Hi All, most of us have heard those stories about silver reaching +$300oz when the US prints to hyperinflation. If silver does eventually hit those numbers, can anybody tell me if we in Australia will experience a similar degree of gain if the Aussie appreciates to $1.50, $2, $5, $10 or $20 against the US dollar? Or will the AUD (being a fiat currency) simply go down the gurgler with the rest of the world?
money will become worthless everywhere no one will take any government currency for anything gold will reign surpreme as cash people will only take gold as payment for anything
As said previously, hyperinflation isn't certain. As inferred by your question, high US$ inflation is certain but what this means for A$ is far from certain as is the timing. You've probably heard Australia called a "commodity currency" and the extent to which this is true (and the RBA's actions) can significantly alter the way it plays out for us. A true commodity currency has a natural hedge in place (just like gold and silver) but in nominal terms this can be watered down via the banksters (and Govt policy). I have discussed lots of potential scenarios with others who have asked the same question in the past and have come to the conclusion that trying to predict a nominal A$ outcome from an extreme nominal US$ inflation scenario is simply impossible. (Further, a F2F discussion is far better at teasing out all the reasons and subtleties than an internet post.) What is more certain is that the real value of the gold and silver will be a significantly better hedge than cash (all else equal and depending on personal circumstances as "cash is king"). Also what is more certain, is that any scenario where gold becomes remonetised (even if in a crappy, doomed to fail way like Bretton Woods) by someone like the US, UK, EU, China then there will be a substantial increase in the real value of gold and anyone holding it will spontaneously experience a large increase in their terms of trade. As always, such a large terms of trade change will come with a massive risk of direct confiscation of course (indirect confiscation will happen anyway) but that's another thread. As DanielM said, we'll most likely be a follower rather than a leader on any such monetisation (as well as being a partial follower in fiat printing).
You only need to look at Greece to see possible outcomes, large parts of the country have returned to Barter, Gold (and by definition Silver) traders have popped up all over too. If the worst happens you will be able to live on quite easily with your stack or trade it for highly depreciated land to live on(or a really nice yacht)
Hyperinflation is a 100% loss of a bank accounts purchasing power. 10 years 10% inflation combined with 2% interest is an 10x(10-2)=80% (not exact) loss of a bank accounts purchasing power. Just to illustrate, inflation doesnt require the hyper prefix to make you lose alot. So a focus on an eventual occurrences of hyperinflation and severe situations, well, I see it abit as useless. My goal with silver is not to avoid that 100% hyperinflation loss, but to avoid any loss. And just already a lower loss than a bank account is still better than the bank account. Just to say, hedging with silver isn't the 'Will Doom Come or Not Come' story that some seem to make of it.
Alternative currencies quickly fill the void of hyper-inflated ones. The real issue is how long do you want to stay in a failing one.
Just have to fix up your maths. 10% inflation with 2% interest will result in a loss in purchasing power of 53%. More specifically, if you have $100 then at 2% interest per year it will be worth $121.90 in ten years time. If, say, 100 units of something (litres of milk, say) cost $100 now, then at 10% per year inflation the same 100 units will cost $259.37 in ten years time. Hence, your $$$ can only afford to buy 47 units - so a 53% loss in purchasing power in ten years.
