Rethinking Gold as a Safe Haven
Gold has often been thought of as a safe haven in times of economic turmoil. When everything else fails, gold, a tangible asset, is usually considered stable — as well as a hedge against inflation.
But it hasn’t been working out that way.
The U.S. dollar has been strengthening, and gold has been volatile. BusinessWeek points this out about safe haven investments:
Faber agrees that investors will have to constantly reassess their safe-haven strategy and that the very concept of what is safe is a moving target. “What is safe today may change quickly tomorrow or next month,” he says. “Nothing is 100% safe at times like this.”
Right now, BusinessWeek says that Swiss currency funds, silver and farms could be reasonable safe haven investments for this particular economic time. It’s an interesting thought.
Cash and the economic crisis
Another thought is that cash may be a reasonable investment at this time. It doesn’t have great returns, but it usually manages to beat inflation. And it is relatively safe. While I would not want cash to make up most of my portfolio, I do not mind having some. Patrick at Cash Money Life is also of this opinion. He points this out about his CD ladder:
CDs aren’t the best investment for people looking to make a lot of money - even at the best of times they probably only just keep pace with inflation. But keeping some of your investments in cash can help smooth your returns and mitigate against large losses like we have recently seen in the world markets.
Another thing to watch out for with cash investments, though, is interest. Unfortunately, yield is falling, since the Fed rate keeps being cut. Indeed, it might be a good idea to clinch some CDs now, since there is even speculation that the rate could be cut to zero if things get desperate enough.
On another note, enjoy a Happy Halloween!
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Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.
