ MORE:  https://www.yahoo.com/finance/news/10-money-rules-build-life-160025454.html

7 Money Habits That Can Make or Break You

7 Money Habits That Can Make or Break You

 Credit.com    Yahoo! Finance/Thinkstock -

Why do you keep buying things you can’t afford? It makes no sense: it’s not rational. Nobody wants to be in debt.

The answer is simple: debt problems are emotional, not rational. Debt results from unconscious habits and attitudes that cause you to spend more than you can afford.

In other words, everyone knows the first law of finance is to spend less than you make. That is how you stay out of debt. Unfortunately, knowing what to do and actually getting it done are two different issues.

That’s why being on the right side of these seven financial practices is critically important to your financial success. They can close the gap between knowing what to do and actually getting it done – simply by changing your daily habits. It is the easiest way to solve your debt problems and begin building wealth.

The good news is this means you have the power to improve your financial situation no matter where you are at today. You created your habits, and your habits produce your long-term financial results. That means you’re in charge and have the power to make positive changes.

Consider the following seven financial practices that can take you to debt or wealth. The habits you choose will determine your financial success or failure.

1. Emotional Spending

Here is a simple test to determine if you’re an emotional spender:

    Do you use shopping to relieve stress or escape boredom?

    Do you use shopping as a pick-me-up or entertainment?

    Do you celebrate by shopping for a treat?

    Do you ever shop as a form of “retail therapy?”

    Do you use shopping for social connection?

    Do you have clothes in the closet with the tags still attached?

    Do you have more than one of the same item?

    Is your credit card bill so large that you can’t afford to pay it off at the end of the month?

    Do you ever feel an endorphin rush when making a purchase?

    Do you experience anxiety, guilt, or remorse after shopping?

    Do you ever hide purchases from friends or loved ones?

If you answered “yes” to one or more of these questions, then you might have an emotional spending problem.

Emotional shoppers become addicted to the temporary endorphin high that comes from buying. You’re genetically programmed to pursue what makes you feel good, turning spending into a physiological habit like a drug. That’s why excessive spending is about the emotional experience from buying stuff and not the stuff itself.

The purchase brings temporary yet immediate gratification (even if it causes debt).

The wealthy habit is to spend based on needs — not wants — and to plan purchases rather than buy spontaneously. A good habit for breaking emotional spending is to force a two-day cool-off period for all non-planned purchases so your emotions can settle down. If you still want it after two days then it may actually be worth buying.

2. Addiction

Closely related to emotional spending is addiction, but this can be an addiction of any kind — not just shopping. Gambling, drug and sex addictions are highly destructive — both financially and otherwise. The ensuing debt spiral may be the least of your worries but is often a consequence.

TO READ MORE:  https://www.credit.com/blog/7-money-habits-that-can-make-or-break-you-64863/

How to Buy Gold at Just $1,500 an Ounce

How to Buy Gold at Just $1,500 an Ounce

Notes From the Field By James Hickman (Simon Black)  February 5, 2025

In the late 1990s, the Internet was brand new... and sizzling hot. And most people thought it would bring radical change to the world, practically overnight.

This is a common theme with disruptive technology. Enthusiasts often overestimate the impact of new technology in the short run, and underestimate its impact in the long run. Such is the case with AI today.

But the euphoria over the Internet in the 1990s compelled investors to pour money into Internet startups— companies with no profits, no cash flow, and no real business model.

In fact, a joke emerged from this era which perfectly described many of these infamous dot-coms: “We lose money on every sale, but we make up for it in volume.”

But it didn’t matter. Dot-coms were the meme companies of their day. And even the most ridiculous businesses that claimed to have anything to do with the Internet commanded outrageously high valuations.

Meanwhile, actual real businesses that didn’t have anything to do with the Internet, like boring old ExxonMobil, were completely ignored by investors.

Exxon was a great example because oil prices at the time sat at a modest $30 per barrel, and most people simply assumed that oil would stay cheap forever. So Exxon traded at just 11 times earnings, generated over $17 billion per year, and even paid a healthy dividend to the shareholders who had the foresight to own it.

Common sense eventually prevailed, and all of the pie-in-the-sky dot-coms went to money heaven. And the real businesses, like Exxon, survived the hype cycle and prospered.

Today, there are plenty of super sexy businesses which have become incredibly popular with investors. A lot of them are really overvalued.

And just like Exxon back in the late 1990s, nobody is paying attention to other profitable, extremely undervalued, real asset businesses.

Personally I think oil could get a lot more expensive from here. And there are some really undervalued oil companies to consider, just like there were in the 90s.

But the really obvious example I want to talk about today is gold.

Gold is still hovering near its all time high. And as we’ve discussed many times before, there are a number of catalysts which could drive the price much higher from here.

There has already been a coordinated effort by several countries to de-dollarize.

