How To Protect Your Wealth From Hyperinflation

| September 8, 2010 | 0 Comments

A good friend and I were having a chat over a beer last Friday after work.  We were at a little hole in the wall bar just up the street from where I live.  We snacked on some pretzels and played a few games of darts while we drank.

We talked about the usual… How’s the family doing and what the kids are up to.  You know, the same stuff you always talk about with an old friend.

But I could tell from the start this cheery and well-spoken guy had something on his mind.  He wasn’t his usual self… something was bothering him.  It wasn’t long before our conversation took a more serious turn.  This easygoing guy had something heavy weighing on him.

The source of his unusual behavior was the economy.  Now, he still has his job and his house, so he’s ahead of a lot of people.

But he’s really worried about the finances of our great country…

He’s been reading reports about the inevitable demise of the U.S. Dollar.  Nightmarish articles about “hyperinflation” in the U.S. are everywhere.  And they don’t paint a rosy picture.

He’s wondering what huge debt loads will eventually do to our economy.  Will out of control deficit spending eventually push the U.S. into insolvency?

And of course, he’s curious if there’s anything he can do to prepare for it…

   How would he protect his savings if the unimaginable happened?  Should he invest in gold?  Are there other investments that may come in handy if doom and gloom reports turn out to be true?

He was obviously worried and he asked me what I thought.

If you’re like him, you may have a lot of similar worries and questions.

I’m going to share with you exactly what I told him.

First of all… RELAX.  Take a deep breath…

Nobody truly knows what the future holds.  And as Benjamin Franklin once said, “Do not anticipate trouble or worry about what may never happen.  Keep in the sunlight.”

Most of the doom and gloom articles are meant to incite fear and drama.  (And to sell newspapers.)

Yes, there are many “issues” with the fiscal situation of the U.S. and other countries.  High levels of debt relative to GDP are a pressing problem, there’s no doubt about it.

But the odds of hyperinflation (rapidly rising prices as a currency fails) are still low at this point.  In fact, most economies are currently tipping on the edge of deflation!

But preparing for future inflationary disaster isn’t a bad idea.

After all, the logic is the same on the other side of the “nobody knows what the future holds” argument.  I think it’s a good idea to try and cover all your bases.

And investing in silver is a good way to do it.  Here are a couple reasons why…

First of all, silver is still cheap relative to gold.  At $20 per ounce, you can load up on silver coins without breaking the bank.

You could also buy the iShares Silver Trust ETF (SLV) which tracks the price of silver.  It’s currently trading for around $19.50.  (Personally, I do a little bit of both.)

Second of all, silver is still not a widely known investment.

If you’ve watched any television recently, you’ve seen ads for gold.  Either they’re telling you how to buy it (for a price), or they want to buy it from you (for cheap).

Most investors know about the gold trade.  If they’re not buying, it’s either because they can’t afford it or they don’t care.

But the cat’s not out of the bag on silver… yet.

If inflation starts to be a big problem, people are going to start caring in a big way.  There will be a rush to protect savings from being whittled down by runaway inflation.

But by that time, gold will be too expensive for the average person.

What will everyone turn to?  You guessed it… silver.

Silver may jump hundreds of percent as the average Joe tries to protect his wealth.  It will still be cheap relative to gold, but it will be priced much higher than it is now.

I think taking a closer look at silver is a great idea.

This was the advice I gave my friend and you should take it to heart too.

Don’t stress yourself out when reading about doom and gloom or “hyperinflation”.  Being prepared by investing in silver will help you sleep at night.

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Category: Commodities

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.

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