When it comes to preparing for an economic collapse, there are a lot of different schools of thought. Some people believe that stockpiling food and supplies is the best way to go, while others think that having a stash of cash on hand is the key to weathering the storm. But what if neither of those options is available to you? What if the only thing left to rely on is your own two hands? In this blog post, we are going to take a look at every possible solution for what to own when the dollar collapses.
A part of this article is summarized in the following video:
What to Own When the Dollar Collapses
1. Gold, Silver, and Other Precious Metals
Precious metals like gold and silver have been used as a form of currency and store of value for centuries. In times of economic or political turmoil, precious metals are often seen as a safe haven asset.
Investors typically turn to gold when they are worried about inflation eroding the purchasing power of their paper money holdings. Gold is also seen as a hedge against geopolitical risk. Silver, on the other hand, is more industrial in nature and is used in many different industries, from electronics to photography. As such, it can be more sensitive to economic trends.
When considering investing in precious metals, it’s important to understand that there is no one-size-fits-all solution. Each investor’s circumstances are unique and will dictate what type of investment makes sense. But for those looking for an alternative to traditional investments like stocks and bonds, precious metals may be worth considering.
A few additional precious metals for your consideration:
- Platinum: Platinum is a white metal that is rarer than gold. It is often used in jewelry and has industrial applications. Platinum prices are usually more volatile than gold prices.
- Palladium: Palladium is a silvery-white metal that is similar to platinum in terms of rarity and uses. Palladium prices tend to follow the same trends as platinum prices.
- Rhodium: Rhodium is another rare metal with a silvery-white color. It is often used in catalytic converters and has industrial applications. Rhodium prices can be very volatile, so it may not be suitable for all investors.
2. Foreign Currency
When it comes to foreign currency, there are a few different options that can be considered.
- The Japanese yen has been one of the strongest currencies over the past few years as Japan continues to recover from its debt crisis. And with interest rates still near zero, there’s no reason to think that this trend will change anytime soon.
- The euro is also often seen as a safe bet. This is because the Eurozone has been relatively stable compared to other parts of the world. Furthermore, the European Central Bank is perceived as being hawkish on inflation, which makes the euro a good choice for investors looking for stability.
- The Swiss franc has also been one of the strongest performers over the past few years, thanks largely to Switzerland’s status as a stable economy during uncertain times of market turbulence. Even when the markets are relatively calm, investors are still flocking to Switzerland seeking safety. All this demand has helped push up the value of Swiss francs.
- The Chinese yuan has been on the rise in recent years. This is because the Chinese economy has been growing steadily in recent years, while other economies have been struggling. As a result, the value of the yuan has been rising against other currencies. For example, since 2010, the yuan has risen by 20% against the US dollar.
3. Foreign Stocks
Investing in foreign stocks could be a very wise move. After all, if the value of the dollar plummets, then the value of foreign stocks is likely to go up since they will be priced in stronger currencies.
Of course, there are risks involved with investing in foreign stocks. For one thing, you may not be familiar with the company or understand how it operates in its home country. Additionally, political and economic conditions in other countries can impact your investment (think Brexit).
That being said, here are a few foreign stocks that could be worth considering:
- Royal Dutch Shell (RDS-A): This oil giant is based in The Hague and has operations all over the world. While oil prices can sometimes be all over the place, Shell is still a well-run company with a diversified business model. As the oil prices rise, Shell’s stock continues soaring.
- HSBC Holdings (HSBC): Based in London, HSBC is one of the largest banks in Europe with around 7200 branches across 80 different countries. It’s been through some tough times lately due to concerns about its growth prospects and exposure to China’s economy, but HSBC remains a solid long-term pick for many investors.
- Nestle (NSRGY): A food and beverage powerhouse headquartered in Switzerland, Nestle owns some of the most iconic brands out there, including Gerber baby food, Nespresso coffee machines, and much more. Here is a live chart of this stock:
4. Foreign Bonds
When it comes to protecting your portfolio from a potential dollar collapse, there is an option to invest in foreign bonds. Foreign bonds can offer stability and diversification, as well as the potential for higher returns.
