Asset Diversification Explained: Cash vs. Gold, Silver, Bitcoin and Index Funds

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Every Friday since February 2024 I run the same check-in: what inflation is doing, what a bank account actually pays, and how a basket of diversified assets has performed. This week I also played a clip of the Rich Dad Poor Dad author making the same old point — diversify, don't put it all in one basket.

This is not financial advice, it's my personal opinion and my own math. But if you're carrying credit card debt at 24%, the first half of this page matters more to you than the second half.

What you'll learn

• What inflation at 2.4% is quietly doing to the dollars in your checking account
• What savings accounts, 3-month CDs and short Treasuries were actually paying
• How I track gold, silver, Bitcoin, Ethereum, the Dow and the S&P 500 each week
• Why ETFs let you own these assets without wallets or storage
• What the 2-year/10-year Treasury inversion has signaled before past recessions
• Why an emergency fund in cash protects your assets from being sold at a bad time

Inflation doesn't reverse, it just slows down

September inflation came in at 2.4%. That sounds tame until you remember what happened two years ago, when inflation went through the roof and housing, cars and groceries all jumped. For those price increases to go away, inflation would have to go negative. It isn't. So prices stay where they are and keep climbing from there — which means your dollar buys less every year.

What holding dollars actually pays

I look at the same three cash options every week. Savings accounts were paying about 0.45%. A 3-month CD, where you lock the money up, was around 1.54%. Short Treasuries were about 4.73%, down from a little over 5%. So a bank savings account isn't even close to beating inflation, a CD barely helps, and Treasuries beat it but not dramatically. If you just park dollars, not much happens.

The basket I track

Gold is up significantly since February when I started this chart. Silver was around $34 — close to a 50% gain this year, partly because India has been buying silver hard. Bitcoin was around $67,000, with Ethereum also up. In the clip, Kiyosaki pointed out the S&P was up 24%, gold 32%, silver 43%, and tied the rush out of the dollar to U.S. debt: interest payments alone running about a trillion dollars a year.

On the stock side, the Dow (30 stocks) was up over 12% year to date, and the S&P 500 is up 93% over five years. I've heard the stat that roughly 80% of financial advisors can't beat the S&P 500, which is why so many books say to just buy the index fund and leave it alone. Buy one share and you own a slice of 500 companies.

ETFs make this simple

You don't have to buy physical metal or figure out a crypto wallet. There are spot ETFs for Bitcoin, Ethereum, gold and silver — you buy shares in your brokerage account and the fund holds the asset. I keep a list of those tickers on the site. Do your own research on which ones you like.

The inversion and why I'm cautious

The 2-year Treasury was a little over 4% and the 10-year was 4.22%. Normally the longer you lock up money, the higher the rate — that's healthy. When the 2-year pays more than the 10-year, that's an inversion, and on the long-term chart, every gray recession band was preceded by an inversion that then un-inverted. We were inverted for a long time and only recently came out of it. That doesn't guarantee a recession, but it's why I'd rather you kill high-rate debt now than stretch for returns.

Assets go down too

Look at any of these charts and you see up, down, up, down, with an average line going up and to the right over time. The danger isn't the dip — it's being forced to sell during a dip because your transmission blew. That's what the cash emergency fund is for. I dollar-cost average, buying a little each month, and I don't lock up money I might need in the next year. I'm personally staying away from real estate because I think it's in a bubble.

Key steps

1. Kill high-interest debt first, especially credit cards near 24% — run it in the Credit Card Payoff Calculator.
2. Build a cash emergency fund so you're never forced to sell an asset at a low.
3. Know what your bank is actually paying you, and compare it to inflation.
4. Save a set amount every month and dollar-cost average into a diversified basket.
5. Use index funds and spot ETFs if you don't want to handle metal or wallets.
6. Don't invest money you'll need in the next year or so.

FAQ

Should I invest before I pay off my credit cards?

My opinion: no. A card at 24% is crushing you faster than most assets grow, and it's guaranteed, not hopeful. Pay that off first, then diversify. The pay off debt or invest first breakdown walks through the math.

Do I need to buy physical gold or a crypto wallet?

No. Spot ETFs for gold, silver, Bitcoin and Ethereum let you buy shares through a normal brokerage account and the fund holds the underlying asset. Research the specific fund before you buy.

What does the 2-year/10-year inversion mean for me?

Historically, an inversion followed by an un-inversion has come before recessions. It's not a prediction, it's a caution flag. Practically, it means clear high-rate debt and keep a real emergency fund — see how to prepare for a layoff when you have debt.