208 THE BiG DROP
But a Picasso painting, carefully rolled up and stashed in the
lining of a suitcase, can be worth $500,000 per ounce. Better yet,
a painting does not set off metal detectors in airports. Paintings
are the best way to move wealth without detection.
In fact, enemies of the United States are using both the
newest cyber techniques and the oldest wealth transfer tech-
niques — such as gold and art — to bypass the major banking
channels and payments systems. Meanwhile, conventional
financial channels, such as stock exchanges and banks, are
completely vulnerable to cyber attack, which can close venues
and wipe out account balances with a few keystrokes. These
types of cyber attacks are one of the 30 snowflakes that could
cause the next financial avalanche.
My takeaway from the meeting with the CSIF financial
threat team was that it is critical for you to keep at least part of
your wealth in nondigital form. This can mean physical cash,
physical gold, fine art or land. These are the assets than cannot
be wiped out by digital warfare or attacks on the power grid.
When it comes to stocks, it is also useful to identify compa-
nies that have physical assets behind them. Even if banks and
exchanges come under cyber attack, these stocks will retain
value because they have tangible income-producing properties.
Real estate investment trusts, or “REITs,” are ideal for this
purpose. They have tangible property assets behind them,
which are a good inflation hedge, and they pay attractive
yields, which is a good deflation hedge. That’s because tax law
allows them to avoid corporate income tax as long as they dis-
tribute 90% of their earnings as dividends.■ One Gold Stock That’s Outperformed Bullion
by Since 2007
There’s one gold stock that’s up over 200% since it starting
trading in December 2007.