No one likes to lose money. That’s why when I started building my survival cache over ten-years ago I started with gold.
Back then, I spent little time (same as I do today) worrying about where I felt the short-term price of gold was headed. What I wanted to do was build a physical hedge for my cash.
Cash is king! Try selling that one to your spouse. But cash is pretty powerful. You never know when you’ll need it. Like when there’s a Wi-Fi outage that shuts-down businesses. No Wi-Fi, no credit cards. No Pizza. Cash is powerful to an empty stomach.
But predicting an outage is as fruitless as predicting the future price of gold. And unfortunately over time, your cash gets weaker and weaker the longer is sits around the house collecting dust. It’s pretty lazy.
So, I didn’t want to just take out a pile of cash, lock it up and know I was losing money every year for the rest of my life. Yes, inflation is low. Wait a minute. Hold on. No one told that to folks at our local farmers market, where they sell a carton of a free-range eggs laid by stress free chickens that have never been told “no” in their life. Or to the folks at Kerrygold and their grass fed butter (it’s worth every penny).
What I set-out to do was to create a 50/50 hedge for any gold/cash storage. For example, ten years ago I wanted $5,000 cash so I matched it with a purchase of $5,000 worth of gold.
The idea being that with my cash and gold collecting dust, I wanted to at least have a chance to win the war against my lazy cash. And I did. Both are still collecting dust.
It’s a simple strategy no doubt. But it has worked for me. The key is not to not buy the gold for appreciation. If you do it will drop by half the next day. It’s simply an unwritten law of investing.
Think about it as a way to be your own banker. All your cash is backed up in your safe with gold.
You become your own government. Your own gold standard. The ruler of your kingdom. That is until the next farmer’s market.