Can I invest in physical foreign currency?

How can investors protect themselves from the euro crash?

At least since the financial crisis, a euro crash does not seem unlikely. With every new impending bankruptcy, the topic is taken up again and it is no secret that the southern euro countries in particular have significant financial problems due to the lack of the possibility of devaluing their currency, which, depending on the country and economic expert, are even considered to be insoluble. Private investors can also protect their money from the collapse of the euro.

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What happens in the event of a euro crash?

For almost all economic experts it is certain that Germany would return to the DM. A is considered likely Exchange rate of 1: 1, even if the economic situation would require a different conversion if the common currency actually collapsed. Especially in the case of one Hyperinflation such exchange rates would of course no longer apply. In addition, it may also be possible that, for example when changing to the DM, only savings up to a certain amount could be exchanged or the exchange rate is significantly worse.

The following consequences are also very likely, provided that the DM would be undervalued compared to the euro - as is currently the case:

  • Temporary freezing of the accounts to a strong one Capital flight to prevent.
  • Capital controls would have to be set up to prevent foreign euros from being exchanged for DM.
  • The assets of Germans abroad would lose value.

If the DM appreciates sharply compared to other European currencies, this means that banks are forced to use foreign government bonds "bad loans“Pile up. A devaluation of 20 percent against the DM also ensures, for example, that it is only worth 80 percent for the bank. At the same time, the loan for the indebted country becomes significantly more expensive, so that the loans can hardly be repaid. Economic turbulence would make the situation even worse and there would be a risk of mass bankruptcy among German banks. However, the deposit insurance is not designed to ensure that several banks become insolvent at the same time, so that the federal government is likely to be extensive tax money would have to invest to a collapse of the financial systems to prevent. Here, too, expropriations of savers could be possible.

That is why experts recommend distributing the money from the outset to different banks with as different business models as possible and in any case staying below the limit of the statutory deposit protection. In this way, investors can use different safety nets and increase the chance of remaining liquid.

Opportunities to secure the capital

  1. Foreign currency accounts

In the event of a collapse of the euro, of course, all savers who have foreign currency at their disposal through a foreign currency account have an advantage. Setting up such an account is very easy. The investor has the option of setting up such an account with his house bank and choosing a specific currency, and can then transfer a euro balance that is converted directly.

If you want to use a foreign currency account for security, you should above all on stable currencies To fall back on. The following are considered "safe":

  • U.S. dollar
  • Canadian dollar
  • Swiss franc
  • Norwegian krone
  • Swedish crown
  • Danish crown
  • British pound
  • yen
  • Singapore dollar

In addition, there is also the option for more speculative-oriented investors to invest in more volatile currencies. Exchange rate chances and risks are increased here. At the same time, the interest rates can also be higher here. Currently popular riskier currencies with higher potential returns include:

  • South African rand
  • Renminbi
  • Hong Kong dollars
  • Turkish lira
  • Mexican peso
  • Hungarian forint
  • Czech crown
  • Polish zloty

Foreign currency accounts can also be accessed through their Interest be interesting and are therefore also suitable as a good addition to risk-oriented portfolios. However, investors should note the tax distinction between interest-bearing and non-interest-bearing foreign currency accounts.

However, there is of course no question that foreign currencies are also supported by the Eurocrash would be jumbled up. Above all, the currencies of the other EU countries could be affected and also collapse for a short time.

Private investors must also expect that an investment in a foreign currency can result in a considerable loss of value, which is likely because the euro is currently significantly undervalued compared to the DM. Anyone who invests in a foreign currency now would have to accept a loss if they were exchanged back into DM.

An investment in foreign currency would also not protect if it was not just a euro crash, but the entire world economy and the monetary system stumbled. Such a tactic could be used for a Hyperinflation have significant advantages and protect the money from currency reform. In this way, savers could still secure their capital.

Is it worth buying shares if the euro collapses?

Shares represent real assets and are therefore fundamentally suitable for weathering currency risks such as inflation or even currency reforms with as little loss as possible. Of course, German and European companies and trading centers in particular would suffer from some turbulence.

In the event of a currency reform, it would be likely that trading would be suspended for some time. As a result, there would presumably be massive price losses, which, however, would not necessarily be long-lasting. A central problem for German companies, however, is the fact that exports would collapse extremely if a national currency were to appreciate, which would probably hit export-oriented companies particularly hard. In addition, important sales markets such as southern Europe would collapse sharply. It is therefore not unlikely that there would be a significant slump in profits and the associated price losses for stocks in Germany.

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That is why equity investments are a good alternative outside the euro area However, it is unlikely that global share prices would remain unaffected by a collapse of the euro. Credit Suisse assumes, for example, that the profits of the 500 most important listed US companies would plummet by 40 percent per share.

