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Experts Say Buy Gold to Counter Hyperinflation

September 14, 2012193 view(s)

Most observers of the U.S. economy have noted that the costs of many basic daily expenditures are on the rise. When the cash required to obtain food, gasoline, and other staples starts to rise, gold and silver often sparkle ever more strongly in their appeal. This is in part because these commodities tend to hold their value even while cash is losing its buying power. Currently, the U.S. economy is supposed to be in a low inflation environment, according to a recent Gold News article; but this is being questioned by those involved in the gold market who realize that if hyperinflation did set in, most people would be unprepared to handle the financial crisis they would find themselves living in. Those who criticize sky-high national debt levels, the printing of money to try to ease economic woes and rapid, unchecked deficit spending believe that hyperinflation may be right around the corner.

One of the reasons that buying gold right now is being touted as wise was explained by way of the corn prices that are so much higher as a result of the current Midwest drought. One observer explained that if a person had gradually sold off their gold market holdings to buy corn from time to time, they would have seen little to no inflation. Of course, gold and silver prices fluctuate, but on average, very little inflation would be noticed by those who hold these commodities due to the stability of precious metals over the long term. Even those not selling when prices are at their peak would experience the preservation of their living standards instead of being badly impacted by inflation. This is important to note because it means that all in all gold is a far more stable form of wealth preservation than cash.

In order to truly counter hyperinflation, owning several ounces of gold would be desirable. The idea would be to stock up whenever possible and sell off only as needed. This would mean that the odds of being stuck with cash when prices rise would be significantly lower. Over time, it would be easier to handle not just monthly expenses, but unexpected expenses too. The investor who chooses this route, say analysts, would wind up seeing much less fluctuation in their savings because they held a more stable asset.

Since inflation and the ensuing hyperinflation can last anywhere from 2 to 5 years, it's necessary to calculate an approximate investment needed. If a person's monthly expenses were $2,500 then they would need around 20 ounces of gold at today's $1,600 price point in order to survive for one year off their gold. For two years, 40 ounces would be needed. As you can see, by stocking up now while prices are reasonable, it is far easier to get a good value over the long run if and when inflation hits.

This kind of strategic thinking can protect a family that invests wisely while conditions favor such an investment. It beats watching purchasing power dwindle from one paycheck to the next and certainly helps keep a standard of living reasonably.

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