What Is The Best Way To Protect Yourself From Inflation?

[Chief_Pedant]

@DrDeth

In that case, Gold would also be worthless and we’re back to ammo and canned goods.

This is a great point, and I hope we don’t ever have to actually test it.

As I look back over human history, it appears to me that even in the worst dadgum famine, there is something about Gold that glitters, and so it retains a real barter value when all else craps out.

Now of course, there’s crapping out and there’s Crapping Out, and so if we are talking the Apocalypse, why it’s true you can’t eat gold. If we are the last three guys on the island and there is only food for two, I’m uninterested in your gold.

Still, short of that level of Apocalypse, I’m betting the polloi will always lust after gold, the way Indians do, and trust it over currency backed by the Full Faith of Good Governments. I am the first to admit it’s just a bet. Mebbe we’ve progressed as a species and all those dadburn liberals whose faith is in Good Government will have convinced us masses we are idiots for worshipping a metal.

As gold approaches $1400, I’ll be the first to admit it’s gotta come down a little short term. But 5 or 10 years out I’d love to re-visit this thread when the Good Governments’ kids get tired of being faithful and paying for our current profligate ways.

[Susanann]

@DrDeth

In that case, Gold would also be worthless and we’re back to ammo and canned goods.

Gold is never worthless. Gold always maintains its value. Gold is the ONLY money that has lasted for thousands of years, while all other currencies come and go.

[DrDeth]

@Susanann

Gold is never worthless. Gold always maintains its value. Gold is the ONLY money that has lasted for thousands of years, while all other currencies come and go.

Food was first and is still here. Then services. Furs likely next, then maybe flint. Then we had silver, copper and other metals, there’s nothing special about gold. Gold does not always maintain it’s value, either.

[dzero]

@Susanann

In a financial collapse, **bullion **is better. Gold is gold, and gold bullion can be bought and sold everyhere. Everyone will accept gold bullion for payment. Gold bullion buy you anything you want from NYC, to Paris, Moscow, Tokyo, HOng Kong, Pago Pago, Kenya, Haiti, or Taylor Nebraska.

You do NOT want to hold numismatic coins in a financial collapse. The only way to sell numismatic coins is to a coin collector, and “wealthy” coin collectors might be few and far between in a world wide financial collapse. You wont find anyone in Pago Pago that would be willing to buy your numismatic coins in a worldwide financial crisis.

At that point numismatic coins would worth at least as much as bullion - or are you actually trying to say that they would be worth less? That is ridiculous. They are made from the same blanks as the bullion coins. The only difference is that they are stamped several times to get the mirror finish that distinguishs proof coins from bullion.

In any event, I’m not one of those survivalist crackpots who thinks that we’re headed towards a Mad Max type of world. If you are, then I hope you have also dug out your underground bunker and stocked it appropriately.

If you’re somewhere in between, then please enlighten us on how that is supposed to play out. Are we looking at a Zimbabwe type of situation where the official currency is worthless and people get what they need from the underground economy and bartering? That’s the only scenario I can see where bullion or gems will do you any good. But feel free to educate me.

[RickJay]

@Susanann

Most of the foreign currencies are also already in bad shape… or worse. The financial crises, the danger of fiat paper currency becoming worthless, is world wide.

Well, I’m sorry, but that is completely false. What gives you the idea Euros or Canadian bucks are in trouble? Why would they be?

If in fact EVERY currency in the world collapses then that would in fact be a worldwide collapse of civilization, and your shiny gold will be taken from you by people with steel and gunpowder, so I’d suggest you invest some of your gold in guns and barricades. But if you feel that unlikely, try diversifying your portfolio.

[Chronos]

The current danger of a dollar collapse is unprecedented, never before has the US dollar been in danger of becoming worthless.

So in other words, what you’re saying is that historically, the dollar has had an excellent track record. Yep, I’ll agree with that. That’s why I trust dollars.

And the choice is not between gold and fiat currencies. Gold itself is a fiat currency. If gold has held up well over a span of thousands of years, then that’s proof that fiat currencies can be trusted.

[The_Second_Stone]

Death is complete protection against inflation and every other malady.

