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Wealth Protection for Traders and Investors

Wealth Protection for Traders and Investors

I’ve given advice on how to reduce your chances of getting scammed buying forex products, I also told you a method for picking a forex broker that meets your needs, I’ve given you advice on how to avoid losing everything to bad account management, and even warned you how improper risk management can wipe out your account even if you have a successful trading system. One thing I never talked about was what to do to protect your money if you become a very successful and wealthy forex trader.

We live in uncertain times. Quite a few huge financial institutions have failed, and others are in deep trouble. Everyone is focused on US fiscal problems at the moment, but there are similar issues around the globe. If things were more certain, this would be a much simpler article to write. Instead, I’m going to give advice on how to hedge your assets against a very wide array of circumstances.

One of the best pieces of advice I’ve ever gotten about traveling is to never keep all of your money in one pocket. It’s not very hard for a thief to pick your pocket. It is hard for the thief to pick 3 or 4 of your pockets. The nice thing about money (and actually part of the formal definition of money) is that money is divisible. You don’t have to (and shouldn’t) keep it all in one place.

In my risk management article, I suggested you have a rule to limit risk to a small percent of your account and to NEVER violate this rule. Now I’m going to suggest a way to “sort of” bend this unbreakable rule. Even a really good brokerage could go under. Whatever bank the brokerage uses could also go under. Sure, US banks have FDIC insurance, but will that cover you if your money is jammed into a corporate account of a US brokerage? (Assuming your money is at a US brokerage in the first place.) Not really. FDIC coverage has limits, and is primarily designed to protect accounts belonging to individuals, not corporations. Also, even if the money is safely insured, what will you do during the weeks (months?) while the government paper-pushers slowly move to straighten things out? Other countries provide wildly varying degrees of protection from bank failure, but none of them will give you instant access to 100% of your cash if your bank fails, much less 100% of your forex account balance if the bank your forex brokerage uses fails.

Once your account approaches a size you feel comfortable with, start taking some money out. Put it someplace safe (maybe spread between personal savings accounts at several well rated banks, maybe stashed securely at home). Wherever you put it, consider this to be your “reserve” account. You can still TRADE like all the money is in your forex account, as long as you don’t spend the part that’s in your reserve account, and as long as you never risk enough of your account to trigger a margin call.

Another thing to consider is compounding your money. By this I mean making profits on your profits. This can work, but you still need to pull some money out to reward yourself, pay the bills, or to donate to worthy causes. Don’t forget that there are some scam brokers who will let you make all the profit you want, as long as you never try to withdraw any. Regularly pulling some profits out of your forex account will give you plenty of warning if you’ve picked a broker like this, so that you don’t waste months or years building up a huge balance only to have the broker steal all of your profits from you.

Something else to consider about compounding – some people seem to have a mental limit to the amount they can get an account up to. Once they hit this limit, the account balance seems to just hover in that vicinity. It’s a psychological thing that affects many (but not all) traders. If it happens to you, pull 20% out and work your way back up to your limit. You may find you can’t ever break it, or you may find that doing this a few times lets you slowly increase your limit. If you can’t break your limit, that’s fine. Just keep pulling some out and working back up to your personal psychological limit.

Another thing to reduce your risk is to have two (or more) forex accounts at different brokerages. When you only have a few thousand dollars in the market, it might not be worth your effort. When you’ve got $50,000 or more, do you really want to trust 100% of it to one broker (and to that broker’s bank)?

OK, so far, you should be considering keeping your accounts at more than one brokerage, and you should have a reserve account at a bank (or several banks, or locked away at home). You should also be pulling out some profits every now and then and using that money elsewhere.

You are now safe from being completely wiped out if any one bank or brokerage fails. This is good. But there’s still a lot more you can do to protect your money.

If you still want your money to earn more money for you, there are plenty of other ways to invest it. The returns may be less than forex, but the risks of your forex accounts and all your other investments crashing simultaneously are less than any one investment crashing alone. Your choices will vary, depending on how much of this “excess” money you can afford to invest and what level of fiscal disasters you are trying to avoid.

