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Cash is King or is it?

Cash is King, or is it?

When during times of inflation is having cash reserves a good thing?

Cash is trash.” – Ray Dalio

Inflation is itself an increase of the money supply and a devaluing of the currency. So in the long run over the years holding cash is like being the last one to not get a seat in musical chairs.

The U.S. Dollar, like all world currencies, is a promise to pay. A promissory note or currency unit. It has only the value that we believe that the U.S. treasury will pay. With price inflation for goods, and services, everything people want to buy costs more.

At the writing of this, the current rate of inflation hit a 40 year all-time high. Inflation coming in at 7% in December 2022.

Fiat Money Crisis!

The awakening to the Fiat Money crisis is a reason why cryptocurrencies have gained in popularity.

What is Fiat Money? Wikepdia calls:

 “Fiat Money is a type of money that is not backed by any commodity such as gold or silver, and typically declared by a decree from the government to be legal tender. Throughout history, fiat money was sometimes issued by local banks and other institutions. In modern times, fiat money is generally established by government regulation.”

Since 1971 when President Richard Nixon took the U.S. Dollar off of the gold standard, it ceased to be representative money backed by gold and silver but became fiat money.

Fiat money does not have use value, and it does not have intrinsic value.

The founders of The United States of America had an idea about Money and what it should be in the constitution, Article I, Section 10, Clause 1:

“No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.”

Fiat Money Cash Conundrum.




  1. a confusing and difficult problem or question.
    “one of the most difficult conundrums for the experts”

So, if we believe that cash is trash as Ray Daleo has said, we can see that we are living in times of high inflation. And possibly even hyperinflation is coming; holding cash long-term doesn’t seem so smart. But does that mean we should hold no cash?

Ironically, even though gold and silver were money for thousands of years before fiat money became the norm they cannot be used as money now. Consider this, you have your gold and silver and you walk over to the local convenience store and ask them to make change with a quarter oz of gold bullion or ten oz of silver – they will look at you like you have lost your mind!

Gold and Silver have to be sold and converted into currency. Where I am going with this is right now we have to use fiat currency to buy the things we need and we get paid in fiat currency. Gold and Silver are bought and sold in fiat currency, stocks and investments like real estate are bought in fiat currency.

Keep your powder dry.

“Stay alert, be careful, as in Go ahead and take on the opposition, but keep your powder dry. This colloquial expression, which originally alluded to keeping gunpowder dry so that it would ignite, has been used figuratively since the 1800s…”

So I recommend keeping some dry powder when it comes to cash. Because no one can predict 100% of the time when the next stock market crash will happen or when a buying opportunity will come in a temporary crash in gold and silver prices or real estate prices. Keeping some dry powder just means you can pull the trigger when the opportunity comes.

“Buy low and sell high.” -Jim Rogers.

Let’s just think about this logically, you can’t buy low or high if you do not have the cash to buy now. It makes some prudent sense to keep some cash on hand. More cash when you believe a correction is coming and even some when you do not believe it is.

Long-term holding fiat currency is a losing strategy but if you use fiat currency to buy assets that are inflation-proof or that will grow and keep up and exceed inflation, then holding some fiat currency makes sense.

What percentage of your portfolio is cash and what percentage is in the stock market, real estate, and precious metals?

A good rule is to have between 5-20% of your investment portfolio in cash. Goldandsilver.com

Recommends an average of 20% of your portfolio in precious metals. But to be realistic the average investor has less than 1% invested in gold and silver showing a real blind spot. 

What if every investor woke up and wanted 2% of their portfolio in gold?

It wouldn’t take a genius to know that the price of gold and silver would skyrocket. 

But speaking of cash it’s good to sell an investment when it is high and buy when it is low. Keeping some cash on hand, to keep your powder dry. For your next speculative trade or long term investment. You may lose long-term with cash, and short term gold prices may go down as stock may go down in value. A balanced approach to investing is the most prudent strategy. Don’t keep all your eggs in one basket.

For more on Gold and Silver in the Inflation Trade Scenario read more here.


Check out my latest blog post at nateplissken.com “Cash is King or is it?” #inflation #preciousmetals #fiatmoney #cash #currencycrisis #nasdaq #nyse

♬ Magical (Instrumental) – BLVKSHP

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