An alternative to prepping

A few weeks ago I proposed that the bankers wanted to have gold close lower on the year, in percentage terms, than the major stock indexes. Just a few days ago, stocks were comfortably ahead of gold as the year was running out. But something happened they did not expect. Stocks began to tank as gold caught a bid. And as Fridays action got going, they had a problem. Just a few minutes after the opening bell, gold showed an 8.6 % gain on the year and was pushing higher quickly, only needing a $6 move higher to overtake the S&P. The S&P stood at a 9.1 % gain and was headed lower. Gold was overtaking the stocks.

Can you imagine the NYT headlines? “Gold outperforms stocks for 2017”  (I can dream, can't I?)

They could not let gold win! Something had to be done! At 10am the gold smash began. It did not let up, and even a small spike at day’s end was hammered back down at the bell. Stocks were juiced again an hour before the close. I bet it cost the banksters a bundle of fiat to get those moves to go counter to the trends.

The end result was 7.9% for gold on the year and 8.8% for the S&P. Whew!  Were you surprised?

But with 2016 in the books, I am looking forward to a nice Q1 and Q2 for gold this year.

In other news, I am thinking deeply about where I want to live the rest of my productive life, and where I’d like to be situated as my strength wanes.  It is certainly not in the city in this two-story condo with a postage stamp sized back yard I try to garden each year. And where might my kids live, and what careers will they find. 2017 may be the time to take control of the situation.

So what follows is a proposal I aim to share with family members and perhaps a few close friends later this Spring. At first glance, it seems audacious, a fool’s errand. Yet, the more I ponder and consider solutions for all the problems involved, I am encouraged that this proposal could be a reality. In fact, the time may be right.

I am sharing this here because maybe, just maybe, something in the proposal may ignite a similar spark in you. If so, copy, paste, and change the names to protect the innocent. Then share it with your family and see what happens. But also, we have a blog filled with critics, problem solvers, creative people, and experienced sages who can certainly contribute to a discussion that sharpens the idea. I am all ears.

                                                                                       -----------------------------

An Audacious Proposal

In 2007, my wife and I owned 8 rental properties and a home in the Midwest. We were up to our ears in debt, but the budget worked due to incoming rents. All of a sudden, Lehman collapsed, AIG collapsed, and hte dominoes began to fall. Our banking system was mortally wounded and the recession punched our rental business in the nose. All of our equity was wiped out in a few months. Every property was “under water.” Even our home was under water. As the housing market slowly recovered from 2009 to 2016, we were able to finally sell all the property, but still booked a loss on every single one. The Midwest never fully recovered. Only our relocation to a hot housing market and two subsequent “smoking” real estate deals helped our personal finances to recover.  But this new movie is starting to look like a bad sequel, with another housing bubble and more banking trouble. Do I want to try to survive another recession on my own?

Future challenges

The future is not rosy. Our nation has a 20 trillion debt problem, and its likely to grow. IF another economic collapse occurs, the way forward will be difficult for all. Yet there may be no economic collapse forthcoming (so-called experts debate it vigorously on both sides). But even if that miracle happens, we still have a debt problem that will, at the very least, keep the US economy mired in recession, just like Japan has been for the past 20 years. How then will my generation retire? How will our adult children earn a good living? What sort of world will our grandchildren inherit? Oh! I wish there was something we could do…

The world is changing. Even in my stable profession of academia, the writing is on the wall. No new professors (high pay)! Universities across the country are hiring “Lecturers” to simply teach more classes at half the pay. Every profession in the nation faces similar cutbacks due to this recession and the failed monetary policies that mired our economy in a bog of debt with nobody to pull us out.

If you are counting on the new president to fix all this, I wouldn’t hold your breath. My hope is that he will make things better, but it will require wiping out that debt of 20 Trillion through a default before we will make any headway.

We must somehow be pulled out of the mud bog of debt before the car will run on its own again. In personal and corporate finance, that happens through a bankruptcy. With nation states, it is the same. Don’t roll your eyes—the US has defaulted on multiple occasions in American history, we just didn’t call it a “bankruptcy.”

