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Safe Haven Money

6 Safe Havens For Money

Are you worried about a potential collapse of the dollar? Many of us are looking for a safer place to park our money other than the US dollar. We have an unsustainable economy, and it's largely due to the whole global financial system being one massive ponzi scheme backed by fiat, debt-based currency. Every dollar minted into physical existence only exists because someone, somewhere owes that dollar.

Gold Bars
Gold Bars - source - Unsplash

The recent Brexit vote shows us the volatility of currencies to various forms of market turmoil, and it is all inter-connected as the world's currencies are backed by the American dollar.

The Brexit vote caused the FTSE 100 to suddenly plunge hundreds of points in minutes - which wiping billions off the value of banks

The total GDP of the world is US $107.5 trillion in terms of purchasing power, and around US $78.28 trillion in nominal terms. It is only backed by $1.39 trillion in circulation as of September 30, 2015, of which $1.34 trillion was in Federal Reserve notes. There is another 500 trillion or more in derivatives.

18 trillion in bond debt, 200 trillion in unfunded liabilities, 3700 trillion or 3.7 quadrillion in derivatives, that the top 10 US banks have to offset all their toxic assets trying to control the commodities and stock markets. 50 million people on EBT, 25 million unemployed and 6 million homeless.

Whilst the FED reserve a private corporation prints 85 billion a month to hold up the stock market based on money that has no intrinsic value other than to create inflation and debt

It's easy to see what is happening but no one wants to believe it.

As a result, more people are looking for a safe haven against a global meltdown of the economy and possible currency collapse. What are some reasonable "safe havens for money"?

6 Safe Havens For Money

The oldest form of currency and most stable store of value since the beginning of commerce in it's most primal form is gold. Gold has to top the list as a safe haven for money, particularly as a hedge against currency collapse.

It is gold's scarcity from which it derives its value; only 165,000 tonnes of gold have even been mined. There are several ways to own gold, either in its physical form or as an ETFs such as "GLD" (for Gold Trust) and "IAU" (forCOMEX Gold Trust), gold futures, junior gold stocks or funds like a Vanguard fund.

There is always a risk whenever a third party is entrusted with your assets. There is also a risk with storing physical gold yourself - namely theft or confiscation.

Which brings me to another risk for owning gold, on paper. Due to the purposeful short selling of gold, the price of gold (which today is just over $1,300) is greatly undervalued.

Also, with all the gold that is owned around the world on paper, it is very, very probable that there is more gold on paper than actual physical gold in existence. Some people will get burned by this if TSHTF.

And as usual, one can never underestimate the evil of government: 1933, the US President FDR issued Executive Order 6102, "forbidding the Hoarding of gold coin, gold bullion, and gold certificates within the continental United States".

The effect of the order, in conjunction with the statute under which it was issued, was to criminalize the possession of monetary gold by any individual, partnership, association or corporation. It definitely makes sense to buy gold using cash if one wants to fly under the radar.

If you choose to own physical gold, your prime reason should be to have something that can be used as money in the event of a currency collapse. Sure you want some 1 ounce pieces such as Krugerrands or Canadian Maple Leaf coins, but understand that if the price of gold does go up, it could do so substantially. It would be impractical to try to barter an ounce of gold if it were to cost say $3,000 an ounce for supplies. So, think of owning it in small quantities as well: 1/4, 1/8 and 1/10 ounce pieces.

Silver is an excellent store of value and as with gold, something that can be used as a store of value in the event of a currency collapse. Some would argue that it has even more liquidity than gold. Silver coins could be one of the best ways to start owning this precious metal. Silver bars or silver rounds are pure, .999 oz silver and can be weighed or assayed (using nitric acid) to demonstrate its value.

Eventually demand for silver due to industrial demand will probably propel the price of silver into the hundreds of dollars per ounce. But silver will still remain cheap in contrast to gold. Historically, the gold:silver ratio is 15:1.

In mid-2016, the gold-to-silver ratio was at about 1 to 79. Put another way, a single ounce of gold US:GCJ6 with futures prices at $1,248.60 an ounce Tuesday, is worth 79 ounces of silver US:SIK6 priced at $15.885

Cryptocurrency - Source - Unsplash

Bitcoin (and other cryptocurrencies) are gaining traction as a safe haven for money. Although the Mt Gox meltdown a few years back where the value dropped dramatically, it has weathered the storm and increased in value.

Bitcoin's intrinsic value lies in its mathematically constrained scarcity and thus isn't vulnerable to inflation as fiat currency is (the "Fed" can't just keep printing more and more of it as it does with paper money - something that is the very cause of inflation as every time they increase the money supply by doing that, they necessarily devalue all the currency already in existence, reduced its buying power). And Bitcoin cannot be controlled by a central bank.

Greater adoption of bitcoin by retailers and increased ownership/demand of BTC will both stabilize and increase its worth as a store of value for money.

The best practice here, as with precious metals or valuable items, would be to store your own bitcoin yourself, as many of these exchanges can be compromised.

Government Bonds
Nations issue bonds by raising money from investors who are offered a set level on interest on them. (called Treasuries in the US). The value here, as in all types of investments and stores of value, is in perception.

Here specifically, that although a company can go under, it is not likely that a country would. Canadian bonds are now worth almost 20 Billion and have a triple-A rating.

The risk here is that the greater the demand for these bonds, the more people will buy into them, which will raise the price at the expense of the yield (the interest on them declines)

Rare Coins
Due to the immense scarcity and the fact that most of these coins are also gold or silver, they are an excellent store of value. Again, the risk is theft, so it would be a good idea to store them in a safe that you have access to and have them insured.

Buying arable land or land that will go up in value is another safe haven for money. In North America, with the development and condo boom, land prices are going through the roof, but there are still some deals to be had.

Buying land from the government (or "Crown Land" in Canada) is one option as is buying arable land in another country.