I often have people ask me: “Why do you stress tangibles investing, Mr. Rawles?” In my estimation, tangibles always trump intangibles. I have three primary reasons why I distrust intangibles::
First: Nearly all intangible investments are denominated in fiat currencies. Because of this there is an underlying currency inflation, revaluation, or repudiation risk. Even when buying stock in the safest, most secure and impeccably-managed company it still has some risk when the investment is denominated in Dollars. Ditto for Dollar-denominated bonds. Ditto for redeemable life insurance policies and annuities. Ditto for business investments. Ditto for money market funds. Ditto for certificates of deposit (CDs). Whenever you have any investment that is denominated in a fiat currency, there is the risk of degradation of the currency unit itself. It is only tangibles that have innate, intrinsic, and intuitively obvious value that is not vulnerable to the whims of international currency markets, interest rate changes, or government insolvency.
The second reason is that most intangible investments represent a debt taken on by someone else. When your deposit funds in a financial institution, nearly all of it is loaned to a private party, a company, or a government. So your investment’s security is dependent on someone or some entity having the willingness and ability to earn a profit and consistently pay down that debt. In essence, the vast majority of investments are buying someone else’s liability. But a personally-held tangible is something of substance that has true intrinsic value, in and of itself. That rock solid value is not dependent on the action or inaction of any individual, corporation, or government.
The third reason is that they are outside of one’s personal control. Your very best intentions have little or no influence on the bad intentions of others. The news headlines are replete with tales of how people have their investments wiped out: Bad corporate management, government ineptitude, corruption, pilfering, swindling, embezzling, “official” confiscation, and wholesale larceny. We also live in the electronic age, so many investments are mere digits in computers. Thus, they are vulnerable to hacking, EMP, solar flares, and various other risks to the power grids. In contrast, a tangible that you keep at home in your personal control is only subject to your own failings. Granted, there are vulnerabilities to rust, mold, and theft. But each of those can be mitigated with proper planning, secure storage, and some concealment. (And in the modern context, I would add: Concealment of the paper trail of your acquisition of a tangible. I recommend that you pay in cash or cryptocurrency for most of your investment tangibles. This will minimize the risk of confiscation by thieves with badges.)
The Tangible Difference
In a world of ongoing currency inflation, tangibles make sense. Whether you are buying Colt Python revolvers, slabbed rare coins, Beta C-MAG drum magazines, bags of junk silver, stripped AR-5 and AR-10 lowers, Swiss self-winding wristwatches, or case lots of .45 ACP hollowpoints, there is not very much that can go wrong with buying tangible investments. With proper storage, the downside risk is minimal, and the upside is almost always pleasing. Just be sure to do your research first and buy low. By low, I mean at or below wholesale. Divorce sales, estate sales, gun shows, and business liquidations sales are often the best places to “buy low”.
An Aside: In my estimation there is only one intangible investment that comes close to investing in a tangible, and that is investing in your own education or the education of your children. A well-educated individual betters himself and hence his prospects for earnings–whether self-employed or employed by others. That is why I’m a proponent of both homeschooling and continuing education well into adulthood. One of my lifelong friends was conferred a Doctorate (PhD) by the London School of Economics when he was 54 years old. That is commendable. Once a body of knowledge is between your ears, you own it. Only senility can take it away. Personal knowledge is invulnerable to market cycles or currency fluctuations. It is also fully portable, and cannot be confiscated.
That, in a nutshell, is my tangibles investing rationale. – JWR
Your reasoning has boatloads of common sense. In essence, trust no one with your assets. Other tangibles are hand tools of all sorts and the knowledge of how to use them. Priceless.
Great article! Short and to the point.
Tangibles encompass almost anything. Having 3 pairs of extra work boots, multiple parts to repair small engines, extra tools. The list is endless.
Gold, silver, and brass, get my vote. Not necessarily in that order.
Along with keeping tangibles at home, one might want to inquire about the limits on one’s insurance policy. There may be good reasons not to get additional coverage on ones tangibles because it would be telling the insurance company what one has which if we became less free might be an issue. However, all policies differ as to contents coverage and exclusions and paying a little more for discreetly covering one’s tangibles may really be worth it.
My grand dad told me in 1944 that all of his bank deposits were lost when the bank closed in 1933, but that all of his bank debts and mortgages were good and collected. He also told me that they collected his gold at $20 an ounce and then re evaluated it to $32 an ounce. In the last 70 years I have seen productive farmland in Minnesota go from about $100 an acre to around $5,000. although I do not know what its value is at the moment.
Be diligent to know the state of your flocks, and attend to your herds (Prov 27:23) True wealth is and always has been tangible. Attending to one’s investments denominated in digital dollars on a computer is meaningless. Perhaps, the chief reason most people stay away from tangible assets is the responsibility and personal oversight one must exercise in holding them, which includes having to look a thief in the eye should he show up to steal. In this day and age who wants to have to confront anyone, let alone wield force to stop them, when one can just invest in digital assets without exerting sweat or putting oneself in harm’s way? So foolishly we are convinced to convert true wealth into paper and digital “assets” and turn them over to others to keep for us, exercising faith in the “good nature” of fellow man to be faithful with them.
From a thief’s point of view, however, it is far easier and safer to steal your assets through inflation, stealth keyboard shenanigans, or backroom corporate deals, which take on “legitimacy” when the government does so through legalized theft backed by the bayonet. Real freedom and liberty requires using real money, exercising real hands on stewardship, and defending one’s self and property should it come to it, which cannot be done in a lone ranger mentality. That is why local, God fearing communities have always been the backbone of a free nation.
