Among the terrible aspects of War is the onset of Inflation. To be clear, I am not speaking of price increases as is often considered “inflation”. It is the RESULT of Inflation which is a Monetary event whereby the quantity of currency is increased ie Inflation and the existing currency in existence diluted or devalued. The USD has been debased since Nixon took the US off the Gold Standard in 1971. Reportedly it has lost a considerable percentage of its purchasing power. Here is AI's take: The U.S. dollar has lost over 87% to 98% of its purchasing power since the gold standard was abandoned in 1971, with most analyses indicating a decline exceeding 90% due to inflation and increased money supply. A 1971 dollar is estimated to have the same purchasing power as roughly 19 cents today, reflecting severe devaluation in the past five decades.
A personal favorite financial pundit Rick Rule estimates that a further 75% reduction in the USD purchasing power will take place over the next 10 years. I think that may be optimistic.
So what can we do during a war virtually guaranteeing Inflation will roar soon? I have touted buying Gold and Silver and let's add to that recommendation other physical assets that can't be printed. Whether we ever get to what is called HYPER Inflation levels ie 50% per year or more is yet to be seen but it does have its proponents all warning that it is immanent. Does that mean tomorrow morning or next month, quarter or year? Who knows but in Weimar Germany's Hyperinflation it was fast… AI says: The Weimar Republic hyperinflation (1921–1923) was an economic crisis where German currency lost all value due to excessive money printing to pay WWI reparations and striking Ruhr workers. Prices doubled every few days; by Nov 1923, $1 USD equaled 4.2 trillion marks, wiping out savings, causing mass poverty, and necessitating bartering.
It is not a pretty prospect and those without assets that will rise during Inflationary times, will suffer. People on fixed incomes will suffer, pensioneers, social security recipients, the typically high enemployed, and many who are unprepared will all find life unrecognizable. The top 10 to 20% who own assets that provide some level of inflation protection will fair much better. I believe this disparity will result in greatly increased civil distress and potentially violent times. I don't enjoy viewing the future in that light but being pragmatic and realistic is a fault to which I admit.
As the Gold and Silver prices have taken hits of late, it is a good time to add to or start your stack. A visit to a local coin shop which often is called a bullion dealer will give you plenty to chew on and dealers can be very helpful. Stay away from collectors coins that come with high premiums beyond bullion or melt value. These can be fine in certain circumstances and for certain investors but you really just want bullion and bullion coins. My favorites are the 1 ounce Gold Eagle, 1 ounce Gold Buffalo, 1 ounce Silver Eagle and 90% junk silver for the small fractional barter days that could arrive. The 90% silver is not really junk of course and is recognizable around the world and will be valued at farmer's markets and more as the economy tail spins. Eventually such disastrous events get sorted out and those with Gold and Silver will have a better seat at the table in any reorganized or completely NEW WORLD ORDER.
Good luck.
Best,
Donn Marier
DM-Your Own CFO