When this economy dives into another depression, I predict that life will get even tougher, because we never fully recovered from the last one. Back in 2008, we were only 10 trillion in debt. But too many middle class jobs have been permanently lost! Ninety-four percent of the “recovery jobs” of the past several years are now known to be part-time positions. and our national debt has doubled.

So, how can we boomers secure a workable retirement? How will our millennial children and their kids secure a living in the future? The challenges we face are real and closer than we know. At best, we are looking at more of the same—recession, interest rates too low for fixed income, poor job market, higher taxes at state & local levels, rising cost of all commodity-based goods.

Is there a better way to live than we have been--in our city home, in a crowded subdivision, fighting traffic each day to work for an employer who does not pay us enough and could cut our job at any time? Can we achieve our desire to have a stable home, stable career, and raise our kids in a healthy environment?

The Vision

We propose to set up a Trust that will purchase rural property, located close to a town or city. It will have:

  • sufficient acreage for growth (40+ acres),
  • multiple residences
  • ongoing business enterprises (i.e., orchards, vineyards, vegetable farming, poultry, livestock, small manufacturing, retail, contracting, recreation, vacation rental, or internet sales & service).

Family members and trusted friends may purchase a share in the Trust and choose to live on the property and run one of its entrepreneurial enterprises. Or, members may purchase a share to simply visit and vacation, building and keeping a small residence, but securing the future option of living and working there permanently should need arise.  (The image above is a 68-acre farm, and, it is currently for sale in southern Colorado.)

The Trust has several overarching aims:

  1. to provide a stable home for all participants, now and in future decades.
  2. to provide opportunity for self-employment and partnerships in economic activity-in short, a career!
  3. to create a self-sustaining community that provides for its own power, food, jobs, and entertainment, not dependent for survival on other employers within a deteriorating economy.

The Trust will NOT be a gated doomsday retreat, remote, secret, fenced in with underground bunkers and guard towers. Rather, it will be a family of entrepreneurs (the youth) and retirees (grandmas & grandpas) who work to build a prosperous lifestyle that secures hope and stability for generations to come.

In short, we will be escaping the rat race—at least the ugly parts of it.

Pros & Cons

Among the many advantages to this different lifestyle are the following:

  • Self-determination of career via entrepreneurship with experienced mentors to help guide new ventures into success.
  • Creative synergy for business ideas and implementation
  • Reduced costs of housing and utilities
  • A close network of personal support
  • Increased physical safety
  • More stability in turbulent economic times
  • More convenient to care for aging relatives who should no longer live by themselves

Overall, the trust will encourage independence in careers, not needing to rely on employers for one’s means of earning a living. Yet, the community life does not preclude outside careers based the wider economy—such as local jobs or a professional career in a large nearby institution like a hospital or college. The members will have a choice.

Among the disadvantages would be…

  • Increased responsibility to other members as you assume daily duties to keep the community functioning. Farms & businesses are lots of work.
  • Decreased “solitude” (if you desire that) with having nosey family members nearby. Perhaps a larger property with housing options in remote corners, away from the main residences can resolve this.
  • A potential large “buy-in” cost up front.

The Trust would not be a “commune” where private ownership and personal finances are stripped away. Nor does the Trust living constitute a withdrawal from local economy and society (though it could). Advantages & disadvantages should be weighed against one’s current opportunities and hardships, keeping in mind that the community life, and self-reliant nature of the project will provide security, stability, and a greater chance for prospering.

Do you like where you live today?

Practicality

Perhaps the most problematic aspect of transforming this vision into a reality is the directional change in the lives of multiple people, a change that would require some to sell out and move, setting up a new life and perhaps a new career.  Others might simply invest in the project, taking a more active role in future years. Financially, up-front costs could be substantial, yet the project should begin providing an immediate return with farming dividends, and as housing & living costs for all would be reduced. If enough families are involved, the up-front costs should be less than the expense of purchasing a typical single family residence in the city.

