Financial Apocalypse Insurance: Elbow Grease
As always, the following is a discussion on financial topics, but is not financial advice! We share our approach, but insist you need to do your own homework & speak with your own financial advisor!
Some of the trusted authors we follow promote investing in gold and crypto currency as a defense against the collapse of the almighty U.S. dollar. Robert Kiyosaki, author of Rich Dad, Poor Dad (affiliate link), talks on his radio shows about how he chooses to invest in physical things, like real estate, precious metals, and cryptocurrency, rather than relying on the Federal Reserve, the stock markets, and fiat currency. Peak Prosperity encourages its readers to invest in 5-10% of one’s portfolio in gold.
However, J. L. Collins, Kristy Shen, and many others, instead promote diversifying against a tanking market with bonds and international market investments. It’s an often repeated rule of thumb that you should invest your age in bonds, and invest the rest in stocks. For example, if you’re 32 years old, having 32% of your portfolio in bonds allows for some defensive, lower return rate (but theoretically less risky) investments to complement your remaining 68% in more aggressive stock market investments (hopefully ETFs, mutual funds, or index funds—stocks are risky business).
It’s curious that none of the financial folks that we read/listen/follow promote saving beyond the ‘saving for an emergency’ savings. Don’t get me wrong, this emergency savings account can be pretty sizeable if it has $2,000 per person in the household, in cash, in addition to 3-6 months of expenses. But if you google ‘save for retirement,’ you quickly discover ‘saving’ for retirement is actually ‘investing’ for retirement. Savings rates, in this day and age, don’t keep up with inflation, so you lose money, over the long run, with it just sitting there, barely compounding. (Not to mention that we collectively have a low saving rate!)
Once the news started talking about COVID-19, we started thinking more about purchasing gold as “Armageddon insurance.” Pre-COVID-19, we didn’t have any gold investments. We researched it, though, following the logic of money printing leading to the dollar collapsing in value, and needing to convert another store of value into something else… but we kept getting hung up on what that looked like in a post-dollar collapse environment. Because whatever that post-dollar world was, it was going to be pretty ugly.
The theory makes sense, but we haven’t done this in practice. The idea being, you take your gold to a dealer and leave with the new currency to buy what you needed at the store. But out here, in the middle of the U.S., should the dollar collapse, we imagine a lot of other obstacles also exist. And that being in the middle, we’ll be the last with physical access. And meanwhile, the wealthy aren’t going to go down without a fight, and there’s a lot, I mean a lot, of wealth tied up in the markets in U.S. dollars. Ever think it’s odd that the world purchases oil in U.S. dollars, yet before fracking, we had been net-importing oil?
One of the aspects of Peak Prosperity we really enjoy is how they promote establishing resilience through multiple forms of capital. Material abundance, rich in health, a wealth of skills and knowledge, and so on. This was a great reminder to think broadly about resilience.
In the exchange gold-for-new-currency scenario, congrats if you have gold, you get new currency! But is everyone else in the economy set up to accept this currency? You’re not going to eat gold bullion. Chicken bouillon, sure! So, we’re opting to invest in our elbow grease instead of gold.
We have lists of things we want to learn/try/do to make us stronger. To be more resilient. To be more self-reliant. Yes, we need to rely on the market for some things, but a shift in mindset might mean that you find yourself driving to a big box store to solve your problem, far less frequently—because you have the know-how to make do with what you have! What could be better in an Armageddon/apocalypse situation?
There are probably many more reasons why people purchase gold. But we’re pretty stubborn and are going our own way with this one. Hard-copy references on the shelves? Check! Deep pantry? Check! Redundant systems for primary functions on our homestead? Check!
Does this mean we’re ready for the worst? Yes and no. You’ll never be ready for everything. But you can be prepared for a natural disaster or market disruption for a few months without feeling like you need to relocate to a secret underground mountain bunker to rationalize your efforts.
Remember scouting? Always be prepared! A little extra elbow grease seems to always help, regardless of available resources. Think about wealth in a broader sense, and you might rest a little easier tonight with the efforts you’ve made. If not, what are you doing tomorrow to improve your fighting position?
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