Imagine a time in the future when hyperinflation becomes a reality in your country. You have zero incentive to save any currency. If you don’t immediately turn your cash into something tangible as soon as you receive it, you will lose purchasing power at an unbearable rate.
What will your next trip to the supermarket be like? What about fuel? How will your business determine its pricing structure? In fact, consider any day-to-day purchase/business activity and ask yourself – on a practical level – how will anyone know whether they’re getting fair value for their currency at any given moment?
Some people might insist that this scenario could never occur in our modern civilised society. However, with the continuing worldwide debt crisis, and central banks’ insistence on printing more currency through quantitative easing (inflation of the currency supply will naturally lead to price inflation) more and more people are starting to see that such a scenario could well be the end result of the current crisis.
We should also keep in mind that the headline rate of inflation can no longer be taken at face value; the real rate of inflation is considerably higher.
“I’ve heard that Gold and Silver will hold their value and that buying them could protect my savings against inflation. Is this true?”
So let’s further imagine that you’ve decided to buy some gold and silver coins to mitigate the risks of inflation. Your purchasing power is preserved, isn’t it?
Yes, and no.
It’s true that, because of the relatively stable and limited supply of precious metals (they can’t be printed by central banks), they should appreciate in value when measured against any fiat currency that gets repeatedly debased by quantitative easing.
BUT, where exactly do you plan to spend your cherished coins? At the petrol station, where the attendant has never seen a silver coin in his life and has no practical experience of converting it into a quantity of fuel? Or maybe at the supermarket, where the cashiers have no clue how many troy ounces worth of food you have in your trolley?
Furthermore, on a practical level, your coins will only be convertible for big ticket items. How will you pay for a loaf of bread and a pint of milk when the smallest denomination you have is an ounce of silver?
Fortunately there is another way to use precious metals which is much less cumbersome than coins.
We see a worrying complacency among those who consider themselves to be “protected from inflation” by virtue of their precious metals holdings. We say that, for precious metals to offer true protection, we urgently need to (re)establish a network of businesses and consumers who are willing and able to trade precious metals for goods and services.
We seem to have collectively forgotten that Gold and Silver have been used as monetary metals for thousands of years. That’s why our aim is to restore precious metals as a medium of exchange.