If you’ve got a LOT of money and live in a country with a stable government and a reliable record of rights for land ownership, real estate is an excellent place to park some money. Currently the USA isn’t the only place dealing with a real estate bubble bursting and a credit crisis. If you’ve got a big pile of cold hard cash sitting around, this is the time to think about hunting for some real estate bargains. You could sell your house and upgrade to a better one, or you could buy some property to rent to others. It’s a big decision, so I suggest you do some major research on the subject before parting with any money. (No, I am not going to write an article about how to avoid real estate scams.)

You could get into the stock market. Just be aware that you can make and lose money in stocks very quickly. It’s better to be a good forex trader (or a good stock trader) than an average forex AND average stock trader (remember, average traders lose money). If you want to have some lower stress stock investments, consider finding some reliable companies that offer shares with a good dividend, and diversify your portfolio (own stocks in companies in several different sectors). Once again, before dropping in any serious money, you need to do some research. I personally only trade stocks only on extremely long-term trades, so don’t have any advice for you on this sector of investment.

You could trade commodities. Once again, it’s better to be a good trader in one market than to be an average trader in two or more markets. Personally, I know VERY little about the commodities market (other than how many ounces of silver equals 1 contract), so I can’t really advise you on this.

CDs and well-rated bonds are generally considered to be very secure, but usually pay low interest. Of course, generally the world isn’t in the middle of a mortgage and banking crisis, so the security these investments provide may be not be nearly as high as a few years ago.

Precious metals are often considered to be a good investment during times of inflation and during major economic uncertainty. Unfortunately, at the moment, the main uncertainty for the US economy is whether it slides into a recession (possibly deep, maybe very deep) or makes a very slow recovery. Either way, there’s not any serious core inflation pressure at the moment (the bulk of US inflation at this time is food and energy related, and those prices are very volatile). As I’m writing this (September, 2008), the dollar has regained some strength, and precious metals prices have fallen quite a bit from their most recent highs. Of course, there are two ways to view this. You can avoid precious metals out of fear they will fall lower, or you can watch closely and try to snap up some bargains. Personally, I’m going bargain hunting.

When I say precious metals as wealth protection, I don’t mean ETFs or options contracts. You can use those as investments if you like, but for REAL wealth protection, there’s nothing quite as secure had having direct possession of precious metals. Paper contracts for gold and silver are supposed to be backed up by physical metals, but the accounting used to figure this out looks like Enron’s last balance sheet before the company finally crashed. Maybe there really is enough precious metal to back all of those contracts, but no one seems to be in any sort of hurry to do a REAL audit to prove it. If the dollar (or whatever your local currency is) did suddenly lose 80 or 90% of its value, would you even know where and how to take delivery on an ETF or commodities contract? This would be assuming the metal was really there to back up the contract and also, assuming someone at the brokerage or commodities exchange hadn’t already “liberated” the metal.

There are some other precious metals traded (platinum, palladium, etc.), but the two best recognized ones are gold and silver. These can be used for general wealth protection, but also are useful for “worst case scenario” situations where economic meltdowns, hyperinflation, and other extreme scenarios occur. This would cause paper money to become nearly valueless and precious metal prices (both in terms of paper currency and in terms of how much they could buy) would go up dramatically. Overall, since physical gold and silver are more widely exchanged than other precious metals, they will generally be easier to buy and sell.

Some precious metals investors focus only on gold and consider silver to be the “poor investor’s metal.” Personally, I prefer silver for a number of reasons (besides the fact that I’m not exactly what you would call extremely wealthy). In the event of a serious economic meltdown, silver is a lot easier to use as money. How are you going to get change from that 1 ounce gold coin when you want to buy a loaf of bread? In quite a few languages, “silver” is one of the words used for “money.” Although gold has also been used as money throughout history, silver was generally used for making smaller denominations – sometimes to the point where the average person would use silver almost exclusively. Silver investing is also a lot cheaper to get started in than gold. Another purely psychological reason for me is I personally find that a pile of silver worth about $1000 is much more satisfying to look at than the same value of gold.