There are a number of factors to consider when investing in foreign bonds, including inflation rates, interest rates, and political risk. Inflationary risks are particularly important to consider, as high inflation can erode the value of your investment. It’s also important to be aware of currency risks – if the value of the US dollar falls relative to other currencies, your investment will lose value (in USD terms).
One way to mitigate some of these risks is to invest in foreign bonds with shorter durations – that is, bonds that mature sooner rather than later. This way you’re not exposed to as much interest rate or currency risk. Another strategy is to ladder your investments, which means investing in a series of bonds with different maturity dates, so that not all of your money is invested at once.
Of course, no investment is without risk – but by diversifying into foreign bonds you can help protect yourself against the potentially devastating effects of a collapsing dollar.
As a side note, keep in mind that a direct purchase of foreign bonds can be a highly challenging task. Try going through an exchange-traded fund or a closed-end fund to ensure a successful purchase.
The following video from Kingcademy gives a crash course on foreign bonds:
5. Bitcoin and Other Cryptocurrency
While gold, land, and various commodities propose a physical form of investment, you can diversify your assets by investing in Bitcoin and other cryptocurrency.
Bitcoin is often called “digital gold” because like gold, it is scarce (there will only ever be 21 million bitcoins in existence), durable (it can’t be destroyed or corrupted) and portable (you can carry millions of dollars’ worth of bitcoin in your pocket). It also has similar properties to gold in that it isn’t controlled by any government or central bank. This makes it an appealing choice for people who are looking to protect their wealth from inflation or a potential collapse of the US Dollar.
Other cryptocurrencies also offer similar benefits. Ethereum, for example, has been designed with the intention of being used as a global currency and platform for decentralized applications. This makes it different from Bitcoin, which was primarily designed as a digital store of value. However, both Bitcoin and Ethereum offer investors protection from inflation and the possibility of huge gains if they continue to rise in popularity and value.
Collectibles can hold their intrinsic value even when the local currency loses its own value. Here are some things to consider collecting:
- Gold and silver coins: These have always been considered a safe investment, and for good reason (see the earlier discussion about precious metals). They retain their worth even in times of inflation or economic chaos.
- Jewelry: Fine jewelry is not only beautiful, but it’s also an excellent investment. Look for pieces made with quality materials like gold, platinum, and diamonds. Avoid costume jewelry, which has no resale value.
- Artwork: Collecting art can be a passion as well as an investment. If you buy wisely, your collection will increase in value over time. But beware of fakes! Do your research before making any purchases and consult with an expert if needed.
- Classic cars: For many people, classic cars are more than just vehicles – they’re collector’s items. If you have the space (and the budget), consider investing in one or two classic cars. They could become quite valuable down the road.
- Firearms: Many people view firearms as essential for self-defense in unstable times. Whether or not you agree with this sentiment, there is no denying that guns can be worth a lot of money. So, if you’re interested in firearms, start collecting now.
7. Income-Producing Real Estate
Real estate is a solid option that shields you against the devaluation of the US dollar. Let’s review the reasons:
- Real estate is a physical asset that can’t be created or destroyed. Unlike paper assets like stocks and bonds, which can become worthless overnight, real estate will always have value as long as there is a demand for it.
- Real estate provides a hedge against inflation. As prices go up, rents generally increase as well, providing a built-in mechanism for increasing cash flow over time. Over the long term, investments in income-producing real estate tend to keep pace with or outperform inflation.
- Real estate offers potential tax advantages. In many cases, you can deduct expenses related to owning and operating an investment property from your taxable income (consult a tax advisor to confirm eligibility). Additionally, any capital gains you realize when you sell an investment property may be subject to preferential treatment under the tax code.
- Income-producing real estate can generate passive income streams. If you purchase a property with the intention of renting it out, you can collect regular rental payments without having to actively manage the property yourself (though there will be some work involved in finding tenants and maintaining the property). This type of investment can provide ongoing cash flow regardless of what happens in the broader economy. Moreover, because rental properties tend to appreciate over time, such investments also offer the potential for significant capital gains when they are eventually sold.
