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This Safe Land Investment Can Protect You from the Dollar CrisisBy
Saturday, September 25, 2010
As you read this, the precious metals gold and silver are soaring.
They're soaring in response to a prediction I've been making for over a year and a half – that the U.S. government will do everything in its power to prevent a deflation in asset prices. This includes the shameless printing of dollars in order to prop up our rotted banking system... which is the plan, according to the Fed's most recent statement, out on Tuesday.
As a result, gold – the "real money" wealth hedge – is at an all-time high. And while I'm a proponent of owning gold and silver bullion to protect yourself from a dollar crisis, there's another excellent way to get out of paper dollars and into productive, "real" assets. It's a long-held secret of the world's wealthiest people...
Buy timber.
Timber has long been a hedge for the wealthy against inflation. In addition to providing good risk-adjusted returns, timber has also been a non-correlated asset. In short, when stocks fall, timber usually doesn't. And because you only have to cut down your trees when prices are good (timber doesn't spoil), timberland is generally a low-volatility asset.
The best way for individual investors to buy timber is through the well-established, large timber real estate investment trusts (REITs): Plum Creek (PCL), Rayonier (RYN), and Potlatch (PCH).
Because these companies are structured as REITs, 90% of what they make goes to shareholders in the form of a dividend. They all yield at least 4% right now.
In terms of long-term performance, let's look at two five-year charts for Rayonier. First, we have the price appreciation of RYN (the blue line) plotted against the Vanguard REIT exchange-traded fund (VNQ – the red line). VNQ holds apartment, shopping center, and office REITs.
Notice the "boring" timberland investment has done far better than developed real estate.
 Now, let's take a look at how RYN has done against the entire S&P 500 Index over the last five years. Again, the dumb trees have done better than the smart people. This graph also gives us a peek at times when trees have not correlated to stock performance, particularly in early 2006, late 2007, and mid-2008. Investors with RYN in their portfolio have done extraordinarily well.
 With Ben Bernanke ready to print money should the economy remain sluggish, it's vital that you have a portion of your wealth in crisis hedges... in real assets like productive land, gold, and silver. Gold, at $1,300 per ounce, is screaming at you to do this right now. Start your crisis hedge program with gold and silver bullion.
And consider timber. As you can see from the charts above, it's a time-tested way to get out of cash and conventional equities and earn higher returns, with much less risk.
Good investing,
Porter Stansberry
Further Reading:
If you haven't yet built up your precious-metals bullion position, don't miss this classic, must-read interview from our sister site, The Daily Crux.
Late last year, the Crux sat down with one of the most knowledgeable gold investors in the world and got details on who to trust (and who not to) when it comes to gold dealers... what kind of premium you should pay... and the safest places to hide your gold.
The interview is completely free. Get details on how to access it here.
Market NotesCHART OF THE WEEK: GREAT NEWS FOR GOLD STOCK INVESTORS Faithful gold stock investors have waited on the idea behind our chart of the week for quite a while...
Although gold has enjoyed a huge rise over the past decade, large gold mining stocks have frustrated investors. While the price of their end-product was climbing, labor, fuel, and infrastructure costs climbed at around the same pace. The result was stagnant profit growth and stagnant share prices for "biggies" like Newmont Mining, the largest U.S.-based gold miner.
But as this week's chart shows, $1,300 gold is a medicine that cures all kinds of headaches. Newmont, a popular gold holding, has been dead money since 2006. But gold's exploding price is causing a surge in mining profits... and Newmont just "broke out" of a huge sideways trading pattern. It's blue skies ahead for the golds.
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Stat of the week
108%
Share price gain of elite silver royalty company Silver Wheaton over the past 12 months. The broader market has returned about 6% in the same period.
In The Daily Crux
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