How to protect yourself against inflation

How to protect yourself against inflation

The traditional hedge against inflation has always been precious metals, specifically gold & silver. Of course the world has changed in so many ways that traditional thinking does not seem to apply anymore. It’s a brave new world. I have been divorced 3 times so I do not pretend to be smart. Having recovered from all the trauma life has brought me, I now have a few bucks to invest. I spend a lot of time reading the blogs of financial gurus and watching their videos. Two things are very apparent. There will be inflation and nobody can agree on what you can do about it.

One thing is for sure, money in the bank is shrinking in purchasing power rapidly. The government says that the annual inflation rate is 2%. I don’t believe that simply because I see the everyday things I buy have been increasing in price rapidly. Even if I was making 2% or more on my money in the bank I would still be losing as the interest is taxed fairly heavily.

People have flocked to the stock market in search of better returns and many have done quite well although you really haven’t made any money until you sell. Will the market keep up with inflation? Will you be able to sell when you need to? I asked myself these questions, did research and determined that I don’t know. It is hard to feel confident if you can’t find a consensus from at least a few non-government and reputable sources. I can’t.

Is bitcoin the answer?

Peter Schiff makes a great argument why bitcoin is worth nothing. He says gold and other metals are useful for things other than a store of value so it is a better bet. Makes sense to me although President Roosevelt banned gold ownership in 1933 as an emergency measure. It seems the government can do whatever it wants as long as it’s an emergency, which is comforting. One of those things it could do is ban ownership of bitcoin (India doing this now). The government loses a lot of power if it loses control of the currency. There are plenty of good arguments on how the government will not be able to stop the usage of crypto but China seems to be doing a good job. When it comes to taking peoples money, the government seems to be extremely efficient especially if it’s an emergency.

Is gold the answer?

Harry Dent says the stock market will crash (this is a pretty universal opinion) and gold will go to $10,000 (this is debatable). That’s scary but hey that sounds like a good time to buy gold, right? I should have cash around for when that happens and invest in gold. The problem with that idea is that by the time something that bad happens, bread will be $1000 a loaf and consequently I won’t have any money left to buy gold with. The other problem is that there may be no way to buy it. It may become illegal in your country. Exchange traded funds that hold gold may be confiscated. Wealthy people such as Robert Kiyosaki have gold stashed in vaults in various places around the globe. Those obstacles rule out gold for me.

There is one very definite vibe that I get from watching and reading these many well versed economic gurus. They are all very sure that something very bad is going to happen soon. The wealthy will survive it fine but what about the rest of us? Even my favorite guru George Gammon expressed his real concerns in a recent video. George is usually very upbeat but this sent a chill down my spine.

What can an average Joe do to protect himself against runaway inflation?

Be prepared to run for it. What?! That’s what City Preppers suggest. What good is money if there is no food around? Don’t think it can happen in the good old USA or Canada? Look at your local grocery store. Have you seen any empty shelves? Are there things that you usually buy that have been out of stock for a while? There are supply chain issues piling up. Stockpiling is the answer then, right? That’s kinda how the shelves get empty in the first place but you can give it a try. One problem with having a stockpile is that if it gets known that you have one then you will have to protect it somehow. City Preppers suggests having the 3 “B”s. Beans, Bullets & Bandages.

I suggest a fourth B; Beer. This is all quite depressing so throwing down a few beers while trying to figure out what to do might be the only idea I can come up with. I am going to buy a little crypto (Bitcoin), some physical gold, some cash to have on hand and a few defensive stocks. That being said there is no guarantee that I will have access to the value of those things or anyone would accept them in payment for a potato.

This short video about the recent collapse of Lebanon will put things in perspective.

The collapse of a society

There are 10 common things that happen when a society collapses. How many of these things do you see happening right now:

• Food shortages
• Paper currency becomes worthless – inflation. If you don’t think we are heading towards runaway inflation then watch this and start doing your own comparisons. Research lumber prices.
• Homelessness
• Large scale migrations – people moving enmasse to what is perceived as a better location
• Utilities being interrupted
• Rapid increase in crime
• Police state – military rule
• No fire, police or medical services
• No disaster relief available
• A new government is formed – usually some kind of authoritarian type

What do you think? Beer seems to be the only solid solution I can find that I could implement. If anyone has any better answers I would like to hear them.

As always these are just my opinions and not any kind of advice.