BRICS— Brazil, Russia, India, China, and South Africa— hold conferences explicitly discussing how to move away from the US dollar. And both the amount of global trade in dollars, as well as the share of American dollars held as reserves by central banks, has been steadily declining.

Central banks and foreign governments own trillions worth of US dollar reserves. And the reason the gold price reached this all time high, is because those foreign governments and central banks traded a tiny percentage of their dollars for gold.

That additional demand was enough to send the gold price soaring to almost $3,000.

So if this anti-dollar trend continues—or even accelerates— we could see $5,000 or even $10,000 plus gold.

These foreign governments and central banks, however, only buy physical gold. They do not buy shares in gold companies.

So while the gold price is near its all time high, gold companies are trading at ridiculously low levels.

Here’s a great example.

The company that we’re profiling in the upcoming edition of our investment research newsletter, The 4th Pillar, is one such undervalued gold business.

It’s a mining company with outstanding properties and a fantastic long term earnings horizon. It operates in an absolutely tier-one jurisdiction with minimal geopolitical risk— i.e. not the Congo or Nicaragua.

Its balance sheet is pristine with no debt. Yet they have a very strong cash position.

Due to their operating efficiencies, their production cost is quite reasonable at around $1,500 for every ounce of gold that they mine.

Yet the market is valuing them at a low, single digit multiple.

I would encourage you to check out our research to find out more.

I think it’s well worth the price of a subscription— especially because right now we’re having a limited time promotion on The 4th Pillar.

The full report on this particular gold company will be sent to 4th Pillar subscribers over the next few days.

To your freedom,  James Hickman   Co-Founder, Schiff Sovereign LLC

https://www.schiffsovereign.com/trends/how-to-buy-gold-at-just-1500-an-ounce-152049/

10 Money Questions I Was Too Embarrassed To Ask

10 Money Questions I Was Too Embarrassed To Ask | Biggest Finanical Mistakes | How To Increase Earnings

Last Updated: August 16, 2022

At age 18 I took out a HUGE college loan… and wasted the leftover money on beer.

At age 19 I got my first credit card… and promptly missed the first payment.

At age 22 I bought my first truck… with an insane interest rate.

Now you may have been born with a degree in finance… but I wasn't – I had to learn everything through the school of hard knocks.  And I was too embarrassed to ask for help.  If I could go back and tell my younger self what to ask… these would be the 10 questions.

1. Am I Being Greedy?

Some of you may think you’re “obligated” to spend. It’s rooted in a belief that saving equals greed. You justify splurges as redistributing wealth. I’m afraid this mindset is warped. Spending less doesn't mean stealing from people don't earn as much as you.

Take my company for example. All the wealth tied to RMRS comes from the value I’ve created. My readers and subscribers find value in the 2000 articles, 700 videos and 200 infographics that my company has made. Advertisers see my content as platforms to promote their products. This value literally comes from nothing. And it's unlimited.

The answer:

No. There’s nothing wrong in finding alternative ways to earn. We must remember that many self-made millionaires these days created value out of thin air. No one was forced to buy their products. People valued them.

2. Can I Afford This Or That?

You receive your month’s pay and feel good. You’re tempted to spoil yourself – perhaps with that motorbike you always wanted? I know you’re checking your balance in the bank. That’s the wrong question to ask.

Obviously most of us would love a nice house and other luxuries. But now’s the time to focus on delayed gratification. It’s not whether you can afford the item in question. It’s really about thinking long-term – seeing more important things ahead.

The answer:

No. Replace the original question with “Could I afford it if I were to pay cash?” This helps you save and set aside money through every “No” that comes about. There’s no need to overthink. It’s automatic. You’re better off with a similar item that's used/secondhand for the meantime.

3. How Many Credit Cards Should I Have?

If you’re part of the majority who struggle with credit card debt, think about it. Wouldn’t life be easier if you didn’t have that many cards? Especially those with high-interest rates?

The desire to save is one thing. Making it happen is a whole different deal. You have to get rid of the obstacles. Less is more.

The answer:

To each his own – it’s you who knows how many credit cards you need to manage your money responsibly. The ideal cards only handle payments when debit cards aren’t accepted. They’re tools for convenience, not for impulse buying. I personally stick with just two.

https://www.realmenrealstyle.com/10-money-mistakes/

https://www.youtube.com/watch?reload=9&v=8n14tPHfHcA&feature=youtu.be

This Trade War Might Be The Straw That Breaks The US Dollar’s Back.

This Trade War Might Be The Straw That Breaks The US Dollar’s Back.

Notes From the Field By James Hickman (Simon Black)  February 3, 2025

It was early spring in the year 1171 AD when Byzantine Emperor Manuel I Komnenos decided to go to war against his much smaller ally-- Venice. And the historical record shows that it was a really bad idea.