The project will require long-term commitment—the deeper, the better.  While members will not be “locked-in, due to the nature of the Trust, long term commitment to the community is a key to success.  Requiring a “buy-in” means that one could “sell-out” should a family decide to leave the project and return to an independent life. Even though a long term goal is to provide an inheritance to our descendants, nothing would preclude dissolving, selling, and distributing the Trust’s assets should the day arrive when it is more of a burden than a blessing.

A wide range of skills and abilities will be necessary to make the community truly self-sufficient—gardening & animal husbandry skills, food preparation and storage skills, construction and maintenance skills. Yet, beyond basic household and property chores (that we already have at home), members who maintain outside careers can certainly live side by side with those who run a business based on the Trust property.

I realize this proposal addresses just a few questions and leaves many unasked and unanswered, yet if there is sufficient merit and interest, we ought to begin a discussion, continuing to discuss pros & cons as well as how to resolve the practical challenges of initiating, setting-up, and maintaining a vision such as this.

So, are you interested in exploring this proposal in more depth?  Are you willing to take action and commit?

                                                                                         ------------------------------------

Well,. there you have it. I. for one, am tired of city living. I had nine years of country life back in Ohio and wish to achieve it again. But the world has changed, I am not as young as I used to be, and I do not think my wife and I, working alone, can achieve the level of prosperity that a good piece of land can provide.

2017 promises to be an interesting year. 

52 Comments

silver66's picture

first first of 2017

Very ambitious.

I do have a question about the mechanism of how a family would cash out. How is the property valued and where does the money come from to buy out. If a family is doing a important but low value production  to the economy as opposed to another family doing a higher value production and they want to sell out, how does their allocation of property get valued? These are not meant to be negative questions but you need to be planning the "divorce" when you are getting "engaged". Anytime money is involved with different family's the wheels can come off real quick if not planned for. No agreement means disagreement later

silver66

Boing_Snap's picture

two will do

Prep or not to prep that is the question.....

abguy4's picture

Thanks for the Great thoughts doc

An absolute breathe of fresh air. Thanks for the Great thoughts and giving one an all something incredibly positive to ponder, for the New Year. Somehow my thoughts always travel in the same direction - I mean community living. Once a month , me an the wife travel to an Amish farm, in the middle of a loosely grouped Amish community, to buy their raw milk and eggs. Now, they do have some rather limiting religious rules, but otherwise they have a very nice working community. A lot could be borrowed from them, (and a lot could be discarded).

Back five years ago, I had an occasion to go to a talk at a building, which has a sign billing it as the "oldest local Grange in the US." So I looked into what a Grange is, (duh). It seems the Grange was the place where all the local gatherings , events, commercial transactions, and most of the political activities took place. It was a co-op. This was before the Federal Gov took control of everyones' personal lives and finances. By all appearances,  lot could be borrowed from them too.

What a marvelous institution~!

Absolutely luved visiting S. CO, but OMG, what the fk do they do for water there?~!

Mr. Fix's picture

Thanks Doc!

yessmiley

benque's picture

A beautifully thought out scenario

I know, many little details to address, all different for each and every person/location, etc, etc.  BUT, I really liked the way you put the idea accross.

Thank you for ANOTHER of your wonderful articles!

Texas Sandman's picture

Galt's Gulch?

Is that what it'll be called?

Dingo's picture

My 20 cents.

Out here in the one of the remotest parts of Australia, actually make that the World, and we've had  a few attempts at communes being set up. The results have been, let's say, "mixed"!

Actually, the only real successes, in terms of surviving intact, are those that are family units that take on small (small is half a million acres around here) pastoral leases (mainly cattle stations). We had many families come from Germany, Switzerland and even California to pioneer irrigation farming in the local valley too. Whilst these guys may not describe themselves as preppers per se, they were all highly motivated to move as far as they could go and completely abandon their previous existences. Their motivation couldn't be solely about making money. This was a complete break from civilization as they knew it. As it turns out, some made a lot of money too. They might not exactly be "Swiss family Robinsons". However, not many folk from Zurich would ever dream to kill wild donkeys, with a .308 rifle, in order to feed their dogs. Life for these guys has definitely changed.

