I would like to get your insight ..regarding the certainty that there will be inflation... if the bulk of the institutional money and people savings, 401 K accounts etc etc ,is held in assets such as the stock market and real estate..bonds, treasuries etc.....then after a crash in stock markets around the world and a large spike up in bond yields then , real estate values decrease ......Immediately all the paper value of the assets goes up in smoke . .all the money that was printed is now worth gizzilions less... there by there is now not a lot of money chasing hard assets.......people are reluctant to spend /invest or simply cant as their money is gone........massive de-leveraging and the economy now balances to where cost of goods is relative to the new amount of money available..ie price declines for everything.... This could also follow thru to the price of PM as the inflationary aspect of trillions of dollars in the system is now vaporized right now we are seeing small inflationary spikes on some goods as a result of the massive printing ..but after a stock market and bond crash and currency devaluation there has to be deflation or price adjustment down ( dont care what we call it ) to reflect the fact that all that paper money on computers is now gone. a fairly simplistic overview but what happens will have a large bearing on the future price of PM
Actually, the one that vaporises when the massive correction happens is the value of the assets. Money or tools of trade becomes scarce during those conditions, as you have witnessed, less money changing hands. In this case, the tools of trade actually becomes more valuable. This is why deflation happens. Value is destroyed but tools of trade (money) is sought after.
Actually the value of the assets is relative to your ability to retain the assets in a financial firestorm. That is predicated on your level of debt, your cash flow and your ability to service that debt. As has been outlined on other threads on this site in a game ending financial firestorm your creditors will strip you of your assets regardless of your ability to service your loans. That is why you need a fireproof keep with your SMSF assets that your creditors cannot access. A good rule of thumb is to ensure one third of your assets remain unencumbered Like the proverbial phoenix that rises from the ashes after the firestorm you can recover Kind Regards Non recourse
