Gold miners

Truck loading. Gold mining
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Schiff has long been a fan of the yellow metal.

“The problem with the dollar is it has no intrinsic value,” he once said. “Gold will store its value, and you'll always be able to buy more food with your gold."

As always, he’s putting his money where his mouth is.

As of Sept. 30, Euro Pacific held 519,095 shares of Newmont and 1.528 million shares of Barrick Gold.

In fact, the two gold mining giants were the firm’s top two holdings, representing 7.4% and 7.3% of its portfolio, respectively.

In Q3, Newmont produced 1.45 million ounces of gold at all-in sustaining costs of $1,120 per ounce — the current price of gold sits above $1,800. Meanwhile, Barrick Gold produced 1.09 million ounces of gold at all-in sustaining costs of $1,034 per ounce.

Gold can’t be printed out of thin air like fiat money, and its safe-haven status means demand typically increases during times of uncertainty.

If gold prices go up, miners like Newmont and Barrick will likely enjoy bigger profits.

These days, you can build your own recession-proof portfolio just by using your own digital nickels and dimes.

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Recession-proof income stocks

Marlboro Cigarettes. Marlboro is a product of the Altria Group and manufactured by Philip Morris USA.
Jonathan Weiss/Shutterstock

Dividend stocks offer investors a great way to earn a passive income stream, but some can also be used as a hedge against inflation — and even recessions.

Case in point: The third-largest holding at Euro Pacific is cigarette giant British American Tobacco, accounting for 4.5% of the portfolio.

The maker of Kent and Dunhill cigarettes pays quarterly dividends of 75 cents per share, giving the stock an attractive annual yield of 8.6%.

Schiff’s fund also owns over 160,000 shares of Philip Morris International, another tobacco king with a dividend yield of 5.4%. The Marlboro cigarette producer is Euro Pacific’s fourth-largest holding with a portfolio weighting of 4%.

The demand for cigarettes is highly inelastic, meaning large price changes only induce small changes in demand — and that demand is largely immune to economic shocks.

If you’re comfortable with investing in so-called sin stocks, British American and Philip Morris might be worth researching further.

Agriculture

Truck loading. Gold mining
Mark Agnor/Shutterstock

When it comes to playing defence, there’s one recession-proof sector that shouldn’t be overlooked: agriculture.

It’s simple. Whatever happens, people still need to eat.

Schiff doesn’t talk about agriculture as much as precious metals, but the fifth-largest holding of Euro Pacific is fertilizer producer Nutrien.

As one of the world’s largest providers of crop inputs and services, Nutrien is positioned solidly even if the economy enters a major downturn. Its shares are already up about 39% in 2021.

Another way to play the agricultural boom is to invest in U.S. farmland.

Farmland could be an effective hedge because it’s intrinsically valuable and has little correlation with the ups and downs of the stock market.

The NCREIF Farmland Total Return Index has increased more than five times over the past 15 years, 10 times over the past 20 years, and 20 times over the past 30 years.

The best part? You don’t need to get your hands dirty to get a piece of the action.

New platforms allow you to invest in U.S. farmland by taking a stake in the farm of your choice.

You’ll earn cash income from the leasing fees and crop sales. And of course, you’ll benefit from any long-term appreciation on top of that.

Fine art as an investment

Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.

That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.

Contemporary artwork has outperformed the S&P 500 by a commanding 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 link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.

Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.

Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.

About the Author

Jing Pan

Jing Pan

Investment Reporter

Jing is an investment reporter for MoneyWise. Prior to joining the team, he was a research analyst and editor at one of the leading financial publishing companies in North America. An avid advocate of investing for passive income, he wrote a monthly dividend stock newsletter for the better half of the past decade. Jing holds a Master’s Degree in Economics and an Honours Bachelor of Science Degree, both from the University of Toronto.

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