The Wealth Preservation Strategies of the Old Money
James Rickards, a renowned financial analyst, predicts that we are on the brink of another liquidity or financial crisis. While this does not imply the end of the world, unprepared investors could face significant losses that may take years to recover. To avoid such a predicament, Rickards suggests taking a leaf from the book of the "old money" - the wealthy families that have managed to preserve their wealth over centuries.
Old Money vs. New Money
In a dinner at Palazzo Colonna, a private palace in Rome owned by the same family for 31 generations or 900 years, Rickards had the opportunity to interact with some of the world's wealthiest investors. He compared the old money, represented by families like the Vanderbilts, Rockefellers and Carnegies, with new money, represented by individuals like Mark Zuckerberg, Jeff Bezos and Warren Buffett.
The old money has a proven track record of wealth preservation over centuries, while the new money is still under scrutiny as they spend on yachts, jets and exotic vacations. The Colonna family, for instance, has managed to preserve their wealth through the Black Death, the Thirty Years’ War, the wars of Louis XIV, the Napoleonic Wars, both world wars, the Holocaust and the Cold War.
The Secret to Old Money's Longevity
When asked about the secret to the longevity of old money, a fellow diner responded, "It's easy. You just invest in the things that last." She elaborated that wealth should be divided into thirds - one third in land, one third in art, and one third in gold. This strategy follows the first rule of investing - diversification.
While stocks and bonds are important, true wealth preservation comes from art, gold and land. Rickards himself owns stocks and bonds, but he also recommends allocating a portion of your portfolio to these old money assets.
Considering Diamonds as an Investment
In addition to gold and art, Rickards suggests considering diamonds as an investment. Diamonds are not only a haven asset for the super wealthy but also a protection asset for investors with a resale value.
Strategist Yoni Jacobs lists four reasons why diamonds are a good investment: their high value per unit weight, industrial use, necessity for global growth, and emotional value. In a future crisis, when gold has spiked to $10,000 per ounce, a similar weight of diamonds would take you into the tens of millions range!
The Growing Demand for Diamonds
Unlike gold, diamonds are nondigital and cannot be wiped out by power outages, asset freezes or cyber brigades. This is crucial in a time of looming central bank digital currencies. The market for gold is much larger and more liquid, but this is changing as the demand for alternatives to cash as a store of wealth grows.
However, investing in diamonds is not as straightforward as it seems. There are many factors that contribute to a diamond's value, and it is advisable to do your homework and seek professional assistance before investing.
Conclusion
In conclusion, the old money's secret to wealth preservation lies in diversification and investing in assets that stand the test of time, such as land, gold, art, and potentially, diamonds. What are your thoughts on this strategy? Do you think it's a viable approach for preserving wealth in the face of a potential financial crisis? Share this article with your friends and let us know what you think. Don't forget to sign up for the Daily Briefing, which is delivered to your inbox every day at 6pm.
