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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.

For those of you who are experienced with this, could you point me to reputable sites that can explain how to go about doing this and perhaps reputable sites where gold and silver coins can be purchased?

Thanks very much.

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    Not an answer so I will add it as a comment. Commodities aren't the only hedge against inflation. Equities like stocks work just fine too. In fact, almost anything except cash works. – JohnFx♦ Jan 9 '11 at 21:51
  • The (wonderful) Planet Money blog + podcast is currently exploring currencies and the role of gold. They are very interesting to put everything in perspective. – Jan Fabry Jan 10 '11 at 16:07
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    Personally, I don't buy the hyperinflation scenario (the Federal Reserve isn't that stupid) but "stagflation" a la the 1970s is definitely on the table. – user296 Jan 24 '11 at 16:44
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    @Randy Minder - I humbly submit that if you're reading the Bible and go to the book of Revalations for concrete investment advice, you're doing it wrong, and would be better served by Matthew 19:21, Mark 10:21, Luke 18:22, Luke 12:20. – user296 Jan 24 '11 at 17:53
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    @RandyMinder seven years -- and lots of quantitative easing -- later, yet no hyper- or even stag-flation. The Fed obviously is not that stupid, George Soros has not destroyed the dollar, and the Bible prophecy hasn't come true in 2000 years. Obviously, it's a false prophecy. – RonJohn Feb 17 '18 at 21:31
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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.)

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    Good idea. It is getting harder to do that, however, as a US citizen (money.stackexchange.com/questions/5557/…) – Muro Jan 10 '11 at 23:49
  • Yeah. However, I suggest to you there is a big difference between having assets in a local country bank account where it can be frozen by a quiet call from a politician's aide (see recent headlines), and on the other hand having money in another country. Yes, they may know it's there, and they can apply leverage, but it may not be quite so easy. – poolie Jan 11 '11 at 0:09
  • I must have missed some news. What headline are you referring to regarding assets being frozen by a call from a politician's aide? – Muro Jan 12 '11 at 11:11
  • Why move when you have the chance at becoming filthy rich? If we have hyperinflation in USA, gold prices will inflate just as fast. – Cody C Oct 5 '11 at 17:25
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    @CodyC, if Zimbabwe or 1930s Germany seems like the kind of place you want to hang out be my guest. Hyperinflation doesn't normally go hand in hand with a quiet enjoyment of your wealth, and just holding gold is not going to make you wealthy other than in nominal terms. I suppose if you have the luck and resources to do well in the black market you may well end up wealthy. – poolie Oct 5 '11 at 22:25
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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).

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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

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    @Aashu - Owning ETF's will do no good when the US dollar has lost all value. I want something I can hold and buy/sell with. – Randy Minder Jan 10 '11 at 12:08
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    @Randy Minder - It might be wise to look at the bigger picture. If the US dollar loses all of its value you are going to have bigger problems than your bank account. At that point it might have been wiser to invest in bullets. – JohnFx♦ Jan 10 '11 at 15:47
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    @JohnFx - I am anticipating/planning for a situation here that Germany experienced in the early 1920's, rampant hyperinflation. I see little way we can avoid such a situation. We're doing exactly what Germany did starting in 1919, printing massive amounts of money. And the US is completely broke. – Randy Minder Jan 10 '11 at 16:10
  • I've got a better strategy for you than gold if you are certain that hyperinflation is imminent. Take out loans for as much money as you can possibly borrow and buy real-estate. It works like this. If you borrow a $1M in today's dollars, and hyper-inflation occurs you pay back the nominal value of the loan in dollars that are worth much less. The difference in the real value of the dollar you borrowed and he one you pay back is your profit. Of course, I don't advise this strategy because it is predicated on apocalyptic scenarios that are unlikely. – JohnFx♦ Jan 10 '11 at 20:18
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    @John - Your real estate strategy is a good idea except it is hard to predict when and how fast the currency will go south. One might not be able to ride out the real estate payments until then. Also, when hyperinflation occurs that real estate isn't going to help you purchase goods - only real money will be useful for the purchase of goods. – Muro Jan 10 '11 at 21:02
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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.

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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.

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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).

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  • There is a big caveat. Hyperinflation is often caused by devastating events (Germany after WW1, Hungary after WW2) or extreme government mismanagement (e.g. Venezuela, Zimbabwe). In both cases a stock portfolio anchored on your own country is likely to be devastated as well because the underlying companies have been bombed to ruins, nationalized or something else. Hyperinflation is also destroying any supply chain, breaking companies. Therefore diversification needs to extend to stocks in stable countries – Manziel Mar 31 at 9:33

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