The manager of one of Britain’s biggest bond funds has urged investors to keep cash under the mattress.
The best strategy to deal with this, he said, was for investors to spread their money widely into different assets, including gold and silver, as well as cash in savings accounts. But he went further, suggesting it was wise to hold some “physical cash”, an unusual suggestion from a mainstream fund manager.
His concern is that global debt – particularly mortgage debt – has been pumped up to record levels, made possible by exceptionally low interest rates that could soon end, and he is unsure how well banks could cope with the shocks that may await.
Monday, June 22, 2015
"It's time to hold physical cash"
"... says one of Britain's most senior fund managers"
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7 comments:
Cash under the mattress is a gift to the Treasury.
It's out of circulation, so the Treasury notices that the money supply is a little low, and prints more money to bring circulating money back up.
If everybody's doing it, it means runaway inflation when it gets spent again, which is another cycle feeding on itself, requiring the money be spent quicker, raising inflation more.
Investments for everybody never work.
I started the practice right after 9-11. I could afford to after a lifetime of working.
When the feces hits the oscillating mechanism.....cash is going to be really not all that useful. The value of the "cash" is in free fall or such flux that it is actually a detriment to have a lot of cash. My parents were in Argentina during one of their (frequent) melt downs. The cost of items in a grocery store changed from moment to moment. My father told me that it took the equivalent of $500 pesos (or whatever they use) to buy a single coke.
It doesn't hurt to have your cash OUTSIDE of the banks to prevent a "bail in" of your life savings. You should carefully examine your mutual funds and other investment holdings for exposure to the coming bank failures and currency collapses....Yes Greece....I'm looking at you. When the banks fail and you have no access to your "currency" which is being held in electronic form at the bank....you will need to have some cash. I would suggest smaller bills as your $100 bill will not mean as much then as it does now. Smaller bills may be easier to negotiate.
If you hold hard assets: gold, silver and have a supply of items that will be going (price wise) through the roof, you will be better able to weather the coming storm. A few bricks of .22 shells or a case of shotgun shells will be more valuable than cash. Food and other supplies bought NOW with cash will be more valuable than a handful of paper.
If nothing happens....well, then you have a nice supply of tuna and can make some sandwiches.
Argentina's melt down.....not my parents. They got along pretty well :-)
Grexit.
Watch for all the Weimars, up to and including Red China, to come tumbling down.
The best bet is to spread it out over a variety of assets. Something is always wildly overvalued or wildly undervalued. If you buy a nice home with nice furniture, there's a chance that the real estate market may tank, but you will have had the experience of living in a nice home. And if you live long enough, the nice furniture becomes valuable antiques. If you buy a luxury mattress you will enjoy the experience of sleeping on it more than your money will enjoy the experience of sleeping under it. The biotech stocks look good. I'm inclined to believe that people will always pay top dollar for a cure for cancer.
Instead of sitting on paper, better to buy precious metals instead. Tangible assets mean more than virtual currency like paper.
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