The larger communes however, seem to unravel due to malcontent with each other. Maybe things would work better if their had been a dire need for the commune in the first place. That is, if people knew that it was far better to be in than remain outside. I bet there would be plenty of autobiographical accounts from people's experiences of life in communal farms. You'd be better off reading these accounts of life rather my shallow thoughts on this one.

The common theme of all of these stories, and I'll emphasize it in caps; is it's VERY HARD WORK. In my mind it's too much hard work to invest in a project that can be simply taken away from you.

These are my prepping thoughts in a nutshell;

 Live in a place where very few people know about. The place has to have no strategic value for the world or even, it's nation. 

There must be abundant fresh water and food sources (wild and agriculture).

Family must have second passports. If life goes "pear shaped" here, we must be able to move internationally.

Have ability to grow some food. Also have ability to forage for and catch food. Diversification must be good in prepping too?

Enjoy the world for what it has to offer now. Travel, see great live shows, enjoy the natural beauty of the world. Our ability to enjoy this may be on borrowed time unfortunately.

Dr. P. Metals's picture

Commune?

just another way to spell migraine...I'll pass.

Dr Jerome's picture

Devil is in the details

I recognize the Trust will have to be well planned, with methods for valuating each building and calculating any appreciation that it may have over the years. Perhaps "buying shares" like in an IPO, and receiving dividends from any profits from community farming might be an approach. That particular property pictured above has over 300 mature apple trees. I suspect the farmer passed away and his family is selling out. I understand that the orchards in that part of the country struggle financially in various years.

Water is a problem throughout the west. There are large aquifers under many areas. The SW corner of Colorado has a reservoir fed from snow melt runoff and a system of canals that feed the farms. domestic water comes from wells. this area only gets 12 inches of rain per year. If you walk 100 feet away from one of these western rivers in a low rainfall area, you are in a desert.  We used to say in Ohio, "just plant your garden and get out of the way." No watering required.

I always admired the Amish when we lived near them. 

The utopian communities of the 1800s have always fascinated me also.  In those days, land was cheap and labor abundant with plenty of people who had nothing wanting to be members. I suppose they did not need any legal guidelines. people just left when they wanted. No ownership. things are different now. We studied them in my american religious history class back in college. I recall that the religious communities always had odd sexual and marriage practices. the Shakers died out because they were all celibate, men and women living in two different dorms...  not for me. 

Sandman, sounds like you really are from TX. I was thinking "Jeromeville," but I suspect my 4 brother-in-laws will object. But I like Galt's Gulch--has a ring to it and a significance for those who see it.

Dr. P. I suppose so, though I am trying to avoid that word. But each "family" would live in a separate house. 

scoremore's picture

Enjoyed the ribbing...

Glad I could raise BTC over a grand for you all yesterday...

Had to run out to finish honey do's...

But you know ribbing can go both ways. smiley

NW VIEW's picture

Another Zion City?

   This concept reminds me of the dream of J.A. Dowie, just over 100 years ago.  He would buy a large tract of land, build buildings, provide restrictions and make a place of safety for those who would buy in.   It was an amazing story but only works for a short season.  Zion City is still there but Dowie's vision of it is lost and it is just another city north of Chicago. 

There are things which will become very important in the coming days.  Fellowship with a grouping of wonderful people, on the back porch, coffee shop, extended family, etc. is really important.   Boomers become lonely and quickly.  Their friends and older family members have passed onward and sitting with a good book in front of the wood stove becomes boring.

Dreaming of moving onto a farm in Northern Idaho brings inner peace.  However, after one week, we will want to come home and visit the kids, grandkids, old friends .......                 There are also those who have vacated America for the good life in XYZ, stayed there for a long season and moved back home.  Yes there are things that are missing. Then there is the work load that falls on the few.

