How Do You Diversify Savings Away from the Dollar?

by Wes Bridel on December 21, 2009

in Stewardship

Is the risk of holding your wealth in Dollars greater than the risk of seeing some of your savings held outside of Dollars fall because the Dollar increased in value?

Is the risk of holding your wealth in Dollars greater than the risk of seeing some of your savings held outside of Dollars fall because the Dollar increased in value?

If you’re trying to maintain a safe Cash Reserve, but have determined that the US Government is acting to destroy the value of Cash, what do you do?  We’re going to look at two major categories of savings  to consider as well as look into the advantages and risks of each.

First, it’s worth repeating that these choices do carry risks of their own.  You must decide that the risk of holding your wealth in Dollars is greater than the risk of seeing some of your savings held outside of Dollars fall because the Dollar increased in value.  We don’t recommend diversifying completely away from Dollars for several reasons including the two mentioned above, as well as the fact that there are always times when the markets act opposite of the way that you expect them to and so holding some Dollars will have value to you.  If you’ve determined that in fact holding too many Dollars is a too large a risk, then you must be willing to take on other risks to protect yourself from these things.

It is sad that the politicians that we put in place to lead us constantly talk about spending money to “help” the poor and middle class, and then put in place spending policies that destroy the value of what little savings these people have.  The wealthy are more aware and better able to diversify outside of the Dollar and thus avoid getting hit as hard by these practices, but the ones who suffer most are those whose savings are in Dollars – which are constantly losing tremendous value without them even noticing it.  However, when things turn dramatically downward, people will realize quickly how little their Dollars are worth.   We are going to discuss some of the options that exist for your savings that the wealthy utilize so that you can better prepare. But you should understand there is a risk that these things will from time to time move downward compared to the Dollar and so be worth less.

We won’t discuss the more exotic ways to prepare or profit from a massive inflation.  There are investments in commodities, industries, in countries, and even in inverse interest rate funds which might do extremely well in this environment, but such things should be considered only after a fuller understanding of the stewardship principles discussed in The Orchard of The Steward’s Calling.

The two primary forms of Savings that we will look at are:

  1. Precious Metals (such as Gold, Silver, & Platinum)
  2. Foreign Currencies

If you are comfortable with these, it is probably wisest to have a combination of these (with a few in each category) to diversify your savings.  We’ve already discussed Gold in three posts starting here.  We’ll pick up tomorrow with more of a discussion on Silver.

This post is Part 7  in the series A Few Ways to Prepare. To use this as a growth tool to better understand your own calling, you might start by reading Pt 1, Pt 2, Pt 3, Pt 4, Pt 5 and Pt 6.

Photo credit: Africa the Gift of God

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