Jim Sinclair's GOTS list

For your convenience please see Jim’s GOTS check list:

1. Your equities are held in certificate form.
2. You have no Federal retirement funds.
3. You have no CDs and investments in bonds.
4. You have modest money deposited among selected BRICs countries.
5. You store your own precious metals.
6. You have no mortgage obligations.
7. You keep cash on hand for 6 months expenses.
8. You have no consumer debt at all.
9. You have a small hobby farm for protein and veggies outside of where you are living with no mortgage debt, set up green.
10. You have a gas, diesel or electric car with high fuel mileage for the farm.
11. You have a generator with large fuel capacity for the farm.

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pmbug said:

In a hyperinflation or currency devaluation, the buying power of your income stream gets hammered. As a result, the percentage of your income used to pay for normal living expenses will skyrocket. You will have less discretionary funds left over to pay down debts.

Rarely does the risk-reward math favor buying an investment (for a potential % gain over time) versus paying down debt (for a guaranteed saving of high interest expense). Would the value of PM in the hand rise significantly enough to overcome the loss in purchasing power of a hyperinflated/devalued currency to allow for both supplementing daily living expenses and paying down debt? Who knows. There is no guarantee that the market framework (ie. capital gains taxes, sales taxes, etc.) will remain stable.

Anyone who understands the "bird in the hand" parable can see that the conservative move is to get rid of debt now.

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