A better plan is;  Obtain a local small farm, grow organic, sell organic, expand if needed, have a small fellowship building for friend and family, expand can house, fire up that wood stove, feed the chickens and learn to barter with other local organic farmers. 

We who occupy life need fellowship.  If we miss the love, joy and peace of family and friends, we have been conquered and depression will move in.    jmo       Jim

Turd Ferguson's picture

Thanks, Doc

MODERATOR

Another great post! Thanks!

Dr Jerome's picture

Scoremore

The Trust's charter shall read: "...and bitcoin shall be the legal tender, Only purchased with silver & gold." cheeky

canary's picture

Dr.J....Happy New Year

USD/JPY up...117.35

EUR/USD down...1.0465.

NOT the best news for gold.

scoremore's picture

Debt clock malfuction? WTF

never mind it is fixed or maybe not...it runs so freaking fast...can't keep up with it.

tonym9's picture

Moderate climate and good

Moderate climate and good water/soil has to be at the top of the list. Without both the trust would fail due to hardship. My vote is a small farm off the Hana Hiway...those that know KNOW. 

BillD's picture

Interesting 2016 data..... repost...

Gold
% increase from last year = 8.39%
First positive % since 2012
Average Annual increase since 2000 = 10.56%
Total increase since 2000= 321%
Silver
% increase from last year = 14.91%
First positive % since 2012
Average Annual increase since 2000 = 12.00%
Total increase since 2000 = 247%
DJIA
% increase from last year = 13.41%
Was negative last year / -2.23%
Average Annual increase since 2000 = 5.04%
Total increase since 2000 = 83.00%
Bitcoin ( Since 2008 / inception )
% increase from last year = 124.00%
Average Annual increase since 2008 = 878%
Total increase since 2008 = 9,699,900%
 

lakedweller2's picture

@ canary

Wait until New York opens and then wait some more to see if algos can't hold up the fantasy.  Hard to count on premarket trends in a make believe world.

Joseph Warren's picture

Thought Provoking Article doc . . .

thanks for writing it.

A few years ago, I moved from the big city back to the rural farm country where I spent much of my youth. I have family here and they all have family & friends in the area. So, it was relatively easy to relocate and be a part of a community. Most people don't have that option, of course. We live in a very mobile and urban focused society.

So, how does one build a community of people for sharing resources and skills ?  That's a question that has been asked for a very long time. It was asked here in America back at the time of earliest settlement. Communities were started often based on common religious beliefs. Even with such religious and family ties, the early settlers had a rough time of it. Bring together more than a couple people and  disagreements and conflicts are likely. What examples are there of such communities that are successful today ?  I don't know, but that would be something that I'd investigate to see what common characteristics they may have.

Rather than trying to build a new community, it seems to me that it might be easier to become a member of a community where you would like to live. The trick is the transition from being an 'outsider' to an 'insider' member of the community. Someone like an MD doctor may have an easier time of it. He would provide the members of his new community with a vital service of a very personal, hands on, and sometimes intimate nature. People have also been taught to trust & respect white coat MDs.

Others will have to look at their own situation to determine how they might become members of a community. Catherine Austin Fitts writes & speaks quite a bit on this broad topic. She moved to rural Kentucky.  You might like her website.  

All the best to you in 2017

Grey Mare's picture

as one gets older

the choices become more important.  I would think long and hard about this approach, doc - your friends and family, much as you love them, have not made the personal journey of development that you have made.  To many people, the picture you paint will sound utopian, much as you try not to develop that canvas.  I know that size and quality of property matters and your resources are limited, but maybe it is worth thinking about how to get like-minded and experienced (and economically sound) people only involved first.  In reality, many people (and their spouses and kids!) would approach this with little more commitment and drive than they will their New Year's diet.  I try to never give advice, but you can see I am failing here - so Happy New Year to doc J, Turd and everyone else, I shall say no more.

