Rick Rule: Your Cash Savings Will Be Crucial During a “Dramatic Calculation”

Here are some strategies to protect your portfolio against collisions for 2022

Content of the article

This article was created by MoneyWise. Postmedia and MoneyWise can earn affiliate commission through links on this page.

Advertising

Content of the article

The stock market is heading towards 2022 at record highs. But according to famous investor Rick Rule, the New Year could be filled with turmoil.

“If you delay a calculation, you almost always have to pay it back with interest,” Rule warned in a fourth-quarter interview.

The former president and CEO of Sprott US Holdings believes that there will be serious consequences for any of the Fed’s easy money policies.

“So the fact that you can skate today, tomorrow and the day after on other people’s money means that at the end of the day when the company itself has to foot the bill, the bill is a lot, a lot, much more important. “

The good news? Rule also suggested a few safe haven assets to protect you. One of them might be worth investing with some of the your extra money .

Advertising

Content of the article

Save money

A bundle of US dollar money is rolled up in a hand.

Nataliia Yankovets / Shutterstock

This may seem counterintuitive since inflation is eroding the purchasing power of cash holdings. But even in this environment – where you don’t earn much on savings accounts – Rule still believes in having cash on hand.

“A circumstance where you have a dramatic calculation, something like 2008 or 1987, or 1990, the cuts in liquidity, when they occur in the market, bring down the price of everything temporarily,” he explained to Stansberry Research.

“Having the money gives you the tools and the courage to take advantage of this circumstance rather than being abused.”

In other words, cash acts like dry gunpowder, allowing investors to capitalize on opportunities if and when things take a dramatic turn south.

Advertising

Content of the article

Buy some gold and silver

Gold and silver nuggets on a black background.  Precious stones, luxury concept and mineral drainage.  Industrial activity, treasure and fortune.

RHJPhtotoandilustration / Shutterstock

It is obvious. Considering central bank money printing, Rule stressed the importance of owning gold and silver.

And the beautiful part? You don’t need to own too many.

“If you have a circumstance where fiat goes to hell in a hand basket, the rise you get in your gold and silver means that a small insurance premium, that is, a small holding of d physical gold and silver compensates for a very large deterioration in the purchasing power of your fiat currency.

“So absolutely save some of your wealth in gold and silver,” Rule stressed.

Remember: there are also mining companies that are well positioned for a precious metals boom.

For example, Wheaton Precious Metals, Pan American Silver, and Coeur Mining tend to do well with rising silver prices. Meanwhile, Barrick Gold, Newmont, and Freeport-McMoRan could offer some serious returns in a gold rally.

Advertising

Content of the article

And nowadays, you can build your own safe haven portfolio just by using your spare pennies .

Own high quality agricultural land

Young green corn growing on the field at sunset.  Young corn plants.  Corn grown in farmland, corn field.

Mark Borbely / Shutterstock

Real estate is another classic hedge against rising inflation and interest rates.

But Rule said “the only area” where he’s increasing his personal exposure to real estate is high-quality farmland – particularly in the upper Midwestern United States.

“To the extent that I can buy very high quality farmland in the American Upper Midwest, I am doing it very aggressively,” he said.

More and more investors have warmed to the idea of ​​farmland, and for good reason: No matter what the economy does, people will always need to eat.

As an inherently valuable asset, farmland can be an ideal hedge because it has little correlation with the vagaries of the stock market.

Advertising

Content of the article

Between 1992 and 2020, U.S. farmland yielded an average of 11% per year. During the same period, the S&P 500 returned just eight percent.

Nowadays, you don’t need huge savings to get into commercial real estate.

New platforms allow you to invest in fractions of commercial and multi-residential properties, with as much or as little money as you want.

A “more beautiful” haven of peace

Woman Visiting Art Gallery Lifestyle Concept

Beach Creatives / Shutterstock

If you like assets that are not subject to fluctuations in the stock market, but can also act as an inflation hedge, there is another one to consider: fine art .

Contemporary art has surpassed the S&P 500 by 174% over the past 25 years, according to the Citi Global Art Market chart.

Advertising

Content of the article

And it is becoming a popular way to diversify because it is a real physical asset with little correlation to the stock market.

On a scale of -1 to +1, with 0 representing no connection, Citi found that the correlation between contemporary art and the S&P 500 was only 0.12 over the past 25 years.

Investing in art by Banksy and Andy Warhol was once an option only for the ultra-rich, like Rule. But with a new investment platform, you can invest in iconic works of art just like Jeff Bezos and Bill Gates do.

This article was created by Wise Publishing. Wise is dedicated to providing information that helps readers navigate the complex landscape of personal finance. Wise only associates with brands he trusts and believes may be of use to the reader. This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Advertising

comments

Postmedia is committed to maintaining a vibrant but civil discussion forum and encourages all readers to share their views on our articles. Comments may take up to an hour of moderation before appearing on the site. We ask that you keep your comments relevant and respectful. We have enabled email notifications. You will now receive an email if you receive a reply to your comment, if there is an update to a comment thread that you follow, or if a user that you follow comments. Visit our Community rules for more information and details on how to adjust your E-mail settings.