Gold - did you know?

Generation to Generation

In recent writings I have alluded to how important it is to understand history, seasonal cycles, and also how to re-assess cyclical economic changes. When it comes to looking at one’s lifetime savings, are there families who have had the skill to protect it and pass it on to future generations?


We know there are events that have the potential to come out of nowhere and blindside us. These events have without a doubt a definitive effect on our family’s net worth. Recent times over the last ten to twenty years are no exception to this fact. I began listing things that quickly came to my mind as I was writing this.

The World Is Full of Perplexing Problems

(perplexing means ‘unsolvable’)

• Tech bubble burst

• War on Terrorism Attempts to stabilize Iraq

• Ongoing attempts to stabilize the Middle East

• Ongoing conflict in the Balkans

• Nuclear power struggle between India & Pakistan

• Possible future conflict with North Korea

• China, Taiwan & United States political disagreements

• Iran, Israel and USA nuclear weapons issue

• Housing market decline

• Massive government bailouts Portugal, Ireland, Italy, Greece and Spain debt

• Massive USA debt total unfunded liabilities over US$109Trillion

• Consumption of 6 barrels of oil per day and discovery of only 1 barrel to replace it

• Massive multiple inflation injections of currency

This is just to name a few; there are many more. I am sure everyone reading this could add more to the list. These problems are not going to go away in the short term, and our leaders have a tendency historically to not deal with these issues until it’s too late from a reactionary perspective. Many seemed to think until recently that our markets are protected from the instability in the world. Well, they’re NOT.

I haven’t listed the above to please you! I have mentioned the above to challenge your thinking! To prompt you to action; to take steps to act now.


“There is no remembrance of former things, nor will there be any remembrance of things that are to come by those who will come after.”

- King Solomon

If you have been reading and taking note of my past writings, you will now know that there are cyclical changes; changes which need to not be ignored. Change is inevitable in economies and is addressed by individuals in one of two ways:

1. Voluntarily

2. Involuntarily

Either way you will have to deal with this common repetitive event known as Change.


Financial definition: To enter transactions that will protect against loss through a compensatory price movement.

When anticipating change, you need to be hedged against LOSSES.


The term ‘black swan’ was a Latin expression. Its old-est reference is in the poet Juvenal’s expression that "a good person is as rare as a black swan."

It was a common expression in 16th Century London describing impossibility. It was derived from the old world presumption that 'all swans must be white,' because all historical records of swans reported that they had white feathers. In that context, a black swan was something that was impossible or near impossible and could not exist. After the discovery of black swans on the Swan River in Western Australia in 1697 by a Dutch expedition led by explorer Willem de Vlamingh, the expression was then used to describe a perceived impossibility that may later be found to actually exist.


The term ‘Black Swan Events’ is a slang term to describe an economic event or an event such as a geopolitical event that will affect an economic market or markets.

There are 2 types of people in the world today - those who are prepared, and those who are not.

The Generationally Wealthy ride through the volatility in most cases unharmed.

Generationally wealthy

The Generationally Wealthy are families and organiza-tions that have maintained:

• Their Wealth

• Their Standard of Living

• Their Future

• Their Inheritance

• Their purpose for their wealth

• Trans-generational goals for their wealth

• Protection of their wealth, family members, employees and trusted advisors

• Preservation of the legacy of the founders

• Preservation of traditional family values

• Preservation of younger generations with inter-generational hand-offs

• Preservation of family governance

• Their children’s inheritance

• Their children’s children’s inheritance—it isn’t just simply up for grabs!

They protect themselves from the rise and fall of our markets! Also, they build their portfolio’s in a very conservative manner. Here is an example of what one of their portfolios might look like:

100K portfolio


When building a portfolio, Gold and Silver are essential to the financial foundation.

The diagram above indicates and depicts the example of a house. When constructing a house, the builder always starts from the foundation. For obvious reasons, he never starts from the roof and works his way down to the foundation. It holds true that the house must have a solid foundation to give the structure secure grounding for strength and stability. Likewise, it is also true with a portfolio in its construction; the foundation needs to be strong so that it can weather economic storms that come during those winter periods. This will protect against partial or full loss of wealth.


The main difference between those who do ride economic cycles through and those who don’t is simply and purely one of a protectionist preservation mindset. The foundation for this mindset is solely knowledge alone. In rare cases the discovery of this knowledge comes about because a family’s net worth can become so sizeable that the mindset changes from one of acquisition of wealth to now having a mindset of protecting the wealth, because there is a sizeable amount of wealth which can now be lost.


The Generationally Wealthy historically have always held an allocation of their portfolio of no less than 5% in Gold. As the geopolitical and economic environments change, they also change their allocation portion to increase their hedged position based upon what they deem to be increased systemic risk within the system.

Gold is the Ultimate Hedge

Until next time,

Simon Heaps

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