Swag is an overused word these days intended to define someone’s style. It’s weak stuff. However, the origin of the word, nay, the acronym, provides hints to a strategy for investing in uncertain times…
That’s right, the acronym ‘S.W.A.G.’ is a code of sorts for wealth preservation that has been used by the world’s richest for hundreds, if not thousands, of years.
So with global markets teetering on the brink of a correction, I felt it prudent to remind everyone of the value of S.W.A.G.
What Does SWAG Mean?
S represents the precious metal silver. For thousands of years silver has been recognized by many leading economists as a relatively stable form of currency. Before the modern era, it was used in commerce around the world. And while nowadays it doesn’t have the same use in everyday commerce as it once did, silver, unlike its richer cousin gold, has a plethora of industrial uses. So, unlike Warren Buffett’s argument that gold is only dug out of the ground so it can be securely put back into another hole in the ground, silver serves a variety of industrial purposes while maintaining its precious metal allure. Silver has always been one of my favorite investments; and over at my other site we give it away as a prize every month for that very reason.
W represents wine, although an argument could be made that it should be replaced with watches. This, of course, doesn’t mean the $14 bottle of wine you just bought at the local grocer. Rare, fine wines have proven to hold their value exceptionally well in tough economic environments and appreciate steadily during the boom times.
A represents art. Depending on the piece and the era, an argument can be made that no other asset holds its value as well as art. Although viewed as a ‘passion investment’ some rare art has been thriving in recent years despite a sluggish economy. For example, just this year an all-time record was set for the price of a single piece of art. $179 million was paid for a Picasso painting which was previously auctioned in 1997 for $31.9 million. That’s a staggering increase of more than 425% in 18 years…
G represents gold. Despite Warren Buffett’s disinterest in the precious metal as an investment, it has proven to be a resilient asset. And for ten years, up until the end 2011, it was among the best performing asset classes on the planet. While critics argue gold has very little use in modern society, it has been viewed as an alternative currency for thousands of years. And with money printing exploding across the globe, it is the leading ‘hard asset currency’ in the world. Demand for the precious metal from China, Russia and India remains near historic levels. If there was a currency collapse, particularly for the USD, there’s no other asset I’d rather be holding than gold. Consider it an insurance policy if runaway inflation were to take hold.
During tough economic times, many people liquidate assets and hunker down until the sun rises again - a historically terrible strategy. On the contrary, to protect themselves from economic volatility and uncertainty, many of the world’s wealthiest invest in SWAG.
Stay hungry,
Aaron