Physical silver is available in many forms. The two most commonly purchased for wealth protection purposes are .999 fine (99.9% pure silver) and junk silver. The .999 silver comes in a variety of sizes and shapes, but 1 ounce rounds, 1 ounce bars, 10 ounce bars and 100 ounce bars seem to be the most popular among those who are buying silver for long term wealth protection. One ounce Silver Eagles are produced by the US mint and are very popular, both for those wanting silver for wealth protection and among coin collectors. Junk silver is coins purchased not for their numismatic value (collectible value), but solely for the silver content of the coin. Older US coins are commonly bought and sold as junk silver, but certain older Canadian coins and some coins from other countries also qualify. US dimes, quarters, half dollars, and dollar coins dated 1964 and earlier are made of 90% silver. JKF half dollars from 1965-1970 are made of 40% silver (often called “silver clad”), and many of the nickels made during WWII (some 1942, all 1943-1945) are made of 35% silver (commonly referred to as “War Nickels”). Some more recent uncirculated and proof coins from the mint are silver clad, but these often have higher numismatic value, so are less common to find available as junk silver.

One advantage of junk silver over .999 pure silver is that even if silver prices fall to 10 cents an ounce (VERY unlikely), all of the junk silver from the US and much of it from other countries is still valid as currency and can be spent just like any other money. One thing I like about the 40% silver clad JFK half dollars is that their face value equals their silver value first if silver prices did ever take a really huge drop. Silver falling below about $3.38 an ounce means that silver clad JFK’s stop losing any additional value, since they are still worth 50 cents as currency no matter what happens to silver prices. Personally, I strongly doubt that silver will fall this far, but the purpose of this article is to tell you how to protect your wealth against a WIDE variety of circumstances, both likely and unlikely. Some people prefer to buy only 90% silver coins, but my junk silver collection includes all different silver percentages from US coins as well as some coins from other countries. Being open to a wider array of choices has also let me get bargains that others passed up.

Be careful when shopping for silver on eBay and elsewhere. The price of silver (and other precious metals) per ounce it for TROY ounces. An avoirdupois ounce (used for weights of just about everything besides precious metals here in the metric-challenged USA) is smaller than a troy ounce. I have seen eBay listings that didn’t specify what kind of ounces when selling mixed coins as junk silver. Some of these were correct for troy ounces, others were using avoirdupois ounces and were really worth about 9% less. If in doubt, ask. If you still aren’t sure, bid 10% less than you would otherwise.

With the current economic oddities, some people are worried about a completely different problem. The current banking and credit crises is reducing supplies of available cash and could lead to deflation. For a consumer with a lot of cash, deflation is a wonderful thing. Prices of goods and services go down. The problem is that severe deflation is associated with events like the Great Depression. Cutting prices of goods and services doesn’t help you if you don’t have a job or any cash. Even if you have a job, your company will be getting less and less money for goods and services. Either your salary will go down or you will lose the job. I can’t help you with the job, but do suggest keeping at least some of your assets in cash – cold hard cash in your hand, not in your bank. As previously mentioned, what are you going to if the bank fails or severely rations withdrawals in order to not fail? Yes, the government will step in sooner or later to help, but governments tend to not react very quickly in cases like this. Having a cash reserve available for investment also put you in a position to take advantage of deals you might otherwise have to pass up.

Personally, I take this one step further. My personal emergency cash supply isn’t all in US dollars. I’ve got Euros, British Pounds, Chinese Yuan, and small amounts of quite a few other currencies safely locked away. My bottom line would be severely damaged if the dollar took a large dive relative to other currencies, but I’d also have some foreign money on hand that would be worth a lot more dollars than I paid for it. I like to think of this as forex with 1:1 leverage.

