Buying gold / silver as a hedge against hyperinflation

I purchase one (1) ounce American Eagles or one (1) ounce Canadian Maple Leafs - both gold and silver.

I've purchased from www.coloradogold.com and www.monex.com. I would highly recommend www.coloradogold.com. I would not recommend www.monex.com. They seemed more interested in signing me up for a leveraged account.

I've read good reviews about www.apmex.com and www.tulving.com.

Also, check your local coin stores. I've found one locally that is just as competitive with the internet companies.

You should expect to pay around 4-6 % over the spot price (www.kitco.com).

Maybe you shuold look at buying into gold and silver ETFs instead..they are much more liquid and yuo can go in and oout of your positions very quickly

Check here:

http://www.garynorth.com/public/department32.cfm

If you have specific questions, shell out $15 and become a member of the site. He actively answers questions himself. (That's not an affiliate link.)

There's a wealth of reliable information on gold, inflation, etc. there.

Looking at previous hyperinflation scenarios, it seems to me the best preparation is to get an option to leave the country. If you imagine yourself living in say Zimbabwe today then having gold coins would be ok, but having money stashed in South Africa and the legal right to move there would be much better.

So, as well as buying gold coins, store some of them in a country you think will be stable, ideally a place you have the right to live in. Perhaps buy some growth assets in that country too.

(None of this is to say I think the USA is on track to become anything like a failed state. But, whatever fraction of a probability you want to assign to the idea of hyperinflation, this is how I think you should play it.)

If you wish to buy actual gold, then www.kitco.com is a reputable site to buy from. (I'm not a part of kitco.com). I would note that paying for day to day items with gold is impractical. Since 1 oz of gold is currently at about $1300, buying some groceries or filling your tank of gas would require only a very small fraction of your 1 oz gold coin. The seller would very likely not have a kind of precision scale needed to confirm you were paying the appropriate amount of gold,(assuming they accept gold as payment to begin with).

I have to agree with other answerers that if you believe there will unavoidably be hyper inflation similar to 1920's Germany, then you should move.

I'm becoming more interested in buying gold / silver coins as a hedge against inflation and especially hyperinflation. I know very little about this, and there are thousands of sites on the internet about this. I'm sure many of them are a little less than honest.

Don't.

A good strategy against inflation / hyperinflation has the following properties:

• It is not dependent on the value of a single currency, commodity or company
• It has a high yield so you will see exponential growth in its real value over the long period

Let me suggest another hedge: a well-diversified stock portfolio.

In contrast to gold that has a real yield of 0% (that's because an ounce of gold today will be an ounce of gold in 20 years, nothing more than that), stocks have a real yield consisting of economic growth (around 2% nowadays) and dividend yield (around 3% nowadays). So, unlike gold that yields 0% in real terms, a well-diversified stock portfolio yields 5% in real terms. So for example in 20 years you have 2.65 times what you had originally. Plus, if inflation (hyper- or not) happened, your investment was protected against that.

If you buy only gold and nothing else, the hedge is highly dependent on the actual price of gold. It's not unheard of for real price of gold to drop by 90%. So against mild inflation it's a really poor hedge, because the value fluctuations of gold will usually exceed the inflation that's happening.

Adding silver to the mix makes the situation a bit better but it's still a portfolio of only 2 commodities. Usually you should have at least 50 if not 100 instruments in your portfolio.

However, someone could argue if value of money reduces by 10000000000x over a period of 20 years, does it matter that your investment increased in its nominal value by only 1000000000x? Well, I would still prefer stocks that would multiply in its nominal value by 26532977051x in 20 years (5% annual real growth).