The Byzantine Empire was still a vast and powerful state by the late 12th century. But it was becoming obvious to anyone paying attention that they were in serious decline.

The Byzantine treasury was almost always empty. Imperial debt was piling up left and right. Byzantine borders were constantly being invaded by Muslim hordes. And the imperial coin-- the gold solidus-- was beginning to fall out of favor as the dominant currency for international trade.

Perhaps most importantly, there were a great deal of inexperienced or incompetent Emperors who stood by and did nothing while adversaries exploited imperial weakness.

One bright spot in Byzantine foreign relations was with the Republic of Venice; and over time the two cultivated a strong friendship, and enjoyed significant trade and military cooperation. When the Byzantine Empire went to war, for example, Venice would often provide naval and maritime logistics support.

Trade was so strong between the two, in fact, that thousands of Venetian merchants moved permanently to Constantinople.

But it all came to an end in March of 1171. The Emperor very suddenly changed his tune on Venice and started viewing them as rivals who were taking advantage.

To be fair, Venice was definitely a rising power at the time. But they were a pipsqueak compared to the size and strength of the Byzantine Empire… and the Venetians in no way wanted a conflict. They got one anyway.

That spring, Emperor Manuel imprisoned as many as 10,000 Venetians in Constantinople. He also confiscated their assets, properties, and businesses.

The ruler back in Venice (coincidentally known as “the Doge”) tried to negotiate a peaceful, diplomatic solution. But in the end, a war between the two broke out. And while direct military conflict was quite limited, the economic and trade warfare seriously wounded both powers.

In retrospect the long-term consequences were clear: the Byzantine Empire lost a supportive ally, essentially pushing Venice into the arms of Western European powers. The Empire also never quite recovered the lost trade and economic opportunity costs from the war.

That’s because all war-- whether a shooting war or trade war-- is expensive. There are very, very few instances in history in which a nation benefited from prolonged war. In fact, the last guy to consistently wage ‘profitable’ wars was Napoleon… and he understood the key was to end it as quickly as possible.

Maybe that’s the strategy in this new trade war today. Maybe the whole idea is to show people that you’re not afraid to make good on your threats… to show that you’re not bluffing… and that everyone should run to the negotiating table immediately.

Perhaps. But it’s been well-documented that a long-term trade war, i.e. tariffs on goods imported from Canada and Mexico, will be incredibly expensive. Canada sends energy to the US. Mexico sends food. If there are two things that US citizens don’t need to become more expensive, it’s food and fuel.

The rough calculations show that American households will pay a few thousand dollars per year more. Most people can’t afford that, nor are they particularly inclined to try.

The optimists say that America doesn’t need to import any of that stuff, and that “we can produce everything we need at home”.

OK, that’s sort of true. The US has the capability to produce almost everything if it really had to. But to borrow from the great philosopher Chris Rock, “You could drive with your feet if you really had to. But that don’t make it a good f***ng idea.”

Every country, every economy in the world has a finite amount of resources-- workers, raw materials, capital, land, etc. And in a free market, those finite resources are put to their best and highest use… because that’s what generates the most profit, i.e. the most wealth and prosperity.

No one puts resources to work making socks and underwear if they could put those same resources to work developing disruptive technology. And the US economy has that option-- producing goods and services of extremely high value (including technology).

This has been a key driver of wealth in America.

But suddenly having to divert limited resources to something less valuable consequently means… less wealth and prosperity. Bottom line, trying to produce everything at home requires misallocating economic resources into less profitable, less prosperous industries.

And the opportunity cost of doing that cannot be overstated.

There’s another, even bigger problem, though.

The US dollar is already in trouble. Plenty of countries have already started to line up against the dollar; and as we’ve discussed in the past, foreign central banks have started ditching the dollar to buy gold instead.

This is a big problem for the US government; the Treasury Department desperately needs foreigners to keep funding America’s massive budget deficits. And even if the budget deficits miraculously disappear, America still needs foreign nations to hold on to the US government bonds they already own.

Threatening (and then actually following through) with tariffs will only make foreign countries less inclined to own US dollars.

Secretary of State Marco Rubio even admitted this weekend that within five years, “there will be so many countries transacting in currencies other than the dollar that we won’t have the ability” to impose sanctions or tariffs.

Less demand from foreign governments and central banks to own US dollars ultimately means higher inflation and higher interest rates across the board-- including higher mortgage rates. So more expensive food. More expensive fuel. And more expensive housing.

Again, this trade war might be a ploy designed to force everyone to the negotiating table… and perhaps they expect it will be over in a matter of days or weeks. But that’s a risky assumption.

A century ago, the ‘experts’ back in 1914 assumed that World War I would be over in a few months, and that the troops would “be home before the leaves fall from the trees” (according to what Kaiser Wilhelm of Germany reportedly told his soldiers departing for the front line).

