Jul 31, 2023
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From Silicon Valley Bank’s collapse to the demise of First Republic, the U.S. banking crisis may not yet be over.
Hedge fund manager and macroeconomic expert Hugh Hendry recently voiced concerns that the government could step in to prevent American bank withdrawals in an interview with Bloomberg Markets.
“I would recommend you panic,” says Hendry, pointing to what he calls “the biggest waterfall decline” in the M2 money supply — which consists of cash, checking deposits and other types of deposits that can be easily converted into cash, such as a certificate of deposit.
“That could reach a crescendo where the Treasury and the Fed may have to come in and actually restrict your right as a U.S. citizen to pull money out of the U.S. banking sector.”
Hendry fears the Fed and Treasury officials may consider a “gate” or “lock” on banking deposits, and says it’s time to turn to “the most reviled security in the universe”: the ultra-long Treasuries.
Ultra-longs, T-bonds with longer maturities — around 20 to 30 years or longer — are trading two to three standard deviations below bond ETFs, which invest in various fixed-income securities, including T-bonds.
Treasuries are also considered more reliable and safe, since the government backs them and they come with a fixed interest rate for the life of the bond.
If you’re not sold on treasuries, here are two other shockproof assets that might be worth a look.
Real estate
Real estate has long been an excellent hedge against inflation — and it could be a safe bet when other financial assets face turmoil.
While you could become a landlord and rent out a spare room for some passive income, there are other ways to invest in real estate that don’t come with the hassles of hosting.
First National Realty Partners — a private equity firm — gives everyday investors access to institutional-quality, grocery-anchored commercial real estate properties through their online platform.
You don’t have to scope out the deals yourself, as FNRP’s team of experts manage every step of the investment process. And since these properties are all anchored by major grocery chains, like Aldi and Whole Foods, they still generate quarterly income even when the economy is volatile.
If you’re looking to break into the real estate market with a smaller budget, another option to consider is EquityMultiple.
EquityMultiple allows accredited investors to buy shares of high-quality, expertly-screened real estate properties for as little as $5,000, and it only takes five minutes to get started.
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Gold
People have hoarded this precious metal for thousands of years — and now there are several ways for you to bank on gold while cash could veer out of reach.
The first tried-and-true method is to just buy solid gold, of course, whether that’s in the form of jewelry, bars or coins. Just keep in mind that prices can be notoriously difficult to predict, and if you’re keeping your gold with a special custodian or broker, you’ll also need to pay extra fees.
Your next option is to buy gold mining stocks or invest in gold ETFs through an investing app or broker.
Robinhood is a commission-free investment app where you can buy and sell stocks, options, ETFs and cryptocurrencies at no account minimum.
It offers a wide range of account types depending on what works best for you, and you can invest in gold stocks and ETFs starting with just $1.
With features like automatic investing, in-app investing guides and 24/7 access to their customer service team, Robinhood makes it easy to diversify — and protect — your portfolio with gold.
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Serah Louis is a reporter with Moneywise.com. She enjoys tackling topical personal finance issues for young people and women and covering the latest in financial news.
