The Big Drop,How To Grow Your Welth During The Coming Collapse

 The Big Drop

How To Grow Your Welth During The Coming Collapse

‘The Big Drop: How to Grow Your Wealth During the Coming

Collapse’ might strike you as a trite title for a worn-out topic.

In the seven years since the 2008 crisis, we’ve seen forecasters

publish countless tomes that predict financial calamity.

This book is different. Its author’s experiences, connections

and scientific knowhow rescue it.

You may think the warnings contained in this book do not

apply to you here in Australia. That the looming collapse of the

American dollar as the world’s reserve currency is a uniquely

American problem.

This kind of thinking is a terrible mistake.

During the last global financial crisis, we in Australia

dodged a massive bullet. Our ‘get out of jail free card’ was an

abundance of natural resources...and a booming China.

But the price of iron ore — our chief export — has roughly

halved in just the last year.

Investment in mining, energy and public-backed infra-

structure is expected to drop by more than 60% between now

and 2018, according to ANZ.

Australia no longer enjoys the protections and advantag-

es necessary to survive a global financial crisis of 2007/2008

magnitude. And, as this book demonstrates, the next crisis is

going to be orders of magnitude larger...

What will this crisis look like?

When will it arrive?

How will it affect Australia in ways the last financial cri-

sis didn’t?

And what can you do to protect yourself?

In this book, the world’s leading ‘financial warfare’ expert

gives you some answers.

I first met Jim Rickards face-to-face last year. We managed

to convince him to get on a plane and present at our World

War D conference in Melbourne. He stole the show with a pre-

sentation called ‘Mutually Assured Financial Destruction —

the Future of Warfare is Financial War’.

While most people know Jim Rickards as a two-time New

York Times best-selling author (or have seen him on TV), his

experience actually spans 35 years on Wall Street.

Even less well known is Jim’s extensive work within the

government, where he has been an advisor to the Office of the

Director of National Intelligence, which oversees the NSA, the

CIA, and 14 other US intelligence agencies.

In fact, after September 11, he was recruited by the CIA

to develop a program to investigate stock market signals that

could identify terrorist activities before they occurred (like the

bets against airline stocks before 9/11).

Jim Rickards’ personal history — plus his constant expert

encounters in intelligence work, non-profit endeavours, fi-

nance and academia — are responsible for the book you hold

in your hands...and for our monthly financial newsletter, Jim

Rickards’ Strategic Intelligence.

The fact that you’re reading this foreword means one thing:

you’ve joined our ranks. There is no better time for forward-

looking Australian investors to receive such intelligence. As

you will soon see, a storm is coming. And, unlike 2007/2008,

unprepared Australians will feel its FULL magnitude.

According to Jim, we are heading towards a devastating

crash in stock markets pretty much everywhere around the

globe. Some markets will lose less than others. But Rickards

believes America’s could fall up to 70% — practically overnight

— and that Australia’s could suffer a fall almost as catastrophic.

What would you do if your superannuation savings and your

assets HALVED in a 12 month period? To what extent would that

hurl a grenade at your retirement plans...and explode them into

complete disarray?

The purpose of this book — and of Jim Rickards’ Strategic

Intelligence — is to make sure that doesn’t happen.

And you couldn’t have asked for a better guide for your

investments.

‘I want to help everyday Australians,’ Jim told me candidly

after he partnered with us at Port Phillip Publishing to launch

his advisory service.

‘There are people in positions of real power who see what

I see, but won’t be honest with people about it. They’re

perfectly prepared for other people to lose all their money.

‘The next collapse — the big drop — is coming. You can

see it coming because of the dynamics.’

The dynamics Jim points out could spell disaster for Aussie

investors.

Not everyone will be prepared. But those who are will be

happy that they were in the aftermath. This book is a means

to that end.

As you read on, you’ll note Jim’s primary focus is the econo-

my and financial market of the US. Some people might think that

US focus makes The Big Drop less useful to the Aussie investor.

As I said, this is wrong.

We no longer have the China-driven mining boom as a

bulletproof vest. More than that, what happens in the US and

around the world has a profound impact on the Aussie economy.

The Reserve Bank of Australia has gone so far as to pin its

strategy for the Aussie dollar on the actions of the US Federal

Reserve. Governor Glenn Stevens made this explicit on 5 May

2015, when he surprised investors by saying that he expects

the Fed ‘to start increasing its policy rate later this year’.

Glenn thinks that will stimulate the Aussie economy this year

by weakening our currency. But fighting the Fed is a risky strategy.

Australia’s economic fortunes have depended on US

growth for decades. But that relationship is entering a danger-

ous new stage.

