For generations, productive Americans have taught their children to save a portion of what they earn, put it in a savings account, and let compound interest grow its value over time. It was great advice for its time, but its time is past. Interest payments on bank savings are so small they can’t even overcome inflation and fees – which means that saved funds will shrink over time rather than grow. When you couple that fact with major bank failures in recent years, the in- adequacy of the FDIC to adequately insure more than pennies on the dollar of all deposits at risk today, and the groundwork that has been laid for “bail-ins” (using depositors’ money to meet banks’ need for emergency funds), savings accounts can no longer be considered safe.
It’s no wonder savers feel like they can’t win. Both living and investing in America today is like go- ing up the down escalator. Rest for a moment, and you might not be able to gain back the position you’ve lost. Stocks are in the riskiest territory they’ve ever been in (including 1929, 1987, 2001, and 2008), and with yield in the cellar and the world moving away from the dollar, bonds are also at extreme risk.
What’s a saver to do?
Well, what if there was a way to save without risk of loss caused by government or financial emergency, but which also offered the opportunity for gain?
In order to do this, you’d have to accomplish two goals.
- Don’t ride the escalator down. (Keep your money from buying less over time as inflation increases your cost of living. This is called “maintaining your purchasing power.”)
- Rather than just maintaining your position, start moving up the escalator. (ie: increase the amount of your money.)
Gold maintains your purchasing power over time. That’s not something that has proved true just since the founding of the Fed or even the Bank of England. For over 5,000 years, there have been two universal truths in the financial world:
- Real assets maintain real value.
- Gold is real money.
No asset accomplishes the first goal better than gold.
But what if you want to do more?
A lot of investors come to us out of frustration. They’ve taken some misdirected approach to their finances, and they’re either unhappy with the results or fearful that they’ve squandered what they’ve worked so hard to build. Some even come to us with dead-end precious metals portfolios due to bad advice on the initial acquisition! These investors seek us out because they’ve come to understand that gold and other precious metals offer incredible financial protection.
But they want more than protection. They want potential.
They want to put their trust (and their money) in a proven system that will compound their investment AND ensure that the money is there when they need it.
We’re happy to report that this system exists. At ICA, it’s affectionately known as the “Ratio Trading Strategy,” and it begins by asking one simple question:
For the last 45 years, McAlvany ICA has tracked the price of silver relative to that of gold, and regularly looked for opportunities for clients to make strategic shifts between the two metals. By buying whichever of the two is weaker, watching it grow stronger, and then continually repeating the process, you can increase the amount and value of your holdings over time with very low risk. As you may already know, the price of precious metals responds to various influences. Industrial supply and demand issues, central bank demand, investor demand, and geopolitical events all impact the metals at different times to differing degrees. We can’t control these events, but we don’t need to. Instead, we can use them to our financial advantage.
The McAlvany ICA Ratio Trading Strategy operates under the following immutable law: The value of gold and silver relative to each other fluctuates over time (platinum and palladium can also be used if desired, as this law also applies to them). Said another way, although the prices of the precious metals usually move in the same direction (up or down), they move at different speeds. Over time, one of the metals will be trading at a significant discount to the others. By trading one for another, an investor can move out of an overvalued metal and into an undervalued one with ease and safety.
In just a few trades, a portfolio can be abundantly enhanced!
The strategy is perfect for the conservative, long-term precious metals investor. While most trading “tricks” involve jumping in and out of markets and trying to hit every top and bottom, this strategy is quite different. You are never out of physical precious metals when you correctly employ our Ratio Trading Strategy. For example, if the strategy calls for selling gold, you will be simultaneously buying silver.
If it calls for selling silver, you will be simultaneously buying gold. Many of the best trades are executed during drops in price rather than increases. And you’ll never purchase an investment whose value can become completely worthless like stocks or other investment vehicles can.