Save some cash

A bundle of American dollars money is rolled up in a hand.
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This might seem counterintuitive since inflation erodes the purchasing power of cash holdings.

But even in this environment — where you don’t earn much from savings accounts — Rule still believes in having some cash on hand.

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

“Having cash gives you the tools and the courage to take advantage of that circumstance rather than being taken advantage of.”

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

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Buy a bit of gold and silver

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This is an obvious one. Given all of the Fed’s money printing, Rule pointed out the importance of owning gold and silver.

And the nice part? You don’t need to own too much of it.

“If you have a circumstance where the fiat goes to hell in a handbasket, the upside you get in your gold and silver means that a small insurance premium, which is to say a small holding in physical gold and silver, offsets a very large deterioration in the purchasing power of your fiat currency.”

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

Don’t forget: There are also mining companies that are well-positioned for a precious metals boom.

For instance, 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 deliver serious returns in a gold rally.

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

Own some high-quality farmland

Young green corn growing on the field at sunset. Young Corn Plants. Corn grown in farmland, cornfield.
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Real estate is another classic hedge against rising inflation and interest rates.

But Rule stated that “the only sector” where he’s increasing his personal exposure to real estate is high-quality farmland — specifically in the Upper Midwest of the U.S.

“To the extent that I can buy very high-quality farmland in the U.S. Upper Midwest, I’m doing that very aggressively,” he said.

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

As an intrinsically valuable asset, farmland can be an ideal hedge because it has little correlation with the ups and downs of the stock market.

Between 1992 and 2020, U.S. farmland returned an average of 11% per year. Over the same time frame, the S&P 500 returned only 8%.

And these days, 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 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.

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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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