[DrDeth]

@Susanann

Gold is never worthless. Gold always maintains its value. Gold is the ONLY money that has lasted for thousands of years, while all other currencies come and go.

Right now, a oz of gold will buy about 40+ cases of MRE aka 500 meals. A worker will have to work for about a month to earn a oz.

Now let us assume, the economy crashes. How many cases of MREs do you think you could buy for a gold coin? One? Your gold just got devalued by 40.

During the Warsaw Ghetto Uprising, a gold coin bought a meal. Thus, gold got devalued by a factor of 500.

During the 1930’s a oz would buy you about 80 meals. Unskilled workers would work about 20 days to earn a oz.

Post WWII, one OZ would buy you about 20- 30 meals. You’d work about a week.

During Roman times a OZ of gold could buy you about 1000 meals, thus the value was higher. You’d work about 2-3 months to earn a oz.

Thus the value of gold has fluctuated from one meal per oz to 1000 meals. A week to 3 months of work.

The value of gold has fluctuated greatly.

[dzero]

@DrDeth - that is some great research. Do you happen to know how much gold inflation there was as the result of the Spanish bring back tons of the stuff from the New World. According to Susanann, only silver was depreciated, not gold. I know for a fact that’s bull but I don’t have the google fu to track down a reputable source. Thanks. (btw, this is only if you happen to have the information handy)

I did however find this from Uncle Cecil:

The importation of New World gold into Spain coincided with a corrosive inflation that has come to be known as the “price revolution.” Although prices had dropped steadily during the 1400s, after 1500 they began to rise dramatically–300 percent by 1600, according to economist Earl Hamilton, who wrote a well-known book on the phenomenon. The reasons for this are complex, but it seems clear that at least in part it was a matter of a sharply increasing amount of money (in the form of silver and gold) chasing a relatively fixed output of goods and services, thus bidding up the price.

[DrDeth]

@dzero

@DrDeth - that is some great research. Do you happen to know how much gold inflation there was as the result of the Spanish bring back tons of the stuff from the New World. According to Susanann, only silver was depreciated, not gold. I know for a fact that’s bull but I don’t have the google fu to track down a reputable source. Thanks. (btw, this is only if you happen to have the information handy)

I did however find this from Uncle Cecil:

Well there’s this:
http://eh.net/node/2741

Which shows that the value of gold went down about a factor of 7, or to put it another way, an oz of gold would buy 7 times less stuff after the Conquest, due to the “Price Revolution”. Or to put it another way gold was depreciated by a factor of 7- or so.

[dzero]

@DrDeth

Well there’s this:
http://eh.net/node/2741

Which shows that the value of gold went down about a factor of 7, or to put it another way, an oz of gold would buy 7 times less stuff after the Conquest, due to the “Price Revolution”. Or to put it another way gold was depreciated by a factor of 7- or so.

Interesting. I guess Cecil’s source was being overly conservative with that 300% figure. Although I think that was taking into consideration all forms of currency. Either way, we may not be able to print more gold, but having a truckload dumped into your economy will have the same effect. So much for gold’s intrinsic value.

[DrDeth]

@dzero

Interesting. I guess Cecil’s source was being overly conservative with that 300% figure. Although I think that was taking into consideration all forms of currency. Either way, we may not be able to print more gold, but having a truckload dumped into your economy will have the same effect. So much for gold’s intrinsic value.

Well, I think my Source* may* be Cecils. He is taking the minimum figure, I am taking the maximum.

[Darth_Panda]

@Susanann

Everyone will accept gold bullion for payment.

By everyone, I assume you mean no one. When was the last time you tried to pay your mortgage with gold, an order from Amazon, the gas station clerk, car dealership, credit card bill?

[aruvqan]

If we are discussing what to do in case of another Great Depression when inflation in Germany meant that people were spending millions of DM on a loaf of bread, or in the US people were being forclosed upon and becoming homeless, rampant starvation and eating at foodlines set up by various charitable institutions …

Simple. Dont bother investing, we do not know what will retain worth.

Make sure you own your home outright. No mortgage, no second mortgage, no loans or payments on anything, furniture, appliances, decorative thcatchekes.

