A Commodity AND Government Backed Security
- Not stocks, nor bonds
- Hear me out…
- Yeah, it’s boring. But that’s the point
I’ve found a very unique investment that my wife and I will buy in the next few days.
Now, it’s not a stock or a bond, so don’t think that I’m front-running you. That would be illegal and unethical. It’s not an option contract, or a commodity futures contract either.
And while we do plan on buying more gold and silver, that’s not what I’m referring to.
It’s a CD. As in, a certificate of deposit.
As you may know, bank-issued CDs are backed by the same Federal Deposit Insurance Corporation as all bank accounts in the United States. That is, principle up to $250,000 is guaranteed by the Government. They’ll print it into existence if they have to, but your initial investment will be safe.
The specific CD I’m referring to isn’t your typical time-deposit at any old regular bank.
It’s a CD that’s based on the spot price of 10 different commodities.
You can read all about this CD here.
There are some wonky tax considerations (you’re taxed annually even though the CD doesn’t mature for 5 years).
And the upside is somewhat limited.
But hear me out.
I look at this CD as a good place to park cash savings over the next 5 years, come rain or come shine.
In the event that commodities don’t continue their bull run, and the dollar rallies, this CD won’t perform significantly worse than any other cash savings vehicle.
But if the dollar continues its decline, and commodities continue to run, then you’ll see some decent gains on this portion of your cash savings.
The price of being wrong with this investment is about as low as it gets. Your downside is limited to the inflation hit you’ll take on the principle over the next 5 years…but if we have significant inflation over the next 5 years, this CD should outperform.
(I should note, I have no incentive, financial or otherwise, to recommend
this CD to you. I'm not getting any kickbacks from Everbank or anything
like that.)
If you have the lion’s share of your portfolio stocked with this kind of easy to understand, minimal downside savings vehicle, then you can rest easier and take on risk with the small part of your savings.
As a reader of this free letter I know you’re inundated with “get rich quick” advertisements. And while there’s a place for that kind of speculation in your portfolio, the biggest portion of your nut should be sitting somewhere safe, boring and steady.
This CD fits the bill. And I’ll be putting a few grand in it later this week.
If you have any questions about this CD or any other “boring” commodity investment, drop me a line at editorial@resourceprospector.com.
Good investing,
Kevin McElroy
Editor
Resource Prospector
