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Buy Gold Now: Why should you buy gold? How do you buy gold? Investment expert Shayne McGuire explains how to profit from this precious metal and how buying gold can protect you from financial risk. Read more about Buy Gold Now >

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20 - The Winners & Losers in Inflation

The precise moment when the inflation turned upward toward the vertical climb was undoubtedly timed by no event but by the dawning psychological awareness of the German and foreign investor that Germany was not going to back its money. With that, the rush to get out of the mark was on. Like a dam bursting, the seas of marks flooded into the markets and drove prices beyond all bounds.”22

The seas of marks which had been stored up by Germans and especially by trusting foreigners flooded forth and fought to buy into other investments, foreign currencies, tangible goods, almost anything but marks.”23

The Losers in Inflation

The biggest losers in the inflation are the savers, the pensioners, those who are reliant on fixed income, those who have cash, bonds, treasuries or gilts. When the paper money that they have carefully accumulated, saved or invested is revealed to be worthless, this class of people is left with the most staggering permanent loss.

This class paid the piper for all of Germany. Great numbers of pensioners were left totally impoverished and forced back into the work gang to end their days there. The encouragement to thrift, an old German weakness, turned out to have been a complete swindle. Instead of a levy on all the Germans to pay for Germany's indulgences, a levy which might have been heavy but could have been fair, Germany left the levy to fall on those who were too innocent to evade it, and from them it took everything they owned. In any case, it was not the piper who went unpaid.”24

The Winners in Inflation

When the desertion of paper money becomes widespread the prices of desirable things rise. Government debt will quickly be deserted and the enormous quantities of money which previously occupied that pool will flood out into real, tangible assets such as precious metals, food, fuel, land, etc. Even the money which was previously occupied in buying goods and services, many of them now revealed to be useless, leaves them in favour of real assets.

For those in search of protection from the final ravages of inflation and steeply rising prices I recommend gold, silver and platinum. We have learnt that precious metals are money and that they achieved this position following thousands of years of trial and error and in competition with all other commodities. It is intuitive therefore that gold, silver and platinum will benefit the most from the collapse of paper money assets.

During the German hyperinflation precious metals were so highly prized that there is an account of a family who found a silver coin, and as they jockeyed amongst each other for a glimpse of it the coin dropped and rolled along the floor into a crack in the doorframe. A heated discussion followed in which the family tried to decide whether they would tear down the wall, or rip up the floor in order to retrieve the silver coin. There is another account of a german family supported by selling every day or so a single tiny link from a long gold crucifix chain.

Why were the gold and silver so highly prized? With them families could buy food and pay for their essentials. Without it they had only depreciating pieces of paper money which could buy them nothing.

So rather than buy up stocks of food or fuel supplies now, which have a use-by-date or are difficult to store, you might instead wish to buy gold, silver and platinum which you can exchange at a later date for the goods and services you require. At the time of writing a 1 ounce gold bar is worth around $1,018 or £614, and is 42mm long, 24mm wide and 2mm thick. So you can store a great deal of wealth in a very small amount of space and can transport it easily, unlike other tangible assets (for the same price you could buy 14 barrels of oil).


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