Inside the Sovereign Mind By Jeff D. Opdyke, Editor, The Sovereign Individual Dear Sovereign Investor, Each week, we receive a huge number of questions and comments from our loyal readers. We do our best to respond to as many as we can. But here's a glimpse of our most interesting and more outrageous. - Paid-up member Robert K, from Massachusetts, writes: "Of course, Detroit's demise had nothing to do with the fact that management insisted on producing fat, gas-guzzling, over-powered, poor-handling cars that the market did not want. The customer had no choice but to turn to European or Asian makers who cared about providing what the customer wanted. Ponder this. If unions are the problem why is Germany, with strong unions, the only healthy export-based economy in Europe? Working people did not bring down the auto industry. Blaming blue-collar worker equals class warfare. The investor class has had its way, and look what we have now. Take my email off your list."
Jeff Opdyke replies: Before you close the door, you should do some homework on German unions. Though they have the power to strike, they rarely do so because they recognize that is counterproductive to the company that gives them a paycheck. The processes for achieving better pay and benefits are civilized in Germany - not the rancorous, aggressive, kill-the-chicken-despite-the-eggs-it-lays crap that U.S. unions routinely pull. Management in America is absolutely at fault, too. But German workers and management have an entirely different rapport than you find in America. Moreover, German wage growth vs. productivity is a different animal than in America, where unions regularly balk at new work processes that improve efficiency and reduce costs. So your comparison isn't fair.
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And we're not blaming blue-collar workers for anything. They're the backbone of America ... and America needs more of them to compete against low-wage Asia. We're blaming union demands over the decades for far too much pay and benefits (and, yes, management is stupidly paid, too). A worker's wages should not rise just because another year has passed. Seniority should never determine a worker's position or value to a company. Pay and position are merit based - period. Any organization that mandates membership just to get a job ought to be outlawed across the land, because that undermines the very ideals of personal freedoms.
See you later, Robert. - Paid-up member John C., in NY, writes: "Loved this (last) issue and with your permission, I would like to forward the first part of it to some of my Liberal friends so that they can see what this current government is doing to us. P.S. I bought a bunch of LNG (Cheniere Energy) in 2011 for $7.38 and watched it do nothing for a while, even go down to $4. But I'm smiling very nicely now. Thank you so much!"
Jeff replies: John, thanks for the note. We absolutely encourage you to pass along whatever we write. The more who read our views, the better the chance that something we write makes it into the hands of someone who can make a difference in Washington.
As for Cheniere, glad to hear you heeded our advice. We've more than doubled our money in a year ... and anyone who followed my recommendation in early-October when I wrote that temporary market insanity was giving us an incredible opportunity to buy LNG at $4 is now up more than 250%. It was always a game of patience, as I routinely stress... - Paid-up subscriber J.P. writes: "Does it make any sense to sit on cash and wait for markets to settle down before re-investing?"
Jeff replies: J.P., sitting on cash - particularly a bank money-market account - makes sense if you fear a coming recession/depression. I don't share that view right now. I would rather put money to work in either large-cap multinationals that are doing well or in small-cap U.S. stocks that generate most of their earnings overseas.
Clearly, you should have some cash. But I do think you need to diversify your cash away from just the U.S. dollar. I would have some of my cash in a currency like the Singapore dollar. You might also consider putting cash into EverBank's All-Weather CD, which contains gold, Norwegian krone, Singapore dollar, Canadian dollars, Swiss francs and the Chinese yuan. (In the spirit of full transparency, my publisher has a marketing partnership with Everbank, and it may benefit if you choose to invest through the bank. That said, I would never recommend an investment if I didn't believe in the product or the firm). - Paid-up Commodity Trend Alert subscriper Alan W. writes, "I am an avid reader of Commodity Trend Alert and I have made substantial investments per your recommendations. Over the past six months, I've purchased most of the stocks you have recommended, and I have done very well. Please give us your thoughts on what you think will happen if the U.S. dollar is devalued by, say, 25%.
Andy Hecht replies: The devaluation of the dollar could work in two ways. Inflation may boost the prices of many assets in the long run. I can't comment on non-commodity assets, but one thing I believe is that commodity prices are heading higher and that inflation is on the horizon because of policies from the Fed and the EU. I believe cash is one of the worst investments in the current environment. The devaluation of the dollar is an inflationary event. On the other hand, if inflation doesn't rear its ugly head, a lower dollar will make commodities much cheaper..
However, by 2025, the world's population will exceed eight billion. And the middle class in Asia is growing. Whatever happens with the dollar and inflation, more people will be chasing the basic staples of life — commodities. Therefore, commodity prices will continue to rise. The commodities sector is the most exciting sector in which to invest today. - Kevin D., a paid-up Sovereign Society subscriber, asks: "Why is Andorra no longer mentioned as an offshore banking place? Is Andorra not a good choice for an offshore bank account these days?
Bob Bauman replies: Andorra is no longer a tax haven. In April 2011, a new government introduced a 10% tax for non-residents on local-sourced income. This tax is being extended to resident individuals who have incomes of 30,000 euros (US$42,000) or more per year. Andorra used to offer strict banking secrecy guaranteed by law. That is no longer true. Under pressure from the OECD, the Andorran socialist party that governed in 2009 successfully stamped out Andorra's welcome of foreign depositors who were taking advantage of banking secrecy.
However, some local banks continue to mislead non-resident customers about secrecy in order to retain their deposits as long as possible.
If you have comments on our essays or investments, drop us a line at SovereignInvestor.daily@gmail.com.
Until next time stay Sovereign, 
Jeff D. Opdyke
P.S. The key to finding some of the biggest profit potential in the world is spotting global trends before they take off; that's what Jeff Opdyke spend every day combing the globe for. He's pinpointed the growth of digital currency as one of those trends, and in his latest special report, he'll show you how you can profit from the coming Death of Cash. | |
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