Grow Your Wealth in Times of Market Weakness
I think we all dream of it: walking through a yard sale and discovering a rare Picasso that the owner was sure was a fake.
Or maybe it’s a personal letter from George Washington tucked away in the attic of a house you just purchased.
Personally, I was always hoping to uncover buried pirate treasure — though highly unlikely, considering that I grew up in Kentucky rather than near the coast.
Earlier this year, one man uncovered a rare King Edward V gold coin in a farmer’s field in Dorset, U.K., which sold for more than £50,000 (approximately $65,840). The coin was minted during the 15th century.
Finding buried treasure is thrilling, but it’s not a reliable option when it comes to diversifying and protecting your wealth…
Don’t Stick With Just Stocks
The stock market has made a great run over the past several years. In 2017 alone, the S&P 500 is up more than 13% and is continuing to make new all-time highs. Investors are enjoying some great profits.
But there is a lingering fear that stocks have run too far too fast.
That we’re overdue for a correction.
In fact, the market has seen a surge in investors moving their money into overseas exchange-traded funds (ETF). FactSet reports that $1.4 billion has flowed into the iShares Core MSCI Emerging Markets ETF (NYSE: IEMG) over the past week. Also, more than $520 million has poured into the iShares MSCI Emerging Markets ETF (NYSE: EEM) during the past week.
Of course, it doesn’t hurt that both ETFs are up about 30% this year.
While diversifying a portion of your wealth outside of a single market — such as holding all your investments in the U.S. and the dollar — is critical, it is important to also have your portfolio diversified to include more than just stocks. It’s time to start thinking about collectibles and gold.
More Than a Hobby
While collecting items such as stamps and coins is often looked at as just a hobby, they are also great stores of wealth, with their values increasing regardless of what’s happening within the stock market.
Rare and ancient coins from increasingly prosperous areas around the world are rising in demand from collectors in search of a piece of history. Coins from Eastern Europe, such as Russia, Poland and Hungary, have seen some prices increase tenfold in the past decade.
Coins from India and the Middle East, long ignored by Western collectors, are now of intense interest. Even traditional collecting areas — such as ancient Greek and Roman, as well as Western European and British coins — have increased over fivefold in the past decade.
But despite the strong demand and price rises, these rare world coins are still very much undervalued when compared to their U.S. counterparts.
The size and prosperity of the American collector base, coupled with the relatively small number of rare coins, means that U.S. rarities go for 10 or 20 times the price of equivalent coins from England or ancient Greece and Rome — and perhaps 100 times the price of their Asian or Middle Eastern equivalents.
This discrepancy offers a unique opportunity for U.S. investors to diversify their collection with rare world coins that are seeing substantial and steady growth in value.
If you are interested in adding collectibles to your portfolio, consider contacting Stanley Gibbons.
Not Just for Jewelry
Diversifying some of your portfolio with precious metals such as gold or silver may help to protect your wealth against the current market turmoil. In times of market uncertainty and weakness, investors flock to gold and silver as an option for preserving and growing their wealth.
One avenue for adding gold, silver, platinum or even palladium to your portfolio is through EverBank’s Metals Select® accounts. These non-FDIC insured accounts allow you to buy specific coins and bars directly, or opt for the more affordable Metals Select® Unallocated Account and have your metals pooled with other EverBank clients. For full details on EverBank’s Metals Select® accounts, please click here.
For the sake of full disclosure, we receive a marketing fee based on our relationship with EverBank. But, honestly, we’d work with them regardless.
When the Market Takes a Turn for the Worse
We’ve all heard the saying, don’t put all your eggs in a single basket.
If your entire portfolio is invested in stocks, you’re potentially left with an ugly mess when the market takes a turn for the worse.
And you know it’s going to happen. Markets don’t endlessly go up.
That’s why it’s critical to have a portion of your assets in collectibles, as they are uncorrelated to the movements of the market.
And that’s why it’s also critical to have another portion of your assets in gold, as the metal typically rises in times of market weakness.
Having that safety net in place will keep you protected … and not relying on finding buried treasure.
Sr. Managing Editor, Sovereign Investor Daily