by Jeff Reeves | December 8, 2012 8:00 am
There’s a lot of doomsday talk lately. Some of it is based on the Mayan calendar and its “final” date of Dec. 21, 2012. Other talk is based on our current political mess with the fiscal cliff and our Congress that ranks slightly more trustworthy than used car salesmen. And, of course, there’s talk of the entire stock market going “kaboom.”
Now, I personally am pretty optimistic about 2013 in specific. And generally speaking, I find that living your life in constant expectation of disaster is a depressing way to go about things. I’m also the kind of person who believes that helping others is more important than mere self-preservation — a feeling I hope other people share, even if only briefly for the winter holiday season.
That said, there are a lot of people who think it’s naïve to simply rely on the goodwill of their fellow man. If push comes to shove in the New Year, these folks want to make sure they are prepared; better safe than sorry if things sour.
I’d rather spend my holidays building a gingerbread house with my two daughters than building a bunker. But if you’re looking for a 2013 hoarder’s check list, here’s a good place to start. Some items are good common sense as disaster preparedness, while others admittedly are a bit alarmist.
I’ll leave it to you to decide which ones are practical, necessary or absurd.
Jeff Gundlach of DoubleLine Capital has been making waves with his recent prediction that the global economy will go “kaboom” very soon thanks to an overwhelming load of corporate, personal and sovereign debt.
And what does he suggest as a hedge on a crash if you can’t be in stocks or bonds? Art, among other things.
Gundlach has a big personal art collection, including works by Piet Mondrian, whose double-line style helped spawn the name for his investment firm.
If it’s good enough for this Wall Street expert, it might be worth exploring for your own assets.
Beyond art, investor Jeff Gundlach also has his eye on gemstones — even noting you can carry a ruby in your shoe if you had to, according to a recent report.
Though there’s no easy index for the variety of stones out there, diamond prices been pretty firm in recent years — though admittedly, that is in part thanks to price controls from megaminer De Beers, which controls as much as 50% of the market.
If you think art is impractical, then Gundlach’s gem argument might make more sense in a crisis.
Of course, if you believe that a crisis is brewing, why not just go with the old standby of gold?
Billed as the ultimate inflation hedge, gold is metal of choice for the doomsday crowd. It is a tangible asset unlike stocks or paper money, and worth enough on a per-ounce basis to make your life savings portable — though a bit heavy if you’re well-off.
At about $1,700 an ounce, gold has rolled back from its mid-2011 high of almost $1,927 an ounce … still, the precious metal has more than tripled since 2005.
For thousands of years gold has been valuable, and likely will remain so no matter what the future holds.
If you don’t like gold as a hoarding option, consider silver. It has a much more practical use as currency in a world where paper money is worthless, since a small coin would be worth $20 instead of $2,000. How are you supposed to barter for a bit of food or water if that’s the minimum purchase? Silver, like gold, is seen as a hedge on hyperinflation, too.
And like gold, silver has rolled back from record highs in recent years — almost $50 an ounce for a brief moment in 2011 and now about $33. However, it also has tripled since 2005.
An added bonus: Silver actually has some practical uses beyond luxury goods, including antibacterial properties. So while you can’t eat gold, using silver to eat with might actually be good for your health — and if you’re living in the bush when society falls apart, that could be a plus.
Prices have rolled back at the pump — including South Carolina gasoline prices that have edged below the $3 mark recently. So why not use this rollback as a time to stock up on gas?
For starters, it’s naïve to think prices will continue to fall. Baseline demand is strong and growing, and fossil fuels aren’t infinite in supply. Inflationary pressures make it a good investment to buy while prices are low.
And furthermore, energy is perhaps just as important to have food, water and shelter in a crisis. I’m not talking about for watching TV, either, but simply for transportation to a safe place or power for tools to make repairs.
Speaking of food, water and shelter, running out of water is a fatal problem — and one that can be easily avoided simply by stocking up a clean, potable supply. Human beings can live for weeks with water but no food, but only days if the water is taken out of the equation.
Furthermore, beyond drinking, it’s important to have a clean supply of water simply to wash yourself and any food to avoid disease.
And from a basic investing perspective, the need for water will only rise as the population does. This is a growth industry.
Whether you’re in the apocalypse crowd or just someone preparing for the next power outage, it’s crucial to have clean water on hand in large amounts.
Presuming there still is some system of property rights in place to prevent someone from just kicking you off your land, real estate investments could be excellent items to “hoard” for troubled times. This is particularly true if your real estate is in a sought-after location.
The less apocalyptic investor knows that an in-demand piece of property always keeps its value based on its location. Can you imagine a world where Midtown Manhattan real estate is common and easy to come by? And if so … do you really want to live in that world?
And if you’re in the doomsday camp, there’s nothing better than a secluded patch of land with fertile soil and fresh water. Better stake your claim while you can.
If you’re not in the doomsday camp? Well, real estate also is a good inflation hedge. And with rates this cheap, you might never have a better opportunity to buy.
But what good is all that land if you can’t live off it?
That means now might be the time to visit your local nursery and start stockpiling seeds so you can grow your own food. After all, once a crisis hits, it might be hard to run down to the local hardware store and look for an envelope of heirloom tomato seeds.
Even if the world doesn’t fall apart, there’s a lot to be said for growing your own food anyway. It’s better for you and for the environment.
No discussion of hoarding is complete without mentioning firearms. After all, the very idea of hoarding involves a desire to stockpile a supply in case of an emergency — so why would you not want to protect that supply?
In a crisis, it might be impossible to find guns or ammunition, so it’s best to be proactive. This goes for a self-defense arsenal as well as for hunting gear that could be used should typical food supplies run scarce.
Just remember that if the alien apocalypse never comes to pass, the ATF might not take kindly to your gun turrets and land mines.
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