Speaking of safely locking things away, if you have significant amounts of precious metals and/or cash, you need to put some effort into protecting your assets from theft. Don’t put it in a safe deposit box at a bank. You won’t have easy access to it 24/7, and if something goes wrong with the bank, you could be blocked from accessing it for a long time. A small safe (many of these are also fire-resistant), firmly bolted (from the inside!) to the wall or floor is a good start. If you are in a flood-prone area, put your cash and other valuable documents inside plastic bags. You can increase the security even more by having the safe be inside a locked cabinet or closet. You can also place some low-value items you are storing anyway on top of and around the safe to further conceal it from view. If you are in a high crime area, get a cheap lockbox, put a small amount of cash and a few silver coins in it, and attach it to something that it can easily be pried away from. Letting the criminals think they found your “secret stash” should make them less likely to keep searching.

One other point I’d like to make is that it’s always a very wise precaution to have at least 2 weeks worth of food and water stored in your home. Some people might think I’m some kind of survivalist nutcase for suggesting this as part of a wealth protection article, but I live in Florida. I’ve seen more than my share of hurricanes over the years. No matter where you live in the world, some kind of natural disaster can happen. All the cash, gold, and silver in the world won’t buy you a bottle of water or a can of soup after a town is leveled by a hurricane, tornado, or earthquake. When supplies finally start to come in after a disaster, price gouging is common. Having your own disaster survival supplies can not only save you a lot of money in these situations, but can also save your life and the lives of your family members.

Most of these wealth protection ideas (besides real estate investing) can be started with very little money upfront. You don’t have to buy hundreds or thousands of ounces of silver all at once. You don’t have to buy 2 weeks worth of extra food to store all at once. You can start by putting away a single day’s worth of food supplies every few weeks. You can buy a few silver coins a month. You can put 10% of your trading account into an interest bearing savings account at a well-rated local bank. You can put a few dollars a week into a cheap (and well-hidden) lock box until you can afford to buy a small safe. If you manage to get a small amount of foreign currency, toss it in the safe with your other cash.

There is one sure way to not protect your wealth – just don’t do anything. It’s easy and convenient to do this. You can sit there and take the risk that your brokerage and its bank will never fail (even though regulated brokerages and large banks have failed). You can assume that there will never be a natural disaster that could cut off your access to food and water for a few days or more (happens all the time, all over the world). You can rest assured that your local currency will never lose value against other currencies or against precious metals (a forex trader who thinks currency can’t lose value – insane!). You can assume that you’ll always have quick and easy access to all of your money via ATM, credit, and debit cards and have no need for a supply of cash (electronic networks for cash transfers do occasionally go down even under perfectly normal circumstances). Don’t diversify your holdings. Keep all your money in one pocket. Just don’t complain to me if something goes wrong and you lose everything.

I’d like to give special thanks to Jason Hommel (www.SilverStockReport.com) for his insight and advice on investing in physical silver. I’d also like to thank Sir Pipsalot (www.ForexDiamonds.com) for his input on the psychological barriers that some traders have when trying to continuously compound their accounts, as well as for many other insights that have helped improve this article.

Author Profile

Pharaoh

Pharaoh

Pharaoh is one of the FPA's oldest members (he claims to be about 4000 years old, but we think he's exaggerating a little). He says he created the world's first trading pair (Cow/Goat) while ruling ancient Egypt. Although there are no archeological or historical records to support this claim, we can't find anything to disprove it. Although he's not as active at the FPA as he used to be, he still holds the highest post count of all FPA members.

We don't understand how he does it, but Pharaoh has an uncanny ability to spot scams faster than anyone else we've seen. He claims to have known a number of companies were HYIP scams just by their domain names and that each time an examination of the website proved him right. He's also famous inside Forex Peace Army for warning about Ponzi schemes, even ones run by large and well established companies. He's been in a number of threads trying to warn people away from active Ponzi schemes. In spite of the efforts of shills and those gullible enough to believe in free money to discredit his words, he keeps up the warnings. In each case, the company ended up either disappearing with all client money or being shut down by the authorities.

