Half a century ago, on the occasion of my parent’s wedding, my paternal grandfather presented his daughter-in-law-to-be with a typical Chinese gift, back in the day: A pure gold bracelet and necklace, with many gold coins attached.
A Chinese citizen coming of age in the early decades of the 20th century, he lived through a fallen empire, war lords, foreign invasions, world wars, and the rise of communism. He saw governments collapse and banking systems fail. The gift of gold coins was a guarantee that wherever my parents went, whatever political or economic turmoil they encountered, even if they had nothing but the clothes on their back, they would have enough money, on my mother’s wrist and neck, to sustain the family.
America in the early 21st Century is a far cry from 20th Century China, but as we are living in increasingly uncertain economic times, the lesson behind my grandfather’s gift remains relevant. The importance of making one’s supply of money both diverse and portable endures.
Glance around the globe, much of the world economy is in recession. Japan and Sweden have instituted negative interest rates, effectively punishing savings. Cyprus even confiscated huge chunks of its citizens’ savings to help prop up a faltering government finances. The world’s financial institutions are regularly being attacked and often breached by cyber thieves and techno terrorists.
No, the sky isn’t falling (yet) and this isn’t a doomsday scenario. But it’s a good time to think about protecting one’s earnings from an uncertain economy and the threats surrounding it.
Thankfully there are several ways to do this.
Here are three of the most common:
- First, and most obviously, stash cash. This, in theory, is as easy as going to an ATM or bank and building up an emergency fund. Though you may have to do that in installments: banks already limit how much of their own money a customer can withdraw each day and is required to report large transactions to the federal government.
- Secondly, buy some precious metal bullion coins. But make sure they are produced by the government. These are the most widely recognized and easily fungible forms of bullion and come in a wide variety of sizes and values. These are important because their value typically increases when paper currency loses its value. And both cash and precious metal billions coins still work when the electricity doesn’t (as they did when Katrina knocked out the power).
- A third and final avenue for portability and diversification are crypto currencies. These are digital currencies such as Bitcoin that are commonly used as forms of payment online. Think of them as another currency like the dollar or euro, but the difference is that as long as there is an Internet, holders will have unlimited access to these funds. And since crypto currencies don’t travel through the regulated highways that other forms of money do, they are, for the time at least, out of the reach of governments and banks.
Though they may not be necklaces and bracelets laced with gold coins, these forms of personal money supply will provide a degree of security, accessibility and portability not afforded funds simply sitting in electronic bank accounts. And with the cloudy forecasts for the world’s financial system, those are all very welcome things.
served as the 38th Director of the United States Mint from 2006-2011. Moy is the chief strategist for Fortress Gold Group, a provider of gold IRA rollovers and physical U.S. gold and silver bullion coins for direct delivery.
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