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How to Hedge Against Hyperinflation

By Edited May 18, 2016 4 4

Paper money inevitably returns to its intrinsic value - Zero. The process is called inflation, or loss of purchasing power.

Hard assets retain or gain in value against paper money in the medium to long run. Hard assets include such durable commodities as gold, silver, nickel, copper and other metals. Real Estate is also a hard asset. Hard assets have a useful purpose like the ability to be reshaped into a valuable product (metals) or in the case of real estate, lived on or used for generating income.

Beanie Babies are not hard assets because they have have no intrinsic value. They are just a consumer good that some people decided was valuable, then decided was worthless. Paper and electronic currency is also not a hard asset because it has no intrinsic value - it only has value because some people decided it has value before they decide over time it is worthless.

Before you say "How can it be worthless in the future?" consider that 150 years ago you could buy a large farm for $200. The government used to issue $1 gold coins and $1 paper bills too. Today a couple hundred of those gold coins can still buy a decent piece of property, but the 200 paper dollars will not pay the transfer fees on the property.

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===Protect your Cash===

Cash savings are an important safeguard against financial stress. However, to protect against inflation or hyperinflation, put your cash savings into a hard asset.

In the US, the common nickel or 5 cent piece contains nearly enough metal to justify it's value. This situation changes daily with metal prices so check www.coinflation.com to see the current situation. Some people are now using physical nickels as their saving method rather then a low to no interest bank savings account. You can keep your nickels at home where they can me used in a situation where the banks are no longer accessible (financial crisis or natural disaster for example.

Copper pennies and Canadian pure nickel coins offer another way to protect against inflation.

===Protect the Roof Over Your Head===

Buy your own home. Rents will with 100% certainty rise over time. If your income does not keep up, it will be uncomfortable. If you buy your home you will never see a rent increase. Sure interest rates may rise, but they amount of money you owe will not go up, and if you get the mortgage paid off you will not even need to worry about interest rates.

===Protect Your Investments===

Invest a good portion of your money in hard assets like copper, nickel, silver, gold, income producing investment real estate and well located land. These assets will rise in price during inflationary times, generally protecting your purchasing power over time.

===Educate Yourself===

It is impossible to really cover this subject indepth in a short article. Get yourself a couple good books on inflation and investing and read up on how to invest in inflation beating hard assets. One good book is the Great Inflation and Its Aftermath: The Past and Future of American Affluence

There are also a number of online forums you can join and discuss hard asset investment strategies.



Feb 8, 2011 7:12pm
In todays economic climate this is a great article.
Feb 14, 2011 2:05pm
This article contains useful information for anyone who hopes to protect their assets. Hyperinflation could easily be in our future!
Dec 3, 2011 2:16am
Putting some hard assets away is fantastic insurance for your financial future. Highly recommended but sadly too often ignored advice.
Jan 25, 2012 11:09pm
Part of me wants to sell my house in CA but then I read an article like this one and then I rethink my decision. I go back and forth with what might be best. I don't have any immediate plans to make any kind of significant financial choices or moves. I am happy to have the reminder that as a renter, (I am one now for the first time in my life), that rents will rise. I bought a house years ago before I ever became a renter.
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