What will happen to the Aussie dollar — and your Aussie-

denominated investments — when US and Australian eco-

nomic interests diverge? The ructions Jim foresees in financial

markets could send the Aussie dollar — and the Australian

stock exchange — into a tailspin. But as in all crises, the well-

prepared can reap the benefits of once-in-a-generation oppor-

tunities.

By the way, we’re not talking about pie-in-the-sky, far-off sce-

narios. Jim penned The Big Drop because the themes that will

spark the next crisis are playing out right now — in real time.

Some of Jim’s views may strike you as improbable. Some

will certainly rub you the wrong way.

Well, hard truths are rarely palatable. That mean you

might react to Jim’s work in the same way as the reader I’ll

quote below...

On 6 February 2015, Jim wrote to his readers in The Daily

Reckoning about the slowly unfolding ‘de-dollarisation’.

The US dollar would ‘die with a whimper,’ Jim suggested,

‘not with a bang.’

Soon after, an American reader sent us this note:

‘My mother tells the story of her first day working as a

bank teller. It was when my father was in Vietnam —

circa 1968.

‘Her manager, a guy who was otherwise reasonable,

took her aside and told her the following: “You probably

won’t be working here long because the dollar is going

to become worthless. It will be good for nothing more

than kindling for the stove.”

‘She was also told that the money she was contributing

to Social Security was a waste since the program was a

pyramid scheme and would collapse in a few years.

‘Nearly fifty years later, here we are. The dollars in my

wallet are still accepted for goods and services and my

mother is still receiving the social security she paid into.

‘The sky has always been about to fall...but never seems

to get around to it.

‘People lap this stuff up and there's always, always, al-

ways someone there to make a buck on it.’

It’s easy to accept such cynicism at first glance.

Since 1971, learned men in the minority, newsletter edi-

tors, pundits, ‘goldbugs’ and gadflies have predicted the end of

the dollar standard. Despite them all, here we are.

But as Jim points out in Chapter 11, ‘The Beginning of the

End for the Dollar’, this reader’s argument is misleading at best

— and downright dangerous at worst.

What the reader who wrote that note may not realise — or

may choose not to recall — is that the US dollar actually did

lose over half its purchasing power in five short years from

1977 to 1981.

US inflation in those five years was more than 50%. In

Australia, it was even worse.

If you had a job, maybe you got a raise. The value of home-

owners’ houses went up.

But if you were relying on savings, insurance or a fixed

income, half of your wealth was lost forever. Maybe that US

bank manager knew something after all.

In fact, the international monetary system has collapsed

three times in the past 101 years.

First in 1914, after the First World War. Then in 1939, after

the tripartite monetary agreement unravelled. And again in

1971, when Richard Nixon ended the convertibility of US dol-

lars into gold.

The monetary system seems to collapse ‘about every 30 or

40 years and it’s been about 40 years since the last one,’ Jim

writes.

‘That doesn’t mean the system is going to collapse tomorrow

morning like clockwork. It does suggest, however, that the useful

life of the international monetary system, if you will, is about 30

or 40 years. We’re at the end of that period, so we shouldn’t be

surprised if it collapses again.’

The Big Drop: How to Grow Your Wealth During the Coming

Collapse shows you how to protect and build your wealth

ahead of and during the coming monetary collapse.

Perhaps even more interestingly, this book may play a part

— however small — in helping to sidestep disaster altogether.

I’m sure you’ve heard of self-fulfilling prophecies.

Say you’re hired as a truck driver from Sydney to

Melbourne — but you believe you are going to be the worst

courier of all time. As a result, you’re distracted and take the

Pacific Highway north to Brisbane.

By thinking you’d be the worst truck driver, you became it.

Your prophecy became true because of itself.

But have you heard about the opposite phenomenon? The

self-negating prophecy?

Jim tipped us off to the concept. He, in turn, learned it

from its originator, Robert K. Merton, a respected sociology

professor at Columbia University who passed away in 2003.

‘A self-negating prophecy is when you make a prediction,’ Jim

told us. ‘You can help it not come true. By alerting people to the

risk, they can behave in ways that make it not come true, which

is what you want.’

‘By sounding a warning — that the “Big Drop” is right under

our nose — based on troubling trends that are in play today, it

helps people do things that collectively will help move us in the

right direction.’

Therefore, as you read, you should repeat in your head

the words of the Financial Times review of Jim’s forecast: ‘Let’s

hope he’s wrong.’

But remember to prepare as if he’s right.

Jim admits the outlook is grim. But he also makes it clear

there are unique and lucrative opportunities for wise investors.

The risk of a US dollar collapse — which would ultimately

take down the Aussie dollar with it — has never been higher.

But luckily, we in Australia enjoy ready access to the building

blocks of a robust portfolio.

Everything you need to get started is right here in your

hands. Read on...

Tim Dohrmann,

Editor, Jim Rickards’ Strategic Intelligence