In addition to investigating scams, Pharaoh has written a number of articles on a wide rage of trading topics, including forex broker selection, risk management, and how to select a good account manager. He's also covered other items of interest to traders, such as protecting wealth and purchasing precious metals.

Pharaoh claims to be a business consultant, but says he makes most of his income by running a globe-spanning hamster smuggling operation. If we are to believe him, he's currently working on a network of hamster tunnels under southern Europe.

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Comments

ernest8fingers
10 years ago,
Registered user
good tangible advice

Sounds like all good advice to me. Nice job.:)
Pharaoh
10 years ago,
Registered user
Thanks Ernest!

I suppose it would have been quicker just to write, "Put your money in a mattress." :D
sierratessie
10 years ago,
Registered user
psychological barriers that some traders have when trying to continuously compound th

Great report.
Is there somewhere to read sir pipsalot info on psychological barriers that some traders have when trying to continuously compound their accounts?
That's me.
Thanx.
ronsellars
10 years ago,
Registered user
This is sound solid thinking and advice.
Pharaoh
10 years ago,
Registered user
> Great report.
Is there somewhere to read sir pipsalot info on psychological barriers that some traders have when trying to continuously compound their accounts?
That's me.
Thanx.

I've never seen him write about it, but he brings up the subject in the Diamonds room from time to time. Since I was planning to write about reasons for pulling money out of accounts, it seemed to fit in with the rest of the article.

It does explain why my account balance seems to never be able to stay above 37 cents for any significant amount of time.
:D
sierratessie
10 years ago,
Registered user
> I've never seen him write about it, but he brings up the subject in the Diamonds room from time to time. Since I was planning to write about reasons for pulling money out of accounts, it seemed to fi..
I like the idea! This time I'm going to take something out, maybe that will break the habit of getting to a certain level and then giving it back.
trader1404
10 years ago,
Registered user
Greetings
I really liked this . . .
If you are in a high crime area, get a cheap lockbox, put a small amount of cash and a few silver coins in it, and attach it to something that it can easily be pried away from. Letting the criminals think they found your “secret stash” should make them less likely to keep searching.

My twist on this is to add some phony money that the robber can get caught passing. Hope nobody needs this.

happy trades
Pharaoh
10 years ago,
Registered user
Another one bites the dust.

The FDIC seized Washington Mutual Bank (WaMu) this evening. It looks like everything will be transferred over to another bank. Stockholders are really going to lose, but it remains to be seen if this will be seamless for account holders or not.

I don't recommend emptying all bank accounts in a panic, but you should at least pull enough money out so that you can cover day-to-day expenses for a couple of weeks at an absolute minimum.
Pharaoh
10 years ago,
Registered user
Don't get too distracted watching the US stock market. There are bigger problems across the pond, and in the middle of it.

Iceland is melting, and it has nothing to do with global warming. The currency has lost about half its value recently and has now been artificially pegged to the Euro (but they may not be able to maintain this). Many Icelandic banks are on the edge of collapse, and those banks hold a lot of money from the UK and the rest of Europe. The government can nationalize the banks, but doesn't have the resources to deal with th situation of too many banks go under. Iceland's government is dangerously close to bankruptcy.

If Iceland collapses, the odds of a domino effect starting in the UK and rippling eastward are pretty high.

If you are stuffing your mattress full of different currencies, skip the Icelandic Krona unless Iceland's economic and banking situation gets a lot better..
kimbo
10 years ago,
Registered user
Depression Survivors

Depression survivors concur that hard cash is what saved them in the depression. Specifically, COINS. They don't have to valuable coins, just coins. Like you said, if you can hire an employee for 50 cents an hour when the world economic system melts down, or you want to buy groceries for the week, US quarters would do the trick.

One other thought, you can get rolls of coins from the bank whenever it is convenient for you. You can also ask for mint rolls of coin which might have a bit more value if the world falls apart. Mint rolls come from the mint directly, and are not the same as rolls that the bank bundled.

Along with your survivalist foods, be sure to include toilet paper, and other necessities.

