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“I have never felt more uncomfortable than I do today…”
So says former Central Intelligence Agency (CIA) acting director James Devine. The Hill reports he believes the present day is America’s “most dangerous time.”
He says it’s worse than the Cold War… since, even though the Soviets had nuclear weapons, neither the U.S. nor the Russians were suicidal. (A first strike by one ensured retaliation by the other, wiping out both sides.)
But an “uncivilized” terrorist group like ISIS has no such countervailing force…
Soon after Devine’s statements, the U.S. State Department issued a worldwide travel alert.
It’s the first such alert since December 2014… and it remains in effect until February 24, 2016. It applies to all American citizens.
There’s no question we live in chaotic times… the real question is whether you’re hedged against them.
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Regular Daily readers know we view gold as one of the best “chaos hedges” you can own. It’s still the asset the world flees to when the unexpected happens.
The chart below shows spot gold prices during the week of the tragic ISIS attacks in Paris.
You can see when the attacks took place just by watching the price action.
Now, while we like gold, here’s the most important thing to remember about it:
It’s an insurance policy.
Just like auto, home, health, or life insurance, you don’t want to be caught without it… but you should never buy more than you need.
As we wrote in PBRG’s 2015 Asset Allocation Manual…
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We like these Chaos Hedges as an asset class because we view them as insurance against a disaster. That could be an implosion of the world’s financial system… banks and brokerages going bankrupt… or a personal lawsuit against you. …Chaos Hedges provide you the benefit of “sleep-at-night” protection. Because they don’t produce income and don’t always go up, Chaos Hedges hold a small percentage of our overall portfolio. |
Bottom line: Gold is a vital asset to hold in any diversified portfolio. But as the number of scary headlines grows, don’t panic and put too much of your net worth into the metal. That makes your portfolio weaker, not stronger.
All paid PBRG subscribers can review our recommended gold allocation percentages, right here.
And if you want to allocate funds to a defensive place—that still offers you 40 to 50 times more interest than a bank account—read our next item…