How to protect liquid assets from risk of hyperinflation

Question

I don't want to freeze my cash in any medium that would require me to look/wait for a buyer, wait for the collective investment fund to cash my shares as they take their allowance of time to cash them when they are cheapest, or risk the only office within 100km capable of turning my [specific asset] into cash is closed due to some local emergency.

I don't really care about turning profit on my savings, but I know better than leaving them on plain account in my country's native currency on percentage keeping up with current inflation - Hyperinflation has swallowed my long-term savings account once already, and the situation isn't really stable.

What asset is easy to liquefy (even in case of severe local crisis) but immune to local hyperinflation and strong against global crises, plus doesn't lose value over time, or at least loses it slower than cash?

Answer 1

No asset is perfect or completely immune to losing value in times of crisis. With any investment your generally trading one type of risk for another.

Gold is often viewed as a safe haven asset as it has preserved its value in real terms through hundreds of years of history, but this leads to its market price often becoming overly speculative at times when people are worried about inflation which can cause its spot price to fluctuate wildly.

If you want something extremely liquid, you might want to consider a basket of foreign currencies which you view as more stable than your own. Nothing is more liquid than cash, but the returns will be low and you'll be exposed to exchange rate risk.

Inflation linked securities from major governments will give you a return linked to that countries inflation index, but you can't be sure the measure used by that government will fully track the inflation you feel with your own lifestyle. There's also the risk that in the opposite scenario of deflation these instruments will actually lose you money (in nominal terms).

Another consideration is to buy things with real tangible value, like real estate or commodities. Assets which humanity will always need like shelter and food are highly likely to retain value in a crisis - but soft commodities are hard to store and real estate is illiquid.

Do you see how every option comes with an equivalent risk?

Probably the best thing to do is take a few of these options and keep your portfolio well diversified. You can't ever know what type of crisis will come next and which assets will suffer until it happens - all you can do is make sure your risk is spread among different types of assets.