Lastly, you might consider paying your utilities one month ahead. That way if there is a meltdown, your grace period would be a lot longer than most peoples.

I agree that the greatest risk is losing one's jobs. If having 6 months of income stashed away seems formidable, these are all steps we can do.

If you are seriously convinced we are in a meltdown, be very careful what bills you pay and consciously choose not to pay some bills if you are down to your last 6 months of assets and no job in sight. This is particularly true for the over 50 crowd, where it will be harder to find work of any kind.

I agree about withdrawing money regularly from your 4x broker. If nothing else, take it from one broker and send it to another. You don't want ugly suprprises. Even if your accounts are very small.

Make a personal plan for 4x. For example, on a $3000 account using no less than 85% margin, I will make a daily goal of 1% a day (microlots), keep my account close to leveraged at all times (personally I will not use a broker that does not allow free margin leveraging), and withdraw 25% of my monthly profits on the 15th of every month. If my margin drops below 85% I will close positions at a loss and/or immediately deposit funds from my emergency fund. By the way, DO YOU KNOW HOW MANY HOURS IT WILL TAKE YOUR BROKER TO CREDIT YOUR DEPOSIT INTO YOUR ACCOUNT AND MAKE IT AVAILABLE FOR TRADING?

Closing trades at a loss is not so painful if it keeps you in the game. You can survive a couple of large hits a year if you are consistantly making 15%+ a month.

Hope this helps some members in the brotherhood/sisterhood of trades avoid some of the mistakes I have made.

Long live Forex for the Common Man :)

Kimbo
ForexTrade09
10 years ago,
Registered user
Are there material fees from buying gold or silver coins? For example, do you have to pay %5 more than the value of the metal that you are buying for some type of commision or spread?
Pharaoh
10 years ago,
Registered user
It varies quite a bit depending on the metal and where you buy it from. Pure silver (.999 fine) tends to have a somewhat painful spread. Junk silver spreads are generally tighter.
1954
8 years ago,
Registered user
Thanks for great article, Pharoah,

May I add in some points.
One important way to lock in your money is to maintain your health at functional level. Make sure you dont consume junk food. Make sure you input into your body with complete and balanced nutrients. Sufficient exercise will help to keep you fit for more ventures into the world of wealth.
ladytrader
6 years ago,
Registered user
Nice post Pharaoh, like always :)
But it does need some courage to read it all the way down. How many pips one could do during the reading? ehehe
bwarecka
5 years ago,
Registered user
solid article and advise. thk a lot.
Whitesnake
5 years ago,
Registered user
Its very much true fact that most of the large financial institutions themselves have failed and thus we small time traders are nothing in front of such big shots. The way i protect my wealth is by diversifying it by investing in real estate, have some Fixed deposits, some in the savings account, buy physical gold.
nanypurwanti
5 years ago,
Registered user
> Are there material fees from buying gold or silver coins? For example, do you have to pay %5 more than the value of the metal that you are buying for some type of commision or spread?

If you buy in forex trade, you just feel the huge of its spread. But if you bought the real one, you will not pay any tax..
Pharaoh
5 years ago,
Registered user
I don't believe he was asking about tax. He was asking about spread or commission on physical metal purchases. Jewelry shops and precious metals dealers have to make money somehow.

Costs to fabricate an item also come into play. It takes about the same amount of labor to make 2 identical rings, one of gold and the other of silver. That cost has to be added to the finished product. If the silver ring has $2 of materials and the gold ring has $60 of materials, a $5 cost of labor would render the silver ring to be a poor choice if you wanted to buy it as an investment in precious metals.

