By Lucas Kawa
“Any thoughts about persistent safe havens (other than perhaps cash under your mattress) are dangerous,” warned Jim O’Neill, Chairman of Goldman Sachs Asset Management.
However, the market skeptics would argue otherwise. The most popular so-called safe haven — an asset class that doesn’t lose value —is probably gold.
But gold can be heavy and costly to store. Furthermore, with gold trading at historically high levels, the die hard skeptics have turned to everything ranging from art, whiskey, to esoteric currencies.
Many traditional and unorthodox opportunities are available that may offer a positive return and/or protection against inflation. You might be surprised at what cracks this comprehensive (but not exhaustive) list of safe havens.
Guns and Ammo
The ability of guns and ammunition to store value makes them an appealing investment option on their own merits. According to ammo.net, the price of Remington .223 rounds rose 224% from 1999 to 2011 – well above the rate of inflation.
Gun sales spiked after the election of Barack Obama in anticipation of more stringent gun control laws.The Wall Street Journal reports that a similar boost in sales is expected in the event of the President’s re-election, and also notes that the supply of guns has not kept pace with demand.
Earlier in 2012, CEO MIchael O. Fifer of Sturm, Ruger & Co. suspended the acceptance of new orders after 1Q sales exceeded expectations.
Source: Wall Street Journal, Sovereign Man
Canadian Bonds
According to the Financial Post, foreign purchases of Canadian bonds reached a record $16.7 billion in May 2012.
Jeff Herold and Maria Berlettano, fixed-income portfolio managers at J. Zechner Associates, indicate that central banks concerned about their exposure to the European debt crisis have turned to Canadian bonds as a safe haven. Canadian bonds have retained a Triple-A rating.
Source: Financial Post
Farmland
Farmland is an attractive safe haven for investors due to its limited supply and perpetual demand. Tom Eisenhauer, President of Bonnefield Financial, remarked that farm prices are a more consistent hedge against inflation than gold. Simon Black suggests that farmland is inflation-proof because of the demand for food, which isn’t going anywhere but up.
John Taylor, from U.S. Trust’s Farm and Ranch division, remains bullish on farmland, even after noting that “”prices over the last five years have continued to go up and they’ve really gone up more than their historic averages.”
Sources: Business Insider, Maclean’s
Japanese Yen
The Wall Street Journal reports that central banks around the world have increased their reserves of yen by 22% over the past four years.
Japan’s currency appreciation has been greater than anticipated, especially relative to the USD, fueling market expectations that Japan will intervene to weaken the yen.
Source: Wall Street Journal
Watches
Most watches are not investment-grade material. However, scarce Rolex and Patek Philippe models maintain or increase their value over time. George Somlo, owner of an antiques store in London, observes that during an economic downturn “buying antique or vintage wristwatches and pocket watches has always been a very solid investment.”
Source: CNN
Timber
Though some might believe this commodities performance is tied to the housing market, timber has a history of strong performance vis-à-vis inflation. Larry D. Spears writes that timberland values increased by an average of 22% per year, compared to inflation averaging 9.2% from 1973 through 1981.
Source: Money Morning
Stamps
The Handbook of Personal Wealth Management states that stamps have one of the “best and longest-standing track records of stability and success” among physical assets. Though fragile, old stamps retain their value like collectible cars or rare comic books.
Source: Handbook of Personal Wealth Management