Thursday, February 21, 2013
I’ve read your book and I have a great respect for your opinion.
Having gone through the economic collapse that you experienced, what
do you think of holding money in Swiss francs or Canadian Dollars as a
Hi Dan, I think both the Canadian Dollar and the Swiss Franc have been pretty stable in the last few years, the Swiss Franc clearly being the one sought after as a safe haven in complicated financial times. This actually caused the SF to be over-valuate and measures had to be taken so as to stop it from going up further.
It is worth reminding everyone that the Swiss Franc is no longer backed by gold as it once was. That stopped in May 2000 after a referendum.
In the case of Argentina it worked out the following way:
Knowing that our peso currency was weak, people saved in dollars, both cash stashed in home and USd accounts in banks. Back then the currency exchange rate was 1 to 1, so it made sense to save up on the much more reliable Usd than the unstable national currency. Besides, who were we kidding? One dollar equals one peso with our country’s track record of hyperinflation and devaluation? As soon as people saved up a bit of money, they turned it to USD and saved it in the bank. When the economy collapsed people rushed to the banks to close their accounts in USd, since all of a sudden those dollars where worth 3 pesos, then 4 the following day. The banks froze everyone’s accounts and closed their doors. Eventually going against the law and constitution they converted people’s accounts in dollars to pesos at a 1,4 exchange rate. Given that everything had gone up in price indirectly proportional to how the peso was being devaluated, you ended up loosing about 60% of your savings. Just as the peso went from 1:1 to 1:4, prices had suddenly gone up 300% or more, somewhat keeping up with devaluation.
After the economy collapsed and people had to get by as best as they could what you did was again, save up little by little and convert your money to USD or Euros as soon as possible, and only digging into your cash stash if you had to. As years went by and learning from what happened with banks during the collapse, a lot of wealthy people stored the physical cash, mostly USD, Euros and gold, in bank safe deposit boxes. Eventually the word got around: Money was again in the banks, but not in the accounts! It got to a point where gov. officials wanted to start opening safe boxes so as to see who was hiding physical money and precious metals. I suppose they never went ahead with that idea because many politicians had they money hidden that way themselves!
2013 Silver Eagle Dollar BU in Airtite Coin Capsule
If something like that ever happens to USA and the dollar goes through a process of devaluation, Swiss Francs will protect most of your purchasing value. In a more extreme case where the dollar devaluates harder or fully collapses, then the SF may get hit hard, in which case precious metals would be the safest haven for your savings.