Further, taxes on jewelry and bullion vary significantly from country to country. Don't assume it's tax free without checking local regulations.
John Sachman
4 years ago,
Registered user
Solid information on this vital subject. Brilliant, thanks!
Jeffrey Lewis
4 years ago,
Registered user
Good advice. Not the simplest strategy, but definitely important points to be on the watch out for...
I loved this quote: "We live in uncertain times." Yes, uncertain indeed. Thanks for the useful report on how to protect that wealth!
:)
NicholasM
4 years ago,
Registered user
From my experience, traders tend to find it hard to save some of their earnings as they continue to push for maximum profits. However, having an independent saving account for your trade wins goes a long way towards protecting your wealth building plan. Earn some, Save some and my policy is saving at least 50% of profits made.
oluakin1070
a year ago,
Registered user
Wao!!!!! this is an excellent advice that everybody has to put into consideration in trading,investment and future occurrences because anything can happen at any time .Thanks for this wonderful, educative, passion for excellence and transformation of our life .
paulm1162
a year ago,
Registered user

Wealth Protection
Protecting Your Assets in Times of Uncertainty
By Pharaoh



Excellent advice as always Pharaoh
Joh
a year ago,
Registered user
Thank you Pharaoh 2008 how innocent we were. 9 years later 2017, climate has changed and so much more, we are under Herr Trump and Herr Piong jang and and i agree it is scary you must have put this here for a reason. Does anyone have something to add


Wealth Protection
Protecting Your Assets in Times of Uncertainty
By Pharaoh



Thank you for the article. Wow 2008 seems a long time away now 2017-we have Kim Jong un and Pres. Trump and it is frightening when both of them want to be right, can you suggest some options for various continents as out home bases vary widely. Great article thank you. :).
Pharaoh
a year ago,
Registered user
> Thank you for the article. Wow 2008 seems a long time away now 2017-we have Kim Jong un and Pres. Trump and it is frightening when both of them want to be right, can you suggest some options for vario..

If you read this one as well as [U]Wealth Protection II[/URL] (from 2011), it's not hard to guess that I'm a bit of a closet survivalist. Oh wait, the terminology has been updated. Now I'm not a survivalists. I'm a prepper. :)

Whether it's a financial collapse, a hurricane, stray missiles, aliens, or something else (like zombies), your first concern is food and shelter. A million dollars or a 10 kg bar of gold won't buy you a sandwich if there are no sandwiches left to buy. Start small and stash some bottled water, canned goods (and a can opener!) and other food items with a long shelf life. Start small. Save the bunker filled with freeze dried food and MREs for later (unless you are rich, in which case build the bunker and invite me). A week's worth of food and water will provide some serious peace of mind when the power goes out because of a hurricane, or the banks lock down the ATMs because your national government is about to give your savings account an unwanted haircut. You can slowly grow the amount of this food and water reserve as your budget permits.

The problem with financial disasters is that there are so many kinds. Hyperinflation makes cash worthless (don't burn it - those Billion dollar Zimbabwe notes can still be worth a few bucks on eBay) and precious metals valuable. Massive deflation harms the value of precious metals. Cash in the bank is subject to haircuts like the one Cyprus gave to large accounts. Cash in your home needs to be well secured against thieves. Then there's something really scary I'd never considered. Last year, India "demonitized" all their 500 and 1000 rupee notes. One day those notes were money. The next day they weren't. Imagine having saved up a pile of US currency in 50's and 100's over many years, then being told you had a limited time to deposit it into the bank (and be ready to explain where you got it if you deposit too much), all while the ATMs and banks have lines over a mile long.

My recommendation is a mix. Pick at least 2 unrelated currencies and start saving those - and keep at least some of it in small bills. For precious metals, you can go with gold or silver or both. Some people like platinum, but since it doesn't have the history in coinage that gold and silver have, I personally don't keep any platinum stashed away. Platinum enthusiasts are free to disagree and tell me how I'm missing out on a great investment.

This diversification of food, water, cash in at least 2 currencies, and metals should give you a greatly improved chance of surviving a wide variety of possible economic or natural disasters, or of at least keeping yourself healthy and tasty until your neighbors decide to resort to cannibalism.
Rizog
a year ago,
Registered user
Interesting articles especially the bit about silver. The article very truly emphasizes the utility of junk to serve as money in case of extreme meltdown. That would be much like going back to the days of Pharaoh when the coins were actually made of silver..!