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<\/p>\nMany Americans today have become 401(k) millionaires thanks to the recent performance of stock markets. But while markets may be flying high today, that won\u2019t always be the case.<\/p>\n
When the next market crash comes, there will be some people who will have prepared themselves ahead of time, helping protect themselves from loss. But there will be others who haven\u2019t prepared, and who find themselves staring down massive losses as a result.<\/p>\n
Wealth protection can be critical during economic downturns, helping to mitigate losses through asset diversification and other strategies. And preparation for that wealth protection begins before markets turn south.<\/p>\n
That means that strategies that reap rewards during a bull market may be ditched during a recession. And many people will gladly hold onto assets that don\u2019t change value at all rather than risk losing money during a recession.<\/p>\n
What you choose to do, and which assets you choose to hold, are largely determined by your appetite for risk and your overall financial goals. But there are two assets that have remained incredibly popular as safe havens during recessions and times of financial turmoil: silver and cash.<\/p>\n
Both silver and cash have their benefits and drawbacks, and each can play a role in protecting your wealth against loss. So which is better for you as a safe haven asset: silver or cash?<\/p>\n
<\/p>\n
70 years ago we wouldn\u2019t have even had this conversation, because silver was cash. Older Americans still remember the days when silver quarters, half dollars, and dimes were used in everyday commerce.<\/p>\n
Even many of the bills used as money were redeemable in silver on demand. But that all began to change in the early 1960s.<\/p>\n
As the market price of silver began to rise, the silver content of circulating coinage began to be worth more than the coins\u2019 face value. And so silver coinage began to be pulled out of circulation and melted for its metal content.<\/p>\n
This led to a shortage of coinage, and so in 1964 the US government decided to switch its subsidiary coinage to cupronickel starting in 1965. Once that switch occurred, silver coinage disappeared from circulation virtually overnight.<\/p>\n
And this wasn\u2019t something limited to the United States either. European countries, many of whose silver coins contained less silver than US coinage, also began facing the same pressures, so that by the mid-1970s most silver coinage was out of circulation around the world.<\/p>\n
Even the silver certificates in the US were eventually no longer redeemable in silver, with the promise of silver redemption being revoked in 1968. Since then, silver hasn\u2019t been cash but rather an alternative to cash.<\/p>\n
For many Americans, buying and owning silver<\/a> retained its allure. Yet many others chose to move forward with cash.<\/p>\n Cash has many advantages. Here are four important ones.<\/p>\n One of the major advantages of cash is its wide acceptance and anonymity. Go anywhere in the country and you can use cash to buy things. Even with the growing use of credit cards and electronic payments, there are very few businesses that don\u2019t accept cash.<\/p>\n With the rising cost of credit card processing, many businesses will even offer you a cash discount if you pay in cash. And if you ever need to buy something from an individual, just about everyone will accept cash as payment.<\/p>\n Cash payments are instant. As soon as money changes hands, the transaction is done.<\/p>\n There are no funds to be cleared by banks behind the scenes, no credit card bills to pay every month. Cash payments settle instantly.<\/p>\n And if you rely on cash as your primary source of spending, it can also help you stick to your budget. Once your cash is gone, you can\u2019t spend anymore, thus limiting your ability to overspend.<\/p>\n Cash is also easily portable, and a wallet can fit thousands of dollars in it. Inflation is slowly eating away at the value of the $100 bills we have, but you can still fit enough money into your wallet to purchase a huge amount of food, a major appliance, or even a cheap used car.<\/p>\n One of the major advantages of cash is its anonymity. There is no record of any purchase or sale using cash, nor does either party have to know the other\u2019s identity.<\/p>\n While some people or entities may abuse this for nefarious purposes, it has many benefits for the average American who would rather not see his purchases aggregated, analyzed, and sold by private corporations to advertisers and government agencies.<\/p>\n The war on cash<\/a> is an effort to eliminate this anonymity and make every financial transaction transparent to the government. That\u2019s one reason that many people today distrust efforts to push electronic payments.<\/p>\n Of course, everything has its disadvantages as well as its advantages. Here are some of cash\u2019s disadvantages.<\/p>\n Like anything else you own, cash is at risk of getting stolen. And the more cash you have, the worse the theft of it will be.<\/p>\n If you have large amounts of cash at home, you\u2019re probably worried that it could get stolen at any time. And the same goes for carrying large amounts of cash outside the house too.<\/p>\n Storing large amounts of cash, if you choose not to use a bank or a safe deposit box, means keeping a safe handy to make sure that your cash doesn\u2019t walk off. And even then, you\u2019ll want to bolt that safe down to make sure it doesn\u2019t get stolen either.