For these reasons, investing in income-producing real estate should be considered by anyone looking to protect their wealth during an economic downturn.
8. Land and Agricultural Commodities
When the dollar collapses, land and agricultural commodities will be some of the best investments you can make. Here’s why:
- Land is a physical asset that can’t be created or destroyed.
- Agricultural commodities are essential for human survival and will always be in demand.
- Both land and agricultural commodities are limited in supply, which means they have the potential to increase in value as demand increases.
- Unlike stocks or bonds, land and agricultural commodities can’t be printed or created by central banks, so their supply is more stable.
- They offer protection against inflationary pressures, as their prices tend to rise when the cost of living goes up.
- They provide a hedge against political instability and economic uncertainty, as investors flock to these assets during challenging times.
9. Off the Grid Living Solutions
A major economical collapse might require more than just investing in precious metals and foreign currencies. There is a good chance you will need to live off the grid, away from your country’s control and infrastructures. Here are some things you can do to be prepared and survive:
- Grow your own food: This is one of the best ways to become self-sufficient and independent from the government or other institutions. You can grow a garden with fruits and vegetables, or even keep chickens for eggs. If you have the space, consider starting a small farm. For more in-depth information, please see my article on off grid farming.
- Store water: It is important to have a clean water supply in case tap water becomes contaminated or unavailable. You can store water in barrels or containers and purify it using a filtration system or boiling. You can also establish your own water system; I have a separate post that explains in detail everything there is to know about off grid water systems.
- Generate your own power: Solar panels and wind turbines are becoming increasingly affordable and can help you generate electricity when traditional sources are unavailable or unreliable. Alternatively, you can invest in a generator powered by gasoline, propane, or natural gas.
- Heating and cooling solutions: Consider investing in a wood-burning stove for heating, as well as insulation for your home to make it more energy efficient. For cooling, evaporative coolers are much more affordable than air conditioners and use far less energy.
- Learn new skills: In an uncertain future, it may be useful to learn new skills that could help you barter or trade for goods and services.
There is much more to learn about living off the grid, which is why I invite you to read my complete guide on off grid living.
10. Barter Items
When the dollar collapses, barter items will become increasingly important. Here are some items that will be especially valuable. You will notice some similarities with the previous list, since both lists deal with items essential to your survival and independence.
- Food: In a post-dollar world, food will be one of the most valuable commodities around. Stock up on non-perishable items like canned goods, grains, and nuts, which can be traded for other goods and services.
- Water: Clean water is essential for survival, so it will be in high demand in a post-dollar economy. Store water in clean containers and have a filtration system ready to go in case you need to purify contaminated water. Invest in a good filtration system – click the link to view products on Amazon and select the best reviewed one.
- Ammunition: In an unstable world, self-protection will be crucial. If you own firearms, stock up on ammunition as it will be difficult to come by after the dollar goes down.
- Tools and supplies for basic needs, such as shelter, warmth, and hygiene: Things like matches, sewing needles, fishing line, lye soap, and bandages may not seem valuable now, but could mean the difference between life and death in a post-dollar society. Make sure you have a good supply of these items stored away.
When it comes to investing in the face of an impending dollar collapse, there are a few key things you should keep in mind. First and foremost, diversification is key. Don’t put all your eggs in one basket, so to speak. Invest in a variety of assets that will hold their value even if the dollar does tank. Gold and silver are always reliable choices, but, as stated earlier, you can also look into investments like real estate or art.
Another important thing to remember is that timing is everything. If you wait until after the dollar has already collapsed, it will be too late to invest. You need to get ahead of the curve and start investing now. The sooner you do, the better position you’ll be in when (or if) the bottom falls out from under the dollar.
Finally, don’t panic! It’s easy to let fear take over when thinking about such a potentially catastrophic event as a currency collapse. But try to stay calm and rational; otherwise you could make some very costly mistakes with your investment portfolio.
Stay safe and be prepared!