A MESSAGE TO THE PRUDENTLY PROSPEROUS

By Al Doyle

December 15, 2009

Despite the current economic situation, you have continued to earn a comfortable income. Better yet, you have always been a financially conservative person who refused to indulge in the debt orgy and bubble of the past decade.

Buying the latest toys, trinkets and gadgets on an impulse never made much sense to you. A trophy home only meant increased maintenance cost sand a high profile to be shunned. You're not the kind of person who is critical of the lifestyle choices of others, but something about the spendthrift mentality of recent years didn't seem right.

Perhaps you sensed that some of those nice things in life could be purchased at a lower price as time passed. Real estate prices have taken steep hits in many areas, and there are plenty of like-new SUVs, cars, motorcycles and boats now being dumped by desperate sellers. Is it time to indulge a little and spend some of your hard-earned cash?

Hang on unless an incredible deal comes your way. There are plenty of nice homes, vacation condos and other stuff available, but there is still a fair amount of room before the economy hits bottom. As layoffs continue to spread and workers run out of weekly unemployment payments, even more goods will hit the market, and the glut will lead to lower prices.

Many adjustable rate mortgages (ARMs) will reset to much higher interest rates in the first quarter of 2010. That will surely lead to another wave of home foreclosures and put even more downward pressure on property values. What seems like a good deal today could be somewhat cheaper in the near future.

Perhaps you don't want to be sitting on a pile of ever-depreciating dollars. Wouldn't it make more sense to put that money into something usable? Try this strategy.

After a sharp rise in November and early December, gold and silver prices have dipped over the past week and a half. This is a normal correction, and it takes place in all markets after a move to the upside. You can put your surplus cash into precious metals - an asset that has served as the ultimate store of value throughout history - at today's lower prices.

Silver in particular is an undervalued item, and the continuing destruction of the dollar will keep demand for the metals (and their value) strong into the future. Wait a little while longer to make major purchases, and it could lead to much better deals down the road. Meanwhile, the money you have worked so hard to earn can be parked in assets that do well in uncertain times.