Reflecting on recent market volatility, the pervasiveness of the pandemic, and the uncertainty of the future, it is no wonder worried investors are questioning long-term, traditional strategies. One investor recently asked, “Is it time to stash cash and buy gold?” Good question. What is the answer?
It depends. (I absolutely hate that reply, but it is the right starting point). It depends on what problem one is trying to solve with cash and gold. If avoiding trips to the ATM is the objective, then having an amount of cash on hand is a good thing. If one has searched the world over for a paperweight that glitters, then gold may be a good option. But if either asset is seen as a hedge against a banking collapse or currency failure, neither may be as practical as bartering with vats of grain, flour, sugar, alcohol, coffee, tea, medicine, batteries, and flashlights.
“Do not worry about your life, what you will eat or drink; or about your body, what you will wear. Is not life more important than food, and the body more important than clothes? Look at the birds of the air; they do not sow or reap or store away in barns, and yet your heavenly Father feeds them. Are you not much more valuable than they?”Matthew 6:24
Think about it. The banking system goes sideways but you have cash on hand. Do you think your paper currency will retain its pre-collapse value? Or is it possible it would take a wheelbarrow full of dollars bills to buy a loaf of bread?
Well, then, doesn’t that argue for gold? But think about this scenario for a minute. You need bread, milk, eggs, and flour, and you find a grocery store that is open. You select your groceries and proceed to the cashier. Discreetly, you pull out a few gold coins and shave off enough to pay for the groceries. Stop. Do not pass Go. The grocer has no means of receiving your gold or determining how much gold he or she would require for a loaf of bread.
On this I am clear: I cannot do much about the banking sector and even less about the stability or instability of currency. I can make sure that everything in my financial plan rests on the bedrock of economic science. If you are not clear just what that means, schedule a session with your financial coach to vet your thinking and stress-test your ideas.
Randall E. Davey, CAP® is a financial advisor with Guide Advisors, Inc. In certain circumstances, he may offer insurance as a sole proprietor or through Guide Advisors, Inc. He resides with his wife, Bonnie in Mesa, Arizona. Randall can be reached at email@example.com or by phone at 425.478.5668. Insurance and advisory services are offered through Guide Advisors, Inc., a Registered Investment Advisor in the State of Washington and other jurisdictions in which it may conduct business. The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services to any residents of any State other than the states listed above or where otherwise legally permitted. All written content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. The information contained in this material has been derived from sources believed to be reliable but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed.
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