How to Invest For an Apocalypse

Credit: Comfreak

How to Invest For an Apocalypse

An introduction to armageddon-style investing

Since 2011, Alex Mason has been planning for an apocalypse. By joining the “Doomsday Prepper” craze the 17-year-old has mastered the art of survival, teaching himself how to fish, hunt with a crossbow, and stockpile resources. Despite the obvious backlash from his friends and family he continues to prepare for a doomsday scenario.

Meanwhile, the ultra-wealthy are also taking precautions but without all the hassle. Instead of confronting the harsh reality of a post-apocalypse world they are eager to obtain one of 573 billionaire bunkers: luxury underground accommodation designed to shield against anything Mother Nature throws at you.

But for those of us who don’t have time to learn survival skills — or can’t afford a luxury bunker — how do we prepare for what author Richard Goswiller describes in his book, Revelation, as “an unveiling or unfolding of things not previously known?” Whether the next apocalypse is a depression, a rapture, or a nuclear war, there are a few ways to prepare ourselves for the day of reckoning while also benefiting our normal day to day lives.

During the Q&A of an investment conference I attended last year, speakers were asked the following question: “If you were given $1,000, what would you invest in?”

While most recommended particular stocks, bonds, and real estate, one man gave an answer nobody was expecting: tinned food. At first, the audience chuckled under their breath, but their amusement turned into astonishment when they heard his rationale: “It’s currently the most undervalued asset in human history.”

With a quick Google search showing tinned food selling at a rate of roughly $150 per 60,000 calories, right now, it’s a bargain to invest in your survival. This makes sense when everyone is expecting a brighterfuture, so it’s cheap to protect yourself against certain risks, no matter how absurd or unlikely, turning the famous “buy when there’s blood in the streets” quote by Baron Rothschild on its head.

But in preparation for an apocalypse, we don’t want to stock up solely due to the cost or durability. Having a food reserve is the ultimate protection against hyperinflation: a long and accelerating period of rising consumer prices. Most people in the western world have yet to experience such an event, though it happens more often than you think.

Venezuela is at the mercy of hyperinflation, where the price of coffee rose 285,614% in a year costing consumers over a whopping one million bolivares per cup. While convenience stores remain almost empty, there are even reports of citizens eating rodents to survive.

But developed economies are no stranger to disaster either with the textbook example being the Weimar Republic. In 1923, to pay off their debts during the First World War, the German government suspended the exchange of the Papiermark into gold. In the coming months, the German central bank, Reichsbank, inflated the money supply tenfold to try and pay off the ever-increasing debt. But this caused a steep devaluation causing the currency to lose almost all its value. Just before the introduction of the succeeding German currency, the Reichsmark, you could exchange 4,200,000,000,000 Papiermarks for 1 U.S dollar — what a bargain.

Now imagine hyperinflation spreads to your economy. While everybody else is busy spending millions — if not billions — on food with worthless paper currency, your once-crazy tinned food purchase turns out to be the best investment you’ve ever made. In an economy in freefall, a bunker full of the stuff becomes a goldmine. You’ll either consume it to stay alive when times are tough or sell it for a tidy profit — providing there’s anyone to sell too.

Though if you hate the taste of Spam and favor fresh food, acquiring an allotment is a better approach to counteract a monumental surge in prices. You’ll have the freedom to grow fruit, vegetables, and other plants without having to fret about Walmart hiking food prices 10,000% overnight in response to a hyperinflation disaster. But when chaos arrives, remember to harvest your crop before someone else does it for you.

Preserving your capital during an apocalypse presents many challenges if you aren’t holding the right assets. Though you don’t need to worry about financial crises because, first, an apocalypse would spell the end of the modern monetary system, and second, it’s underway already. The U.S Dollar is the preferred global medium of exchange due to its reserve currency status but as is starts to lose dominance and value, the Greenback is heading in the same direction as every other fiat currency in history. Since 1913, it has lost over 97.5% of its value due to inflation, and with prominent world powers like the Chinese and the Russians making a consolidated effort to decouple from its hegemony, the U.S dollar is a ticking time bomb.

It’s scary but useful to know that throughout history all fiat currencies collapse, so there’s no harm in protecting yourself against an inevitable devaluation. Instead, we want a reliable store of value for our hard-earned capital, and if there’s one asset class that’s stood the test of time, it’s precious metals: gold, silver, platinum, and palladium — to name a few.

Over the past century, as we’ve moved into an era of debt and confidence-backed currencies, precious metals continue to flourish in an environment of loose monetary policy. Demand has skyrocketed, forcing the financial industry into action. As a result, there are many ways to buy, sell, and transact precious metals: metal-backed Exchange Traded Funds (ETFs), metal-backed bank accounts, and metal-backed cryptocurrencies. When the apocalypse hits, the problem is they only mirror the price of metals. Their digital infrastructure will be wiped out and you’ll have no liquidity; nothing physical to trade in your possession. There will be no market, bank, or exchange.

Without a currency and digital means of transacting, bartering will become the norm as the only way to buy and sell anything will be through physical means. That’s why physical assets, with real, intrinsic value are the only means of exchange during tough times.

But to keep those assets safe, you’ll need more security than the storm cellar Dorothy uses in the opening scene of The Wicked Wizard of Oz. Instead, it’s time to build a personal Fort Knox: a place to store prized possessions, capital, and reserves.

If you’re lucky enough to join the billionaires club in a luxury underground bunker then go for it. Still, for the average citizen, the smallest size bomb shelter will set you back $37,000 — and that’s without ongoing costs. Of course, the cheaper alternative is to board up your windows and doors, pray, and hope for the best. But if Hollywood’s apocalyptic genre of movies is anything to go by, for you, this doesn’t bode well. It’s clear that despite preserving food and capital being somewhat affordable, finding a place to preserve those assets is the real expense when preparing for an apocalypse.

As everybody on your street starts to notice the silo in your front yard and the food reserves in your garage, prepare to face your critics. Exposing yourself as an ultra-contrarian means you’re perceived as a crazy person similar to the characters you see in the movies, the Charlie Frosts, the Russell CassesBut never mind what your critics say. You’ve got the supplies, capital, and shelter you need to have a better chance of surviving the next apocalypse.

Now all you have to do is play a waiting game, yet it isn’t a waiting game: it’s a game of hope. Though the subject I’m writing about is naturally pessimistic, I am optimistic about the future. I hope we survive the next apocalypse whether it’s a nuclear war, a financial meltdown, or an asteroid collision — like the Chicxulub. But, ultimately, we also rebuild and learn from our previous mistakes.

Being preemptive by avoiding reactionary thought helps us prosper because risk happens slowly then all at once. So to have any chance of surviving for an apocalypse — and what’s to come after — we need to study our history. It prepares us for events that happen over and over again, but that nobody else sees coming. As the famous philosopher, Edmund Burke, once said, “Those who don’t know history are doomed to repeat it.”

By now it’s evident that apocalyptic investing isn’t investing: it’s more of an insurance policy protecting you from events most people don’t believe will happen. If an apocalypse does occur you’ll hit the jackpot, but you won’t be driving a flash car or sailing a luxury yacht. Sadly, there are no modern luxuries in a post-apocalyptic world.

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