Make sure you own at least one vehicle outright, paid off in full. No notes, leins, workmans leins. Nada.

Have some good sturdy clothing, doesnt have to be fancy, just able to be washed and dried a lot, no fancy schmancy dry clean items at all.

Learn how to can your own food, get a pressure canner and a bunch of cases of canning jars and lids, spare seals. Learning how to dry foods and getting a dehydrater is also an idea.

OK? Now if you lose your job, you will have a place to live, and something to drive to go look for work, and a way to keep foods without electricity. Chopping your monetary outgo, you can lose electricity - you may have to get a wind up alarm clock, heat shower water over a woodstove, and use an outhouse if you dont have access to city water [wells at home mean you need an electric pump to get the water out.] You can invest in a very nice wood kitchen stove that has a water tank for heating water attached to it. To cook, and heat water, and heat your space all you need is a source of wood. You do not always have to buy wood, frequently you can get the wood cut down by road crews just for hauling it away. You can make an arrangement with a local farmer to get downed trees out of his woodlot for free or a nominal charge.

If you own your property outright, all you need to do is come up with the taxes on it. Frequently you can actually pay taxes in kind, which means you can pay your property tax with honey, if you have enough skeps to give you the commodity value of honey adequate to equal what you owe in taxes. If you actually bought your little gold coins, now is the time to use them to pay taxes on your property.

[Chronos]

Great research, DrDeth, but to be thorough, are all of those meals equivalent? An MRE probably costs more, on a per-meal basis, than a Big Mac combo at McDonald’s, and the Big Mac combo costs more than a homemade meal.

Then again, that probably just makes the swing even more extreme.

[Susanann]

@Darth_Panda

By everyone, I assume you mean no one. When was the last time you tried to pay your mortgage with gold, an order from Amazon, the gas station clerk, car dealership, credit card bill?

Gold is not for everyone. Everyone is not going to buy some gold.

In your case, I think “you” personally should probably invest in California state and local bonds.

[DrDeth]

@Chronos

Great research, DrDeth, but to be thorough, are all of those meals equivalent? An MRE probably costs more, on a per-meal basis, than a Big Mac combo at McDonald’s, and the Big Mac combo costs more than a homemade meal.

Then again, that probably just makes the swing even more extreme.

You make a good point. But it’s hard to compare exactly what is a “meal”. I can find US food banks that can feed a person for $1. So, that’s 1300 meals per OZ.

But as you said, that just makes the swings even more extreme. I admit the Warsaw Ghetto is rather extreme, but the post WWII period, say the 1950’s, where gold was $20 oz, I have done quite a bit of research and a decent inexpensive meal was around $1. So, 20 meals/oz. An unskilled worker would labor about 20 hours to earn an OZ of gold. Today he’d work about 160 hours.

So, just in 50-60 years, the value of Gold has fluctuated at least by a factor of 8, up to a factor of 50.

Gold is just another commodity.

[Darth_Panda]

@Susanann

Gold is not for everyone. Everyone is not going to buy some gold.

In your case, I think “you” personally should probably invest in California state and local bonds.

You really shouldn’t give specific financial advice to people without understanding their financial position and investment goals. It’s a violation of the Chartered Financial Analyst Standard of Professional Conduct - specifically, Standard III-C-1) Suitability.

The standards are only mandatory for Chartered Financial Analaysts, and obviously you are not one, but they are considered good practice for anyone providing financial advice.

[dzero]

@Darth_Panda

You really shouldn’t give specific financial advice to people without understanding their financial position and investment goals. It’s a violation of the Chartered Financial Analyst Standard of Professional Conduct - specifically, Standard III-C-1) Suitability.

The standards are only mandatory for Chartered Financial Analaysts, and obviously you are not one, but they are considered good practice for anyone providing financial advice.

So . . . I shouldn’t be telling people to put their life’s savings into NIB star wars action figures? :smack:

[Darth_Panda]

@dzero

So . . . I shouldn’t be telling people to put their life’s savings into NIB star wars action figures? :smack:

That’s an exception to the rule - it’s just common sense.