<\/p>\n While cash is portable, carrying large amounts of it can make it impractical for large purchases. Carrying $10,000 means carrying a stack of 100 $100 bills, which would make for a big bulge in your pants.<\/p>\n When the Federal Reserve Act was first introduced in 1913, the US Treasury was required to print $10,000 notes in such quantities as were necessary to supply the Federal reserve banks. That statute is still on the books<\/a>, but Treasury has long since ceased producing those bills, as the government is trying to cut down on tax evasion and money laundering.<\/p>\n But that $10,000 bill today has as much purchasing power as $312.55 did in 1913. So while it may seem like a lot, it\u2019s actually not really.<\/p>\n With the way inflation is going, there may eventually be a time when $100 bills are used like $5s and $10s are today. And when that happens, the utility of cash could be greatly diminished.<\/p>\n You\u2019ve probably heard stories of studies that find traces of cocaine on over 90% of bills in circulation, or of the germs that can catch a ride on cash. It became a real fear during COVID, when many people thought they might be able to catch COVID from handling cash.<\/p>\n While these fears may be slightly overblown, there\u2019s still a bit of a stigma attached to dirty, used bills. And if the thought that the money in your wallet may have spent time in a strip club or been used to snort cocaine makes you feel ill, cash may not be for you.<\/p>\n Counterfeiting remains a problem with cash, and it can be tough to tell real bills from fake ones. With counterfeiters using real banknote paper to make fakes, and with the quality of counterfeits rising, sometimes the counterfeit notes are higher quality than the real thing.<\/p>\n For the layman, there\u2019s not really a foolproof way to determine real cash from counterfeits. We all just assume that the cash we use is real, and many of us try to avoid anything larger than a $20 bill for transactions.<\/p>\n But if you\u2019re trying to accumulate large holdings of cash, the last thing you want to do is pick up a few counterfeits, because that calls the legitimacy of all of your cash into question.<\/p>\n Inflation is the real killer when it comes to holding cash. Because of inflation, the value of your cash holdings is decreasing every year.<\/p>\n Even at a relatively low inflation rate of 2%, cash will lose 80% of its value over the course of your lifetime. And at the current rate of inflation, it will lose 80% of its value in less than 50 years.<\/p>\n The higher inflation gets, the worse it is for cash holders. If inflation were to return to levels of 10% or higher, cash would lose 80% of its value in less than 17 years.<\/p>\n Many people choose to own silver as a safe haven asset, whether it\u2019s to protect against inflation, to protect against recession-related loss, or as a potential barter method or daily use currency in a post-crisis society in which fiat currencies have collapsed.<\/p>\n While methods of buying silver such as purchasing silver through a silver IRA<\/a> are gaining in popularity, that still requires your silver to be managed by a custodian and stored in a bullion depository. For many people, being able to hold physical silver coins or silver bars in your hands is worth it to ensure that you have your silver whenever you want it.<\/p>\n Here are some advantages to owning silver as a safe haven asset.<\/p>\n Like gold, silver has also enjoyed a reputation for being a hedge against inflation. While the US dollar has lost 87% of its purchasing power since President Nixon closed the gold window in 1971, the silver price has risen nearly 2,000% since then.<\/p>\n During the entirety of the 1970s stagflation, when inflation reached into double digits, silver\u2019s annualized rate of growth was over 30% per year, and over 20% per year even after adjusting for inflation.<\/p>\n Silver has been trusted to protect wealth for centuries. When currencies fail, companies go bankrupt, and governments collapse, silver is one of the first tangible, physical assets people run to for safety and security.<\/p>\n Not only is silver popular for wealth protection, it also has the potential to make great gains during tough times. It can even outperform gold.<\/p>\n In the aftermath of the 2008 financial crisis, gold nearly tripled in price, but silver more than quintupled in price. Its price growth was about double that of gold.<\/p>\n Many people who are buying silver today believe that silver is undervalued, and are hoping that silver will once again outperform gold during the next recession.<\/p>\n Silver can help diversify your portfolio, as it alters the risk profile of your assets and can help offset losses elsewhere. How much of your portfolio you want to allot to silver may depend on your risk tolerance, aversion to losses, and overall financial goals.<\/p>\n![\"$100](\"https:\/\/goldco.com\/wp-content\/uploads\/2024\/06\/Cash800x533.jpg\")
<\/p>\nAdvantages of Cash<\/h2>\n
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Wide Acceptance<\/h3>\n
Speed of Use<\/h3>\n
Portability<\/h3>\n
Anonymity<\/h3>\n
Disadvantages of Cash<\/h2>\n
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Security and Loss<\/h3>\n
![\"$10,000](\"https:\/\/goldco.com\/wp-content\/uploads\/2024\/05\/10000USDFRN800x336.jpg\")
<\/p>\nBulk<\/h3>\n
Health Concerns<\/h3>\n
Counterfeiting<\/h3>\n
Inflation<\/h3>\n
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<\/p>\nAdvantages of Silver<\/h2>\n
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Inflation Hedge<\/h3>\n
Wealth Protection<\/h3>\n
Growth Potential<\/h3>\n
Portfolio Diversification<\/h3>\n
Familiarity<\/h3>\n
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