There’s a lot of talk about inflation. Michael Burry, who made billions shorting the US housing market in 2008, claims that the United States is facing a crippling wave of inflation. Other economists and investors warn of a similar situation, with some saying that this inflationary situation will get so bad that it causes riots and social collapse.
With dire predictions like these, you may be wondering if now is a good time to buy gold or silver. Today’s article examines this issue and provides several strategies for weathering this potential economic disaster.
Precious Metals: The Only True Currency
If you’re curious why people argue that gold (or Bitcoin for that matter) are important, here’s an excerpt from Kenneth J. Gerbino’s article “The Great Deceit” that explains things nicely:
It is the paper money created out of thin air that creates the unfair distribution of wealth that is making the middle class fall more behind and the poor more poor. Newly created money and credit in a paper money system benefits those that can access the money first and buy capital goods and real property at one price before the new money circulates and makes all prices go up. Wages also do not keep up with inflation and that creates another squeeze on the middle class. the bottom 90 % of our citizens went from owning a big piece of the income gains (65%) in the 1960’s to being squashed in the 2002–2007 period to 11%.
By having money that isn’t attached to any real value, government printing makes the rich richer, and the poor poorer. The recent pandemic bailouts are an excellent example of this.
In a hyperinflation scenario, fiat money could potentially lose all value, while gold and precious metals will always be worth something.
But are gold and silver the only “true stores of value,” like many claim?
As Jim Rogers, one of the greatest investors and commodity traders of all time, put it:
For centuries gold’s true believers have said that gold alone is a good store of value. On the other hand, over the centuries a lot of things have been a good store of value, including wheat, lumber, and iron ore.