' How long could you live off your savings and investments? Two weeks, two
months or two years? What if you were suddenly unemployed? These are
critical questions to discuss with your family immediately.
According to the top experts, the Year 2000 Crisis will change the economic
landscape of the U.S. (and the world) for many years to come. Dr. Edward
Yardeni, a highly respected Wall Street Economist, sums up the Y2K Crisis
best: "Plan for the worst, and hope for the best." The Chinese word for crisis
has a double meaning — danger and opportunity — the primary difference is
early risk management. It is imperative that long before the Y2K Crisis, you
protect your assets in several ways. The first step is to take an inventory of
your financial assets and start your own Y2K bank. Determine how much
cash you will need to maintain your household for a minimum of two to six
months. If possible put that amount of cash away in a safe place. If you are
like all too many Americans who live hand to mouth, begin saving at least
10% of your income in a Y2K Piggy Bank while also accumulating food and
water. This may require some sacrifice, including taking on a second job, but
the alternative of being dependent upon family, friends, or government is
even less appealing to most. Many Y2K experts advise pre-paying your bills
two to three months in advance beginning in late fall 1999.
Next, contact all your financial institutions and brokers to request a hard
copy of all financial assets and liabilities. Your banker, stock broker, real
estate broker, etc. should be willing to provide these at no cost as well as a
letter stating their progress on Y2K Compliance. Most major banks are well
on their way to fixing their systems. But more than a fair number are lagging
behind, especially midsize and small banks. Says George R. Juncker,
vice-president of the Federal Reserve Bank of New York: "I think
definitely...some just won't be open for business on Jan. 3, 2000."
Dr. Edward Yardeni predicts that from 5% to 20% of banks will fail as a direct
result of the Year 2000. Eugene A. Ludwig, head of the OCC, expressed
concern that small community banks, with 16% of national bank assets, were
behind on their 2000 programs. According to the OCC, 20% were just starting
to address the issue in Spring of 1998.
Then there's the public perspective: "There may be movement to the high
ground as we move closer to 2000. Meaning... if you are heavily reliant upon
a [smaller] bank, you might want to have a relationship with a major player,"
says Steve Sheinheit, a senior vice-president and head of corporate systems
and architecture at Chase Manhattan Bank, the nation's largest.
But even large banks that achieve Y2K compliance may suffer from a crisis in
confidence. In one study, 38% of information-technology professionals
surveyed by Gartner Group Inc., a technology consulting firm, said they may
withdraw personal assets from banks and investment companies just prior to
2000.
What if the banking system or U.S. dollar should fail? Without the intrinsic
(or substantive) value provided by gold and silver, all currencies are mere
confidence games. Former Federal economist John Exter refers to all
post-1965 currencies as "IOU Nothing" money. Therefore, if the public loses
faith in the government, the value of government-issued money can plummet
overnight. Digital cash — the kind stored in your checking or savings
account, CD's or credit cards — could become completely inaccessible if the
computers go down for very long.
The next step is to diversify your assets. This is a very personal decision
that should take many factors into consideration. This is why your
investment professional should be consulted. If you don't have confidence
in their Y2K strategy, get another advisor. There will be a lot of money made
and lost as a result of Y2K and prudent planning is the key to protecting
your assets and staying ahead of the Y2K curve.
During an extended crisis, the first form of "currency" that usually surfaces
is barter. People begin trading with one another ad hoc for the goods and
services they need. After a while, a few items become the predominant
medium of exchange. In the past, these have included cigarettes, ammunition,
and tangible commodities. The economic earthquake caused by Y2K could
send us into a global recession or depression, followed by a bout of
hyperinflation. In either case, tangible assets offer wealth insurance.
Gold and silver coins are portable, liquid, and private — all important
elements in a crisis. There are three kinds of gold and silver coins: 1) Newly
minted gold and silver bullion coins, such as the American Eagles, or the
Canadian Maples Leafs, etc.; 2) "Junk" silver coins, (pre-1965 dimes,
quarters, half-dollars) that have been circulated and consist of 90% silver;
and 3) Numismatic (or rare) coins that have a collector's value above and
beyond the value of the metal contained in them. Historically, collectibles like
fine art, first edition books, and numismatic coins have maintained their value
during periods of crisis, and in some cases, escalated to extremely high
values.
For most barter purposes (as opposed to investment purposes), junk coins
are probably the best. The problem is the volume and weight of junk silver.
Junk silver is good for small day-to-day transactions, but inconvenient for
buying a parcel of land. Gold bullion coins are about fifty times more
valuable than silver by weight today, making gold coins ideal for larger
transactions. If you have a good deal of wealth that you want to transfer
safely from one side of the crisis to the other, then you should definitely
consider U.S. numismatic coins. According to Forbes Magazine (11/97) "Rare
coins offer privacy from government snoops" and are also portable, liquid,
and provide long-term wealth insurance against an inflationary spiral. A
balanced Y2K-proof portfolio should include a diversity of gold and silver
coins.
The good news is that you don't have to be wealthy to start converting your
assets into tangible hard money assets. You can get started for as little as
$100. A reputable dealer who offers a two-way market (buy and sell) and
guarantees physical delivery is your best choice. After you diversify into
tangibles, carefully consider how to safely store them out of harm's way.
y2knet.com |
