Protecting yourself in a dollar crash

With gold well above $1500, silver challenging $50, and the dollar index threatening all-time lows even against a basket of other printable fiat currencies, I thought it would be helpful to revisit Advice to a young man on supporting a mistress. This post from a year and a half ago listed investment ideas to protect your portfolio from Zimbabwe Ben. While the positions have performed extremely well since then, I think they still make sense today.

Foreign stocks:
VWO, VEA -- Vanguard emerging markets and EAFE index ETFs
SWISX -- Schwab international index fund
EWA -- Australia stock ETF
EWC -- Canada stock ETF

Foreign currencies:
FXA -- Australia currency ETF
FXC -- Canada currency ETF
Everbank.com -- savings accounts and CDs denominated in many different currencies

Foreign bonds:
PFUIX -- Pimco Foreign Bond (unhedged)

GSG -- Goldman Sachs Commodity Index ETF (yes, they are evil, but their index is OK)
GLD, SLV -- gold and silver ETFs
GDX -- gold miner index ETF
gold coins -- pick them up at your local dealer for $50 -$70 per ounce above the spot price of gold

For most investors with a long time horizon, I'd recommend a very diversified portfolio with most or all of the above in addition to significant chunk of US stocks (VTI -- Vanguard total index is the only thing you need to hold there) and a good chunk of cash/short-term CDs.

I still hold all of the above, or their functional equivalents, with the exception of the the foreign bond fund. With fiat currencies around the world likely to continue competitive devaluation, I'm not that enthusiastic about bonds anywhere.

Since then, I've also come to strongly prefer physical metals over the ETFs. And I'd take the Pimco Commodity Fund (PCRCX, PCRRX) over the GSG.

I also mentioned real estate in the post. Ironically, the one thing Zimbabwe Ben most wants to inflate is the one thing he hasn't been able to yet. It's still an open question whether the dollar collapse will be big enough to overcome today's still-high real estate valuations. But if it does, 4-to-1 leverage with a 30-year-fixed mortgage is a great way to play it.


qs said...

I don't like the price of silver right now. Any time something is too good to be true, I am skeptical.

qs said...

I bought some silver at just over $10 a couple years ago, and now it's 5X that.

wcv said...

Yeah it's had a huge move. I bought some Jul 35 puts. I hope it tanks so I can make money on the puts and then buy more silver.

Nailed it

Twitter (X) : To be fair, though, I thought they'd come up with someone more appealing than Cackles Harris.