Excellent explanation on why tangibles over intangibles.
I shall reduce it to a few talking points and use it to explain to others.
Well done and appreciated, Captain!
A good read and building block of that education you spoke about at the end. The only comment I could make to add to any of that is discernment is needed with the education part of tangible investments, because there is so much rot out there, and false information. Even the New York Mellon bank got stuck with some “gold” bars that had been drilled out and tungsten inserted in them. I always weigh my tangibles when I’m considering buying them. And I always pay with cash. Imagine, worthless paper can be traded for real value. Usually, it’s the high point of my month. Great post.
DThomforde
anywhere within a 30 mile radius of Raleigh NC productive farmland is going anywhere from $25,000 to $60,000.00 per acre.
thoughts on assets: I would suggest everyone learn how to fix their own vehicles and have the tools to do it. Spent an hour on the phone this morning trying to find someone to fix the electric window on my wife’s 10 yro car. Some shops were booked 10 days out, several had gone out of business and on and on. So I can only imagine what it would be like in a SHTF situation. I admire JWR for the constant reminders of knowing how to do stuff.
YouTube is a good source for learning how to do things (as much as I despise Google). I learned how to replace the window lift mechanism in my F150 and save about $300 over what the dealer wanted.
Buy Low – Gun Shows ???? Not any that I have attended lately.
Here in the American Redoubt, where gun show tables cost only around $40 each, there are plenty of bargains to be found. Look closely at every table, and dicker on prices! The best prices seem to be at the “Mom and Pop” tables–not those operated by gun stores that drag in their inventory to gun shows on weekends.
I started taking your advice years ago, and am always watching for useful bargains. I realized, too, that knowledge and experience are intangibles, but very necessary to survival. So trading some of your fiat for classes and training is a great idea. Spend some money upgrading the areas where you are weak; at least learn the basics. First aid, farming/animal husbandry, firearms/patrol/security skills, build a shelter/fire, navigation and evasion skills, how to find water and make it safe, CPR, choosing a safe campsite, assist the birthing a calf/foal/human, recognizing and use of healing herbs, the list goes on and on.
For a solid year I scouted the dollar book store after work and picked up 60+ reference books for $1 each. Encyclopedias, dictionary, history books, medical references, first aid/emergency medicine, physics, philosophy, engineering textbooks, how to repair plumbing, copies of the Constitution, welding, canning, organic gardening, sample legal forms, food preservation. When I am gone, these books stay on to help a future generation. AAA is very generous with their roadmaps, do you have your stash?
I have literally pounds of open-pollinated heirloom seed. I purchased a variety of “fish” antibiotics and keep them with a hard copy of human dosages and symptoms. Duracell batteries are good for ten years, or get rechargeable and a solar charging station. I bought an inverter, and a solar charger. I have kids boots and runners in all sizes from the thrift store, they usually cost a dollar; I also have jeans and jackets in various sizes. Food galore. All kinds of garden and farm tools. And brass, lots of brass. I was happy to trade my fiat debt money for these valuable tangibles. Long term food always makes me the happiest.
Man, I am impressed with people’s storage abilities of their property.
I have a nice house but limited storage.
Just wondering who rents storage units for all of these barter items?
Anyway, I am content and amply supplied
It is not practical to purchase tangibles in cash when you are investing in the thousands or tens of thousands or hundreds of thousands of dollars. I value precious metals, but you stated a good point about not leaving a paper trail. When purchasing from some of the well known precious metal companies, transactions are paid via paper trail. e.g., Bank wire, credit card, etc. So what do you recommend to somebody who has tens of thousands or hundreds of thousands of dollars to protect and not give in completely to the intangible annuities, hedge funds, stocks, etc?
The best large tangible investment is productive farm or ranch land, that can double as your family retreat.
If you want to invest in metals, I recommend finding a local coin shop, withdraw cash from your bank account, and purchase that way. I’d rather have the hard assets in hand then in an “account” somewhere far away.
And depending on how much you’re purchasing, you may want to have a (small?) safe or other hiding place to keep your metals. NOT a bank safe deposit box, which you can be denied access to by TPTB for any “reason”.
Understood, thanks JWR. Sounds like Woods Ranch up near Samuels, very admirable family business and great tasting meats too. They sponsored a Renaissance Festival last Labor Day weekend and it was my 1st time on property, amazing! Personally, I prefer keeping to myself on 10 to 40 acres w/ necessary tangibles + Precious Metals.
Deplorable Silver Stacker – Your suggestion is great for the small time coin investor, but not for somebody who is wanting to invest tens of thousands, hundreds of thousands of dollars in precious metals. One can not even withdraw $10K or more from bank without having to file form with IRS. Could you imagine the hassle involved to try and stay “under the radar” by withdrawing $9K/daily for 10 or 20 days in a row and the fear that “local coin shop” would not set you up to be robbed. There has to be a better way to purchase precious metals for those seeking $10K to $200K investment.
Any opinions of $10K to $200K investment via insured purchases from reputable companies such as Rosland Capital, Augusta Precious Metals, Leer Capital, APMEX, JM Bullion, and/or Silver Gold Bull? I prefer to have on hand shipped insured for my home safe opposed to portfolio paper.