Only in mathematical terms. Not in economical (purchasing power) terms. You throw these two together as if they're the same. They're not. Figures example: Moment A: buy 1 oz gold at $1,900, bicycle price $1,900 Moment B: sell 1 oz gold for $1,900,000,000, bicycle price $1,500,000,000 You can't buy the bicycle anymore with the 1 oz gold. In mathematical terms, your investment million-folded. In economical terms, your investment lost 20% Just My Opinion!
Pirocco, My words, "No idea what that would have bought at that time. In hyperinflation, values seem to be come meaningless too." I have tried to indicate that I am NO expert on life in 1923 Germany, and from my quote above say that i have no idea. I do not know what a dozen eggs cost in Germany in1923, all I know is what an ounce of gold was in 1923. If you were alive in that time please let us know. ....and, Moment A: buy 1 oz gold at $1,900, bicycle price $1,900 Moment B: sell 1 oz gold for $1,900,000,000, bicycle price $1,500,000,000 You can't buy the bicycle anymore with the 1 oz gold. This does not compute, The gold covers the cost of the bicycle with change. OC
That's true, I should have added the 400,000,000 instead of subtracting it. But you surely got the point. What I know is, that when a price of a product triples over period X, and other prices don't, that later on, the opposite will happen, because people dynamically relocate their storage of value objectives towards the products that are most undervalued relative to the others. This relocation makes the price again rise, until the opposite situation, where the previous products again become cheaper instead of more expensive. If you only know the price of gold in 1923 Germany, then you have no reference to judge the gold price back then. That also wasn't the subject, the subject was that you stated that the price one buys at is irrelevant once hyperinflation occurs. There I don't agree, for above reason, as the (wrongly chosen) figures example shows: the price then will be as relevant as the price today and the price of 2011's gold peak. With as basic reason that it's not the absolute (relative to zero) price that matters, but the relative to the prices of the products you really wanted, for which you used gold as inbetween step to. So it's not the price that is meaningless, it's your statement about it, that is meaningless.
It's not so much the value of gold increasing as the value of other things dropping. Real estate doesn't loose value to the inflation, rather the RE market tanks and with no-one to buy the land/houses prices drop. If the stock market takes a dive you'll be able to buy stocks cheap. PM is thought to preserve it's value while other parts of the economy comes crashing down. Exit strategy? When SHTF, sell off some PM and buy a cottage. Ride out the storm and see what opportunities await on the other side.
I lost the source, but I recall reading some stats on Weimar inflation (breakdown by percentage of income). The major expense by far in hyperinflation was food, along with other basics like energy and clothes. The cost of rent declined as a percentage of income. The thing that stuck with me was that food can become vastly more expensive.
I think I have read a similar comment, and also in the context of Argentina, Brazil and Mexico etc. In Zimbabwe food was the only thing that interested a buyer. OC
Surely nobody is suggesting that an ounce of gold would have decreased in purchasing power during the Weimer Hyperinflation...? Imagine the demand for anything other than cash? That huge store of value surging for something else! Where would a lot of it go? http://fofoa.blogspot.com.au/2010/12/focal-point-gold.html
Talking about Exit Strategies, silvers price has just been driven to abit over $21. It's better to Exit at $21 than at $19.5!
Are you intending to exit into the fiat that we are running away from? A good exit strategy is to have the elements on hand that will allow you to do nothing until the dust settles. i.e. food, cash and metals.
"A good exit strategy is to have the elements on hand that will allow you to do nothing until the dust settles. i.e. food, cash and metals." +1
At tops they say to wait for $today+$10. But they sell at $today+$1 Those that consider silver as an investment are those that say others to wait for $today+$10! $21.5 is there! $21.5-$19.5=$2 $2/$19.5=+10% 10% profit in some days! But only if you sell!
I would avoid physical metals for a purely investment intent. Use a paper silver investment like a ETF, it is just so much easier and faster. You can even put automated and conditional macro style buy/sell orders in with most brokers. We are living in the 21st century now, no reason to use a 18th century method of commodity investment. Sell off capital on the way up, buy on the way down (via ETF). Keep physical holdings as insurance policy/saving and never sell this unless you really need the fiat.
We stack for different reasons. You call it investment, I call it insurance. If there is a crunch moment, the outcome is the same. If there isn't a crunch moment, the outcome is still the same.
