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- Want to invest outside of the stock market? Try fine art
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The famous author is a long-time advocate of investing in precious metals.
Gold and silver have helped investors preserve their wealth for centuries. They can’t be printed out of thin air like fiat money and their value is largely unaffected by economic events around the world.
But this time, Kiyosaki is favoring one over the other, and it has to do with the gold-to-silver ratio — which simply refers to the number of silver ounces it takes to buy a single ounce of gold.
“FYI Gold Silver Ratio oldest tracked rate in history: For 20th Century the gold: silver ratio was 47:1…47 oz of silver=1 oz gold. Today 85:1,” he wrote in a tweet last month.
In other words, the current gold-to-silver ratio suggests that gold (silver) is relatively expensive (inexpensive) historically speaking.
Kiyosaki also prefers silver because of its industrial use.
“Silver is an industrial precious metal. Gold is not.”
The grey metal is widely used in the production of solar panels and is also a critical component in many vehicles’ electrical control units. The industrial demand — plus the hedging properties — makes silver a very interesting asset class for investors.
There are plenty of silver miners well-positioned for a silver price boom. Companies like Pan American Silver (PAAS), Wheaton Precious Metals (WPM), and First Majestic Silver (AG) should provide a good starting point for some research.
But Kiyosaki suggests a more straightforward approach — just buy the metal directly.
“I do not touch paper gold or silver ETFs,” he says. “For $25 bucks everyone can buy a silver coin.”
So it might be time to visit your local bullion shop.
To be sure, Kiyosaki doesn’t exactly claim that silver is immune to current market turmoil.
“All markets crashing: Real Estate, Stocks, gold, silver Bitcoin,” he tweeted last week.
But one asset’s strength is very well known at the moment: oil.
It’s not necessarily good for your wallet because higher oil prices mean you are paying more for gas. “Middle class wiped out by higher oil inflation,” Kiyosaki recently tweeted.
Of course, if you own investments with exposure to the energy sector, your portfolio in 2022 will probably look better than those without it.
The price of crude oil slipped in June and July but is still up 34 per cent year-to-date.
As you’d expect, strong oil prices benefit oil producers. So far this year, investors have enjoyed outsized returns from names like Chevron (35 per cent), Exxon Mobil (51 per cent), and ConocoPhillips (50 per cent).
That said, investing in commodities is a particularly volatile undertaking.
If you’d rather hedge against inflation without the extreme ups and downs of commodity-related stocks, take a look at a few under-the-radar alternative assets.
Fine art as an investment
Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.
That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.
Contemporary artwork has outperformed the S&P 500 by a commanding 174 per cent over the past 25 years, according to the Citi Global Art Market chart.
And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.
On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.
Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.