GM

Sound Money Minnow's picture

Dr. J

I think this could work fine in the Great Lakes Region. In rural NY property prices haven't went parabolic in either direction. Water is abundant and property is conducive to great farming yield. Yes, we have enormous taxation. If we could extinguish the albatross of New York City, and find a amiable local county Sheriff that supported the same, I am all in. How much would the buy in be? 

aomegaa's picture

Costa Rica

My Choice of a location would be in Costa Rica. Plenty of water, good soil, and a wonderful climate!

canary's picture

Everybody's trying to prepare

Image result for the most isolated place in siberia images

boomer sooner's picture

Thanks Dr Jerome

I always gain something from your writings!  

The topic you discuss is an awesome idea, but pitfalls are many and difficult to overcome.  Starting with silver66 initial, but becomes a major problem (in my eyes) when contribution to the community from each member is scrutinized.  Socialism sucks, imho.  My share of contribution is greater than yours, but you feel you contribute more than I and Bob combined.  This reminds me of the colonists disagreements and why many pushed "west" on their own.  

I am more of the loaner type and would look at participation of each.   Self decription  (works well with others, NOT.  This is why I am self employed.  The sun rises and sets on how well I alone perform.)

Below is a family that I follow on youtube.  A few years ago they decided to move from Portland and make life more simple.  It is an awesome thing they did and continue to this day.  I chose this particular vid because I hope some of the younger crowd will pay attention to the "debt is a weight around your neck".  Life is more enjoyable when not having to worry about making payments to the bankers on the 1st.

Add:  On the drive back from Colorado, going through Western Kansas (around Hays) on Friday, I listened to the local radio station.  The station gave the normal commodity price updates you hear in farming areas, but one item caught my attention.  At the end of the update, Silver was down $0.25.  Growing up in a farming community, I had never heard silver prices being quoted on the radio.  No mention of gold.

matt_'s picture

@SMM Re: New York

I live in the same part of the world as you.  New York state does have plenty of water, but that is about the only thing going for it for such a property.  Taxes are outrageous.  Winters are long.  Gun laws are oppressive.  Government regulations are downright hostile to starting businesses.   I agree that western New York would be great if it could secede from New York City and Albany, but unfortunately that will never happen.  People always say that real estate around here is cheap, but it isn't true when you factor in taxes.

My wife and I have strong ties here for family and work reasons.  However, we both want to leave at some point.  The state I have been dreaming of is Tennessee, but there are 49 states I'd rather live in than New York (well, maybe 48 states.  California is just as bad and possibly worse than New York).

I would say Ohio, Michigan, and Pennsylvania have many of the same advantages of New York with a lot less of the disadvantages.  I've thought about buying a second home nearby in Pennsylvania just to get away from the SAFE act.

Angry Chef's picture

Note ban to shave off a third of gold demand in 2017

Did anybody really believe that when India banned the 500 & 1000 Rupee Note that it was about stopping corruption ? Or was the real purpose to blunt Gold demand ?

http://www.business-standard.com/article/economy-policy/demonetisation-to-shave-off-350-tons-of-gold-demand-in-2017-116122800565_1.html

boomer sooner's picture

Eric Sprott

Sorry if posted.  Didn't recognize the handle.  Chris Martensen from Peak Prosperity?

Swift Boat Vet's picture

Scoremore --- Ribbing

I wish there were a deeper discussion about Gold Money or UPMA.   Second being the gold and silver 'bank'  in Utah now that Utah has enacted gold buffalo and silver eagle to be "legal tender".  Therefore it is not taxed as a trade or swap,  but just as money spent, either by check/voucher or by debit card.   You have the ability to pay in either gold, silver or US currency.

Swifty

Ozymandias's picture

New Harmony, IN

Dr Jerome, Although it is a long way from what you are looking at, the history of New Harmony, Indiana can probably be helpful in formulating your plan. It's also an interesting story. I tried to link an article from Wikipedia but it is not working correctly. For some unknown reason the "Indiana" part of the link is not taking so you will have to select Indiana when Wikipedia gives you a choice of "New Harmony"s.

https://en.wikipedia.org/wiki/New_Harmony,_Indiana

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