The stock market is heading into 2022 at an all-time high. But according to popular investor Rick Rule, the new year can be turbulent.
“If you defer the account, you will always have to pay with interest,” Rule cautioned in the Q4 interview.
The former president and CEO of Sprott US Holdings believes there will be dire consequences for all of the Fed’s easy money policies.
“So the fact that you are able to skim today, tomorrow and the day after tomorrow on other people’s money ultimately means that when society itself has to foot the bill, the bill is much bigger.”
The good news? The rule also suggested some safe haven assets to protect yourself. One of them might be worth investing some of your extra cash.
Save some money
This may seem illogical because inflation erodes the purchasing power of cash holdings.
But even in this environment – where you don’t earn a lot from savings accounts – Rule still believes in having some cash on hand.
“A circumstance where it’s a dramatic reckoning, like 2008 or 1987, or 1990, where reduced liquidity, when it occurs in the market, temporarily lowers the price of everything,” he explained to Stansberry Research.
“Having money gives you the tools and the courage to take advantage of this circumstance rather than take advantage of it.”
In other words, money acts as dry gunpowder, allowing investors to take advantage of opportunities if and when things take a dramatic turn south.
Buy a little gold and silver
This is clear. Looking at all the Federal Reserve money printing, Roll noted the importance of owning gold and silver.
And the nice part? You don’t need to own a lot of them.
“If you have a circumstance where it goes to hell in a hand basket, the upside you get in gold and silver means that a small premium, a small holding of gold and silver, offsets a very large decline in the purchasing power of your fiat currency.”
Rolle emphasized this by saying, “Save a portion of your wealth in gold and silver.”
Don’t forget: There are also mining companies that are well positioned to thrive in precious metals.
For example, Wheaton Precious Metals, Pan American Silver, and Coeur Mining tend to do well as silver prices rise. Meanwhile, Barrick Gold, Newmont and Freeport-McMoRan could all generate serious returns in the gold rally.
And these days, you can build your own safe haven wallet with just your spare pennies.
Own some high quality farmland
Real estate is another classic hedge against high inflation and interest rates.
But Rolle mentioned that the “only sector” that increases its personal exposure to real estate is high-quality farmland – specifically in the upper Midwest of the United States.
“To the extent that I can buy quality farmland in the upper Midwest in the United States, I am doing it aggressively,” he said.
More and more investors have warmed to the idea of farmland, and for good reason: No matter what the economy does, people will still need to eat.
As an intrinsic value asset, farmland can be an ideal hedge as it has little correlation with the ups and downs of the stock market.
Between 1992 and 2020, US farmland returned an average of 11% annually. During the same time frame, the S&P 500 is only 8% back.
And these days, you don’t need to get your hands dirty to get part of the action.
New platforms allow you to invest in US farmland by taking a stake in the farm of your choice.
You’ll earn cash income from rental fees, crop sales – and any long-term appreciation on top of that.
Safe Haven “Insomnia”
If you like assets that aren’t subject to the ups and downs of the stock market — but can also act as an inflation hedge — there’s another one to consider: fine art.
Contemporary artwork has outperformed the S&P 500 by 174% over the past 25 years, according to Citi Global Art Market Chart.
It has become a popular way to diversify because it is a real physical asset with little connection to the stock market.
On a scale of -1 to +1, where 0 represents no link at all, Citi has found that the correlation between contemporary art and the S&P 500 has been just 0.12 over the past 25 years.
Investing in art by the likes of Banksy and Andy Warhol was only an option for beginners, like Rule. But with a new investment platform, you can invest in famous artworks just like Jeff Bezos and Bill Gates.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.