What are Alternatives to Cash – Inflation Hedges
We were talking about what are safe alternatives to cash but at least semi liquid. Here are the ones I came up with:
What are others? I.e. where can I move my cash as an inflation hedge.
Stocks also, but only if you’re willing to buy and hold. Timing the market with stocks is a recipe for sub-par returns (buying high and selling low).
Why would you want an alternative to cash? Cash becomes more valuable in a deflation because it buys more. You asked about an inflation hedge. That may be a problem in the future but right now it is deflation that the Fed is fighting a losing a losing battle with.
Land, silver and gold will more than likely deflate too. The advantage of land, silver and gold is that they are real assets. They will never go to zero. Land cannot be removed (i.e. stolen in the same way that the other assets can because it is fixed in place). However, it can be confiscated or stolen as can silver, gold and cash money. Land requires the most effort and cost to look after and get a return on.
Silver is more manageable than gold because it is less valuable so an ounce of silver is easily tradeable but an ounce of gold is not much use to trade for a week’s supply of food. Other people are not used to trading things for silver or gold but they are very used to trading with money. Paper money is flammable or, if in digital form, may not be obtainable if the internet is not operating or a bank shuts its website. So, you need to have real cash and somewhere safe to keep it.
The best solution is probably a mixture of assets:
1.Have land if you can use it yourself – especially to live on. However, if you have a mortgage with little equity you are very exposed to catastrophic loss in a deflation.
2. Have some gold and silver. Gold has been useful traditionally as worn jewellery because a necklace is made up of links and each link can be traded.
3. Have enough cash readily available to keep your family fed and housed for 3-6 months.
4. If you have a surplus of readily available cash, use it to buy a stock of food and other staples (soap, loo-paper, cleaning chemicals etc), medicines, warm clothes and quality footwear, vermin proof storage containers, carpentry and garden tools, seeds, an electrical generator, spare fuel, kerosene lamps, kerosene, bicycles, puncture repair kits and spare tyres.
5. Make sure you know who your friends are.
I would add in means of self defense and also skills that could be useful in a difficult time like first aid, small engine repair, welding etc.
So you think we are going into a deflationary period? Isn’t the FED devaluing the $ by printing all the money. I’m curious to hear your thoughts.
If I can put this out there, my wife and I used to store cash under our mattress. As soon as we learned about inflation, we looked for alternatives. GoldBack.com is an alternative that we have chosen. The Utah Goldback is legal tender here in Utah, but you can barter with them in any state. You can own gold for less than $4 with each goldback. One Goldback has 1/1000 oz of gold in it, nearly 25% of stores accept them as payment here in Utah, including many small businesses and farmers markets.
If you are thinking of a long-term investment, I would recommend larger gold coins due to the premium, but if you want something that will retain its value and make small purchases with, it’s the goldback. I’ve used defythegrid.com to purchase them, but there are other sites that offer the same thing, just prices vary.
Jim Rogers,” One day, the hedge fund managers driving Lamborghini ‘s will be driving tractors.”
obtwJimmy has lost more money in a day than I have ever earned.