I am indebted to John T. Reed for his insights into liquid hard assets. If you've never heard of those, you'll wish you had when the Fed's quantitative easing has reduced the conventional liquid parts of your net worth to zero.
I have some basic rules for defining a liquid hard asset.
1. It is available as a bulk commodity.
2. Its value is widely known and well-defined.
3. It can be used for barter in quantity for other goods or consumed on its own.
4. It is divisible into small quantities.
5. It is not subject to spoilage under normal environmental conditions.
My take on the Reed approach has been to stock up on things I can trade locally for necessities or consume in the normal course of my existence without having to participate in a volatile economy. I have stocked up on canned goods and toiletries that have quite long shelf lives.
Buying enough of the things I'll need to survive several years worth of currency devaluation and commercial uncertainty is my way of protecting the rest of my net worth from potential destruction under hyperinflation. I am now fully prepared to survive years of financial uncertainty.