The following important guidelines result from this

  • A collapse of the euro would not leave a global market unaffected. The aim should be to keep the losses as low as possible.
  • Shares from Germany would have an advantage if the company switched to DM if the company was mainly active in Germany.
  • Above all, companies that import goods could take advantage of the benefits.
  • Numerous Swiss corporations should be able to survive a euro collapse unscathed.
  • If the domestic currency were to appreciate (for example by converting to DM), the exchange rates of foreign companies would inevitably fall.
  • As always, risk diversification is essential and should focus specifically on companies outside the monetary union.
  • Investors should focus on strong and solid individual stocks and also check the global interdependencies in the process.
  • Funds and ETFs that spread the risk across several economic areas are a good alternative.

In doing so, however, it can make perfect sense to receive a certain contribution as liquid funds. For example, a switch to DM could result in interesting investment opportunities in southern Europe.

Government bonds

Government bonds considered safe are currently unable to offset inflation. Still, they could be the big winners in the event of a Euro crash. So it is considered likely that, for example German government papers in the event of a currency reform, there will be particularly strong demand. The prerequisite is, of course, that such a changeover goes hand in hand with no debt cuts and that the bonds continue to be serviced. In principle, however, this is considered likely, because in order to be able to establish the new means of payment directly as a hard currency, a loss of confidence cannot be risked.

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Another possibility, however, is the government bonds of other countries that have a high credit rating and are not part of the monetary union. Most of the major rating agencies give the following countries outside the euro area top marks:

  • Canada
  • Australia
  • Norway
  • Switzerland
  • Sweden
  • Denmark
  • Singapore
  • Great Britain
  • United States

However, not all countries offer attractive interest rates, so private investors should compare the offers and terms in advance. At the moment, however, various countries such as Denmark or Australia still offer interest rates of around four percent. Investors would have killed two birds with one stone here: On the one hand diversifyyour investment in the event of the euro crash, and on the other hand, you can benefit from a higher return, which is solid even if the monetary union continues to exist. The exchange rate risk remains, however.

gold and silver

Gold is considered to be crisis-proof and belongs in every portfolio that is supposed to hedge against a collapse of the euro. The physical form should be preferred. Precious metals are usually considered to be even in times of absolute crisis Exchange currency usable against goods. In addition, their price then increases significantly.

As with any raw material, but also with Stocks or real estate there is of course the risk that prices can fall. However, this is likely to happen above all if the crisis does not materialize. In this case, however, other investments would probably do well.

Gold can be bought at the local jeweler or gold dealer, but also on the Internet. The provider Goldpay offers an online shop and delivery directly to your home.

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Store gold in your own house or in a locker?

A second problem with gold is storage. A gold coin or ingot can be stolen easily. Most thieves are familiar with the usual way of storing things in the desk drawer. An alternative is to hide the coin or bar. However, it has happened that the owners can no longer find the hiding place themselves in the end. In addition, the hiding place usually does not protect against thieves from your own household.

It is good to have your own safe. If you don't have that, you can rent a safe deposit box. But that costs money.

Store gold centrally

A compromise solution is central storage, for example in the gold depot of My treasury. The gold is not delivered, but stored directly in the vault by the seller.

Gold can also be stored in the safe. If you want to buy oil or coffee beans, you need a little more space.

The company from Vienna obtained no storage fees, but earns its money exclusively through the purchase and sales fees. The disadvantage is that you are not holding the money in your own hands.

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Of course, the “concrete gold” is particularly in demand in times of crisis and would protect investors in an emergency. An expropriation or a total loss of value is still the most unlikely here. In an emergency, however, the Loss of rent and the lack of liquidity are problematic be.

In crisis-ridden southern European countries in particular, there are currently interesting investment opportunities - which, of course, would also lose value in the event of a currency reform.

Real estate is therefore particularly suitable for investors who can muster enough time and expertise to find suitable properties. On the other hand, a sufficient capital stock is necessary, since they are not suitable as the only capital investment. Buying your own home is almost unreservedly recommended, but high debt can be problematic here.

Use robo advisors

If you don't want to worry too much yourself, you can also use a Robo Advsior. An algorithm selects ETFs and ETCs that offer a wide range. However, there is no scenario that predicts the total collapse of the economy. After all, the robo advisor spreads the money worldwide. In the event of a global crisis like the one that occurred in the wake of the COVID-19 pandemic, this does not protect against losses, but also such situations Spreading pays offbecause different industries and different regions are affected differently. Safe stocksare mostly food manufacturers in a crisis, for example.

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