The stock market is heading towards 2022 at record levels. 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 chairman and CEO of Sprott US Holdings believes there will be dire consequences for any easy money policy the Fed has to deal with.
“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 business 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 your extra cash.
To save money
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, reductions in liquidity, when they occur in the market, temporarily lower the price of everything,” he explained to Stansberry Research.
“Having the money gives you the tools and the courage to take advantage of this circumstance rather than being mistreated.”
In other words, cash acts like dry gunpowder, allowing investors to capitalize on opportunities if and when things take a dramatic turn south.
Buy gold and silver
It is obvious. Given all of the Fed’s monetary impressions, 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 hike you get in your gold and silver means that a small insurance premium ie a small holding of gold and physical money compensates for a very large deterioration in the purchasing power of your fiat currency.
“So absolutely keep some of your gold and silver wealth,” Rule said.
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.
And these days, you can build your own safe-haven portfolio just by using your spare pennies.
Own high quality agricultural land
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 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.
Between 1992 and 2020, U.S. farmland produced an average of 11% per year. Over the same period, the S&P 500 only returned 8%.
And these days, you don’t have to get your hands dirty to get in on the action.
New platforms allow you to invest in US farmland by taking a stake in the farm of your choice.
You will earn cash income from rental fees and crop sales, as well as any additional long-term appreciation.
A “more beautiful” haven of peace
If you like assets that aren’t subject to stock market fluctuations, but can also act as an inflation hedge, there’s another one to consider: fine art.
Contemporary art has outperformed the S&P 500 by 174% over the past 25 years, according to the Citi Global Art Market chart.
And it’s becoming a popular way to diversify because it’s 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 the art of 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 like Jeff Bezos and Bill Gates do.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.