This, too, may be long and costly. But even if it's short, declaring war on your own ally could easily create lasting consequences for America by accelerating backlash against the dollar.

To your freedom,    James Hickman  Co-Founder, Schiff Sovereign LLC

https://www.schiffsovereign.com/trends/this-trade-war-might-be-the-straw-that-breaks-the-us-dollars-back-152034/

This Will Likely Be A Really Big Deal For Gold

This Will Likely Be A Really Big Deal For Gold

Notes From the field by James Hickman (Simon Black)  February 4, 2025

Well that was fast.

The smoke had barely cleared on the opening salvo of the Great North American trade war, when all sides called a truce to talk out their differences.

Just as we wrote yesterday, this is exactly what I was hoping would happen. In fact, in a Zoom call that Peter and I had Friday with our Total Access members, we predicted this outcome: that the trade wars were just an elaborate show to demonstrate to the world that America is willing to make good on its threats, and force everybody to the negotiation table.

There may be some short term benefit that comes from this. But as we said yesterday, there will likely be some long term consequences and here’s why:

According to Federal Reserve data, there will be roughly $28 trillion worth of US government bonds maturing over the next four years, i.e. now through the end of 2028.

That’s more than 75% of the government’s $36+ trillion national debt.

This is an absolutely staggering figure, averaging $7 trillion per year for the next four years.

And remember, we’re just talking about the existing debt that is set to mature. It doesn’t even include new debt that has to be issued over the next four years, which could easily be another $7-10 trillion.

This is an enormous problem for the Treasury Department, because they clearly don’t have $28 trillion to repay those bondholders.

Now, usually whenever a government bond matures, the investor might simply roll the proceeds into a new government bond. In other words, the old bond matures, and the investor puts the entire principal and interest into a new bond at whatever the higher interest rate is today.

This alone is going to cost the government a lot of money, because most of the bonds that are maturing over the next four years were originally issued 5, 10, or even 20 years ago, when interest rates were much, much lower.

So let’s do the math: if the government issued $28 trillion in the past at an average interest rate of 3%, but now they’ll have to refinance all that debt at a new rate of 5%, then effectively they’ll be paying an extra 2% per year.

That’s almost $600 billion in additional interest EACH YEAR on top of the $1.1 trillion interest bill that they’re currently paying. But even that might be wishful thinking.

And the reason why is, if you look at America’s public debt, the investors who buy those bonds are split pretty evenly between US entities (the Federal Reserve, American companies, US individual investors) and foreign investors (foreign government, central banks, multinationals).

This is critical to understand: the Treasury Department relies very heavily on foreigners to buy US government bonds and help fund the national debt.

At the moment, most countries around the world have to buy US government bonds simply because the US dollar is still the world’s dominant reserve currency. So they are essentially forced to hold US dollar assets, and Treasury securities are still the most liquid US dollar assets in the world.

Yet for the past several years there has been a significant movement underway by a number of countries to engage in trade and commerce without using the dollar. And this movement is growing.

I mentioned in my letter to you yesterday that the brand new Secretary of State Marco Rubio acknowledged this over the weekend, suggesting that the dollar’s dominance could be seriously diminished within five years.

Facing the constant threat of sanctions and tariffs will only motivate Brazil, Russia, China, India, and even many countries in Europe, to accelerate their diversification away from the dollar, and away from the United States.

The natural beneficiary of that trend will be gold.

We’ve written about this extensively. Gold rocketed to an all time high last year because central banks, and foreign governments, were reducing their dollar holdings.

And think about it. If you’re a foreign central bank and you have $100 billion of US government bonds that are about to mature, what are you going to do?

Are you going to reinvest that entire $100 billion back into a country that might already be threatening you with economic penalties?

Or do you quietly let the treasuries mature, take the money, and find someplace else to invest that $100 billion?

A lot of foreign governments and central banks are going to be giving serious consideration to option two.

But they are going to have to invest that money in an asset that, like US dollars, is widely accepted, and has universal value and marketability around the world.

Gold is one of those assets. And that’s why central banks have been buying so much of it for the past couple of years.

I think there’s an obvious case to be made, given the prospects of tariffs and further trade wars, or even just the threats thereof, they are going to keep buying gold and send the price even higher.

So if you’re interested in hedging against future risks to the US dollar, gold makes a lot of sense.

But on a final note, I’ll point out as I have in the past, that foreign governments and central banks buy gold. They do not buy shares in gold companies.

And right now there is a bizarre financial paradox in that gold is at an all time high, but thriving, profitable businesses which produce gold are trading at absurd discounts.

And we’ll talk about some examples over the next few days.

To your freedom,  James Hickman   Co-Founder, Schiff Sovereign LLC

https://www.schiffsovereign.com/trends/this-will-likely-be-a-really-big-deal-for-gold-152041/