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.
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).